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Decomposing the factors influencing household debt: the case of China

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  • Yung-Ching Tseng
  • I-Fan Hsiao

Abstract

This study discusses the issue of household debt in China based on the data of China household finance survey completed in 2015. The quantile regression model is adopted as the key research method, and the conclusions are derived are as follows. The increase in household debt in China is significantly correlated with several financial factors, including household assets and income, as well as the socioeconomic factors of education, age and working unit, in addition to senses of security and happiness. The assets of highly indebted households influence their debt in a positive way; the influence of income on household debt decreases as the quantile increases; the householder age has a negative effect across all household quantiles, and the debt holdings are less at older ages. The influence of household educational background dramatically increases from negative to positive following the indebtedness level, suggesting that enormous debt burdens may be generated from the cross effect of disadvantages in income and educational background. By decomposing the results of the quantile regression estimations, the evidence suggests that sufficient financial knowledge is essential in avoiding the financial distress from household debt.

Suggested Citation

  • Yung-Ching Tseng & I-Fan Hsiao, 2022. "Decomposing the factors influencing household debt: the case of China," Applied Economics, Taylor & Francis Journals, vol. 54(23), pages 2627-2642, May.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:23:p:2627-2642
    DOI: 10.1080/00036846.2021.1992343
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    Cited by:

    1. Benyan Tan & Yingzhu Guo & Yan Wu, 2024. "The influence and mechanism of female-headed households on household debt risk: empirical evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    2. Liu, Jiankun & He, Xiaobin & Dong, Yinxi, 2024. "Household debt and children’s psychological well-being in China: The mediating role of parent–child relations," Children and Youth Services Review, Elsevier, vol. 157(C).
    3. Ryszard Kowalski & Agnieszka Strzelecka & Agnieszka Wałęga & Grzegorz Wałęga, 2023. "Do Children Matter to the Household Debt Burden?," Journal of Family and Economic Issues, Springer, vol. 44(4), pages 1007-1022, December.

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