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Emotional Support and Financial Distress

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  • Da Ke

Abstract

This paper is the first to explore emotional support as an important determinant of household financial outcomes. Using microdata from the United States and Australia, I document that individuals who feel emotionally supported are less likely to experience financial distress. This relationship is not confounded by nonemotional aspects of social support and is confirmed by between-siblings and within-individual analyses. Further investigation suggests emotional support helps to overcome psychological barriers that impede individuals from taking precautions against adverse shocks. Moreover, when such shocks occur, those with strong emotional support can better cope with the adversity as emotional support boosts their confidence. (JEL D14, D91, G41, G51, Z13)

Suggested Citation

  • Da Ke, 2026. "Emotional Support and Financial Distress," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 15(1), pages 199-226.
    • Handle: RePEc:oup:rcorpf:v:15:y:2026:i:1:p:199-226.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfae024
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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