1 - Introduction
Published online by Cambridge University Press: 05 January 2013
Summary
In his Presidential Address delivered to the American Finance Association, John Campbell argued for the importance of “household finance,” an academic field that has attracted much interest but still lacks definition and attention within the finance profession. Analogous to corporate finance, household finance asks how households use financial instruments to attain their objectives. We argue further that the study of household finance is not only important for households as investors in developed economies; but it is also crucial for households running businesses and farms in developing countries, where financial markets are often problematic and household consumption, investment, and production decisions are likely nonseparable. Understanding the financial environment and financial behavior of these households should ultimately help researchers and policymakers gain a greater understanding of behavior, evaluate existing policies targeting poverty, and potentially help remove distortions in financial markets.
The study of the financial environment and household financial behavior occupies a large share of the growing literature on empirical development economics in the past few decades. Household surveys have been promoted by governments, international organizations, academics, and survey groups in many countries, providing useful data for research into various aspects of household finance. Although studies using data from household surveys have provided several important insights about the financial situation and behavior of households in developing countries, some challenges remain. Most importantly, definition and measurement of variables used in these surveys and studies are sometimes inconsistent or unclear.
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- Information
- Households as Corporate FirmsAn Analysis of Household Finance Using Integrated Household Surveys and Corporate Financial Accounting, pp. 3 - 16Publisher: Cambridge University PressPrint publication year: 2009