Household Consumption and Personal Bankruptcy

41 Pages Posted: 21 Mar 2008  

Ning Zhu

China Academy of Financial Research (CAFR); Yale School of Management; University of California, Davis - Graduate School of Management

Date Written: February 2007

Abstract

This paper utilizes the population of personal bankruptcy filings in the state of Delaware during 2003 and finds that household expenditures on durable consumption goods, such as houses and automobiles, contribute significantly to personal bankruptcy. Medical conditions also lead to personal bankruptcy filings, but other adverse events such as divorce and unemployment have marginal effect. Over-consumption makes households financially over-stretched and more susceptible to adverse events, which reconcile the strategic filing and adverse event explanations.

Keywords: personal bankruptcy, consumption, bankruptcy law reform

JEL Classification: H3, G3, K00

Suggested Citation

Zhu, Ning, Household Consumption and Personal Bankruptcy (February 2007). Available at SSRN: https://ssrn.com/abstract=971134 or http://dx.doi.org/10.2139/ssrn.971134

Ning Zhu (Contact Author)

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

Yale School of Management ( email )

135 Prospect Street
Box 208200
New Haven, CT 06520-8200
United States

HOME PAGE: http://pantheon.yale.edu/~nz26/

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States
530-752-3871 (Phone)
530-752-2924 (Fax)

HOME PAGE: http://www.gsm.ucdavis.edu/Faculty/Zhu/

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