Do Credit Supply and Unemployment Risk Matter for Household Saving? Evidence from Poland

This paper contributes to the literature on the effects of uncertainty on household saving – a long-standing and extensively explored topic yet leaving a number of issues inconclusive. It concentrates on the labor income uncertainty by addressing saving against unemployment risk in terms of changes in credit supply and households’ financial wealth. Time series analysis uses dataset of quarterly observations from 2003 Q4 to 2019 Q3 for Poland. It provides empirical evidence of the negative relationship of changes in households’ financial wealth and credit availability with the household propensity to save, in line with the buffer saving model. Furthermore, it contributes to the discussion on the choice of uncertainty measures referring to the labor market with a recommendation to employ the subjective (perceived) unemployment expectation index rather than the objective unemployment rate. These results are meaningful for policy implications. They emphasize the role of credit availability for household consumption/saving decisions. In case of expansionary monetary policy and making credit easier to acquire for households, all other things equal, a negative effect on the household saving rate may be expected. This poses a question about the risk of households’ overreliance on credit and therefore about their financial stability in emergency situations.

Pandemic, risk-adaptation and household saving: evidence from China

PurposeScholars have not agreed with each other on how people would behave after experiencing a catastrophic event. They could save more as a precautionary action for future difficulties or save less with a carpe diem attitude. This study aims to attempt to shed light on this debate with empirical observations on how the Covid-19 pandemic has affected household saving decisions.Design/methodology/approachThe two waves of the survey data allowed us to investigate both instantaneous and ongoing effects of Covid-19 on household saving decisions. The instantaneous effect refers to the immediate impact of the crisis, while the ongoing effect refers to the lasting impact of the pandemic when economic recovery had started. The variation in the number of confirmed cases across cities during the two waves provides the source of power for identification. The authors extend their analyses of the impact of Covid-19 on the household saving decision by using ordinary least squares models. Due to the ordered nature of survey responses, the authors also rerun all baseline models using the ordered probit regression method.FindingsThis paper studied the impact of the Covid-19 pandemic on household saving decisions in China. This study found that households in the most affected cities would save more during the Covid-19 but tend to save less when the disaster started fading away. Combining findings in Kun et al. (2013) and Filipski et al. (2015), people do become more pessimistic during and after the Covid-19, possibly driving their observed precautionary and cape diem behaviors during the two points of time. Heterogeneity analysis shows that specific households would dramatically change their saving behavior. These observations might be useful for policymakers who concern the economic recovery after this pandemic disaster.Originality/valueUnderstanding how the Covid-19 pandemic would affect household consumption vs saving decisions is important for the economic recovery after this disaster comes to an end. The analyses presented in this research could be useful for policymakers who concern appropriate policies aiming to boost consumption and economic activities after Covid.

Determining the potential of informal savings groups as a model for formal commitment saving devices

Background: Saving behaviour has attracted research attention over the past 20 years. Typically, individual and household saving rates among low-income groups are inadequate. Research suggests that informal savings groups are effective vehicles for encouraging saving among low-income individuals. Yet little is known about the drivers of positive saving behaviour among informal savings groups, which makes it difficult for formal providers to design interventions that promote higher levels of saving.Aim: This study aimed to explore both the rational and non-rational drivers of saving behaviour among low-income members of informal savings groups, the attributes of informal savings groups that positively influence their collective saving behaviour, and to identify the valued features of savings groups that encourage the adoption of informal commitment saving devices (CSDs).Methods: The study was informed by a literature review followed by field research in which semi-structured interviews were conducted with 10 savings groups and 10 individual members of savings groups. The participants’ perspectives were analysed and compared within the context of behavioural economic theory.Results: The study revealed seven characteristics of informal savings groups that potentially serve as interventions to explain non-rational saving behaviour. It also identified seven features valued by users of informal CSDs (including flexibility, restricted access to savings and no transaction fees) which could be salient to providers of formal CSDs.Conclusion: On the basis of the findings, a behavioural design framework was proposed to inform the design features of formal CSDs that may ensure customer retention and improved saving outcomes.

THE INTERNET MIRACLE: THE IMPACT OF INTERNET ACCESS ON HOUSEHOLD SAVING IN INDONESIA

This study analyzes the impact of access to the internet and household saving behavior, in the context of the amount of savings and the saving preferences, in Indonesia. Using the fifth wave of the Indonesia Family Life Survey data, this study finds that there is a positive effect between internet access and household savings. This access includes private internet access and public internet access. Nonetheless, the effect of private internet access differs from public internet access. Private internet access positively impacts both the amount of savings and the saving preferences, whilst public internet access only increases the amount saved, not the saving preferences.

Determinants of Household Savings: An Empirical Evidence from the OECD Member Countries

Using the data from the 36 OECD member countries over a time period of 1970-2017, we study variations in household saving rate across the countries through the lens of the socio-economic and -demographic shifts over time. In addition to traditional determinants of household saving such as life expectancy, education, average number of children born per woman over a lifetime, and household debts, we examined changes in the socio-economic and -demographic conditions that are conducive to the human capital value of female labor force and thus female employment opportunities. We have identified that the narrower is the gap between genders in higher education attainment and employment, the higher is the household saving rate. Our empirical findings also suggest that both giving childbirth at an old age and preferential income tax rates for households with children are negatively affecting the household saving rate.