Factors Related to the Financial Vulnerability of Small Business Owner-Manager Households

Journal of Personal Finance, 11(1), 49-77, 2012

29 Pages Posted: 2 Sep 2012

See all articles by HoJun Ji

HoJun Ji

Consumer Sciences Department, Ohio State University

Sherman D. Hanna

Ohio State University (OSU)

Date Written: August 31, 2012

Abstract

We investigate financial vulnerability of households with small business owner managers, using 1992 to 2007 Survey of Consumer Finances datasets. Based on regression analyses of two ratios, business assets to total household assets and business income to total household income, we find that vulnerability in terms of both ratios increases with the number of employees and the number of years in business. The income ratio increases with age up to age 48, then decreases. Black households are less vulnerable (have lower income ratios) than White households. Single head households are more vulnerable than married couples in terms of the business to household income ratio. Those willing to take substantial investment risks have higher business asset ratios than those unwilling to take any risks.

Keywords: Financial vulnerability, Small business households, Survey of consumer finances, Risk tolerance,Diversification, Household Portfolios

JEL Classification: D12, D14, D21, D29, G32, L25l, L26

Suggested Citation

Ji, HoJun and Hanna, Sherman D., Factors Related to the Financial Vulnerability of Small Business Owner-Manager Households (August 31, 2012). Journal of Personal Finance, 11(1), 49-77, 2012. Available at SSRN: https://ssrn.com/abstract=2139806

HoJun Ji

Consumer Sciences Department, Ohio State University ( email )

United States

Sherman D. Hanna (Contact Author)

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

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