IFin Seminar, Arna Olafsson - CBS Denmark
Institute of Finance
Date: 15 January 2024 / 12:35 - 13:40
Speaker: Arna Olafsson – CBS Denmark
Title: The Co-Holding Puzzle: New Evidence from Transaction-Level Data
Date: January 15, 2024
Time: 12:25 – 13:40
Room: A-13 (red building)
Abstract:
Why do individuals pay debt interest when they could use their savings to pay down the debt? We explore why individuals “co-hold” debt and savings using detailed and highly disaggregated daily-level data on household finances. We find that co-holding mostly occurs in short spells within the month and the level of co-holding is typically modest. Periods of co-holding are not associated with shocks at the individual level. We show that mental accounting has a role to play in explaining co-holding, in particular how individuals allocate different categories of expenditure to accounts in credit and debit.
