Emotional Support and Financial Distress

Review of Corporate Finance Studies, Forthcoming

49 Pages Posted: 10 Apr 2021 Last revised: 27 Nov 2023

See all articles by Da Ke

Da Ke

University of South Carolina - Department of Finance

Date Written: March 24, 2021

Abstract

This paper is the first to explore emotional support as an important determinant of household financial outcomes. Using microdata from the U.S. and Australia, I document that individuals who feel emotionally supported are less likely to experience financial distress. This relationship is not confounded by non-emotional aspects of social support and is confirmed by between-siblings and within-individual analyses. Further investigation suggests emotional support helps to overcome psychological barriers that impede individuals from taking precautions against adverse shocks. Moreover, when such shocks occur, those with strong emotional support can better cope with the adversity as emotional support boosts their confidence.

Keywords: emotional support, financial distress, social networks

JEL Classification: D91, G4, G5

Suggested Citation

Ke, Da, Emotional Support and Financial Distress (March 24, 2021). Review of Corporate Finance Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3811231 or http://dx.doi.org/10.2139/ssrn.3811231

Da Ke (Contact Author)

University of South Carolina - Department of Finance ( email )

1014 Greene Street
Columbia, SC 29208
United States

HOME PAGE: http://www.dakefinance.com

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