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Emergency finance in Australian households An empirical analysis of capacity and sources

Listed author(s):
  • Andrew C. Worthington

This paper examines demographic and socioeconomic characteristics as predictors of emergency finance in Australian households. The data is drawn from the most recent Household Expenditure Survey Confidentialised Unit Record Files (CURF) and relate to 6,892 probability-weighted households. Emergency finance is defined in terms of the ability to raise $2,000 within one week and its potential sources include own savings and loans from deposit-taking institutions, finance companies, credit cards, family and friends and welfare or community organisations. Characteristics examined included family structure and composition, source and level of household income, age, sex and marital status, ethnic background and housing value. Binary logistic models are used to identify the source and magnitude of factors associated with the ability to raise emergency finance and the likelihood of choosing each method of raising finance. The results indicate that the presence of children, the number of dependents and income-earning units, the age, sex and ethnicity of the household head, dependency upon government pensions and benefits, homeownership and disposable income are significant determinants of the capacity to raise emergency finance. However, the demographic and socioeconomic factors examined are generally better at predicting mainstay sources of finance such as own savings and loans from deposit-taking institutions and credit card usage than loans from family and friends and welfare or community organisations.

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Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 163.

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Date of creation: 20 Nov 2003
Handle: RePEc:qut:dpaper:163
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  1. DeVaney, Sharon A. & Lytton, Ruth H., 1995. "Household insolvency: A review of household debt repayment, delinquency, and bankruptcy," Financial Services Review, Elsevier, vol. 4(2), pages 137-156.
  2. Ian Domowitz & Robert L. Sartain, 1999. "Determinants of the Consumer Bankruptcy Decision," Journal of Finance, American Finance Association, vol. 54(1), pages 403-420, 02.
  3. Walker, Catherine M., 1996. "Financial management, coping and debt in households under financial strain," Journal of Economic Psychology, Elsevier, vol. 17(6), pages 789-807, December.
  4. Dean M. Maki, 2000. "The growth of consumer credit and the household debt service burden," Finance and Economics Discussion Series 2000-12, Board of Governors of the Federal Reserve System (U.S.).
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