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Source: Review of Finance
Resulting in 1 citation.
1. Jiang, Danling
Lim, Sonya S.
Trust and Household Debt
Review of Finance 22,2 (1 March 2018): 783-812.
Cohort(s): NLSY79
Publisher: Oxford University Press
Keyword(s): Bankruptcy; Debt/Borrowing; Discrimination, Age; Financial Behaviors/Decisions; Foreclosure; Net Worth; Trust

Permission to reprint the abstract has not been received from the publisher.

Using a large sample of US individuals, we show that individuals with higher levels of trust have lower likelihoods of default in household debt and higher net worth. The effect is driven by trust values inherited from cultural and family backgrounds more than by trust beliefs about others. We demonstrate a causal impact of trust on financial outcomes by extracting the component of trust correlated with early-life experiences. The effect of trust is more pronounced among females, those with lower education, lower income, lower financial literacy, and higher debt-to-income ratio. Further evidence suggests that enhancing individuals' trust, to the right amount, can improve household financial well-being.
Bibliography Citation
Jiang, Danling and Sonya S. Lim. "Trust and Household Debt." Review of Finance 22,2 (1 March 2018): 783-812.