The Co-holding Puzzle: New Evidence from Transaction-Level Data

Abstract

Using detailed and highly disaggregated data on household finances, we examine the
tendency of consumers to “co-hold” savings and debt simultaneously. The disaggregated
nature of the data allows us to calculate co-holding at daily frequency. We find that
co-holding mostly occurs in short spells within the month and the level of co-holding
is typically modest, while a subset of individuals are persistent co-holders. Periods of
co-holding are not associated with shocks at the individual level. Drawing on detailed
transaction-level data, we show that co-holding is related to the allocation of different
categories of expenditure to accounts in credit and debit.

Keywords: co-holding, credit card puzzle, household finance

JEL Classification: D12; D14; D15; G51