Do social interactions matter for borrowing behaviour of the Europeans aged 50+?
International Journal of Bank Marketing
ISSN: 0265-2323
Article publication date: 21 September 2021
Issue publication date: 1 February 2022
Abstract
Purpose
This paper aims to explore the linkage between households' social interactions and credit context and how these interactions may influence household borrowing decisions.
Design/methodology/approach
Based on a sample of 45,907 individuals referred to 18 countries, drawn from the Survey of Health, Ageing and Retirement in Europe, different probit regressions are used to test the four hypotheses proposed.
Findings
Empirical evidence confirms that intensive and extensive sociability are positively related to consumer debt holding. However, when social activities are considered separately, there is weak evidence that they are also related to mortgage debt holding and over-indebtedness. Moreover, at this level of analysis, the different nature of the social activities in which the individual participates in may condition the relationship with borrowing behaviour. The findings also show that relative income plays a passive role in household borrowing behaviour, since low-income households are more likely to hold mortgage and informal loans or to be over-indebted in highly indebted countries.
Originality/value
First, this paper extends the knowledge of the relationship between social interactions and borrowing behaviour by considering not only the intensity and diversity of the social activities in which the individual participates, but also the different nature of these activities. Second, it proposes that social interactions may play a passive role on borrowing decision, suggesting that household's behaviour might be passively affected by the density of borrowers surrounding it. To the best of our knowledge, there has not been any attempt to test this issue regarding household borrowing decisions. Third, unlike the few empirical papers on the topic, the paper also analyses previous issues by distinguishing between different types of debts; a distinction that revels the different role played by social interactions.
Keywords
Acknowledgements
This paper uses data from SHARE Wave 6 (doi: 10.6103/SHARE.w6.710), see Börsch-Supan et al. (2013) for methodological details.
The SHARE data collection has been funded by the European Commission through FP5 (QLK6-CT-2001-00360), FP6 (SHARE-I3: RII-CT-2006-062193, COMPARE: CIT5-CT-2005-028857, SHARELIFE: CIT4-CT-2006-028812), FP7 (SHARE-PREP: GA N°211909, SHARE-LEAP: GA N°227822, SHARE M4: GA N°261982) and Horizon 2020 (SHARE-DEV3: GA N°676536, SERISS: GA N°654221) and by DG Employment, Social Affairs and Inclusion. Additional funding from the German Ministry of Education and Research, the Max Planck Society for the Advancement of Science, the US National Institute on Aging (U01_AG09740-13S2, P01_AG005842, P01_AG08291, P30_AG12815, R21_AG025169, Y1-AG-4553-01, IAG_BSR06-11, OGHA_04-064, HHSN271201300071C) and from various national funding sources is gratefully acknowledged (see www.share-project.org).
Citation
Fernández-López, S., Daoudi, D. and Rey-Ares, L. (2022), "Do social interactions matter for borrowing behaviour of the Europeans aged 50+?", International Journal of Bank Marketing, Vol. 40 No. 1, pp. 27-49. https://doi.org/10.1108/IJBM-02-2021-0077
Publisher
:Emerald Publishing Limited
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