Main Article Content
Abstract
Purpose: Economic crisis is a global phenomenon. When the crisis hits, many people are affected. This paper is an attempt to analyze the impact of financial resilience on the lives of individuals and households. In this study we analyze what are common financial shocks that individuals can face and how they tend to cope with this and our recommendations.
Methodology: Literature review and comparative study of consumption and consumer credit across diverse market.
Main Findings: The intensity of the economic crisis may vary from one person to another, depending on the individual financial resilience. Some households are less resilient to financial shocks than others. This may be because they have low levels of savings, have limited access to affordable credit, already hold high levels of debt or lack the skills required to manage household budgets.
Implications: Financial resilience is difficult to estimate because it is a dynamic concept – the ability to recover quickly from an income or expenditure shock. Savings are in anticipation to the challenges face which might hinder the achievement of financial goals, hence there is a scope for new saving/investment products which are more comprehensive in nature.
Novelty: We over a period have witnessed that there is a social support to the society during economic crisis but what is required is organization resilience rather than developing personal capabilities. The resilience should go beyond financial vulnerabilities and encompass mental stability, emotional wellbeing, education attainment etc.
Keywords
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References
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- Boisclair, D., Lusardi, A., & Michaud, P. C. (2017). Financial literacy and retirement planning in Canada. Journal of Pension Economics & Finance, 16(3), 277-296. https://doi.org/10.1017/S1474747215000311
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- Collins, J. M. (2017). A Fragile Balance: Emergency Savings and Liquid Resources for Low-Income Consumers. London:Palgrave Macmillan.
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- Gray, B., Gash, M., Crookston, B., and Aleotti, V. (2015). How Do You Know “Resilience†When You See It? Characteristics of Self-Perceived Household Resilience Among Rural Households in Burkina Faso. Davis, CA: Freedom from Hunger. Washington DC: CGAP.
- Murtin, F. and d’Ercole, M. M. (2015). Household wealth inequality across OECD countries: new OECD evidence, OECD Statistical Brief, No. 1, OECD.
- Pal, R., Torstensson, H., & Mattila, H. (2014). Antecedents of organizational resilience in economic crises—an empirical study of Swedish textile and clothing SMEs. International Journal of Production Economics, 147, 410-428. https://doi.org/10.1016/j.ijpe.2013.02.031
- RBI Financial Stability Report Issue. (2021) No. 22, pp 29-30.
- Seltzer Y, C McKay, A Britt, P Martin and J Won. (2014). Insights Into Action, What Human-Centered Design Means for Financial Inclusion. Washington, DC: Consultative Group to Assist the Poor.
- Ynesta, I. and De Queljoe, M. (2017). Statistical Insights: What does household debt say about financial resilience? OECD ECOSCOPE. https://oecdecoscope.wordpress.com/2017/10/13/statistical-insights-what-does-household-debt-say-about-financial-resilience/
References
Almenberg, J., & Dreber, A. (2015). Gender, stock market participation and financial literacy. Economics Letters, 137, 140-142. https://doi.org/10.1016/j.econlet.2015.10.009
Atkinson, A., McKay, S., Kempson, E., and Collard, S. (2006). Levels of Financial Capability in the UK. Results of a baseline survey. Bristol: University of Bristol.
Berkman, L. F., Glass, T., Brissette, I., & Seeman, T. E. (2000). From social integration to health: Durkheim in the new millennium. Social science & medicine, 51(6), 843-857. https://doi.org/10.1016/S0277-9536(00)00065-4
Blanc, J. L., Porpiglia, A., Teppa, F., Zhu, J., and Ziegelmeyer, M. (2015) ‘Household Saving Behaviour and Credit Constraints in the Euro Area’, ECB Working Paper No. 1790, European Central Bank. https://doi.org/10.2139/ssrn.2621479
Boisclair, D., Lusardi, A., & Michaud, P. C. (2017). Financial literacy and retirement planning in Canada. Journal of Pension Economics & Finance, 16(3), 277-296. https://doi.org/10.1017/S1474747215000311
Brune, L., Giné, X., Goldberg, J., and Yang, D. (2015). Commitments to Save: A Field Experiment in Rural Malawi. Washington DC: World Bank. https://doi.org/10.1596/1813-9450-5748
Campbell, J. Y. and Cocco, J. F. (2007). ‘How do house prices affect consumption? Evidence from micro data’, Journal of Monetary Economics, 54(3): 591-621. https://doi.org/10.1016/j.jmoneco.2005.10.016
Chandler, C. (2014). Integrated Health and Savings Group Program.
Collins, D., Morduch, J., Rutherford, S., and Ruthven, O. (2009). Portfolios of the Poor. Princeton: Princeton University Press.
Collins, J. M. (2017). A Fragile Balance: Emergency Savings and Liquid Resources for Low-Income Consumers. London:Palgrave Macmillan.
Dupas, P., and Robinson, J. (2013). “Why Don’t the Poor Save More? Evidence from Health Savings Experiments.†American Economic Review, 103(4): 1138-1171. https://doi.org/10.1257/aer.103.4.1138
Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2014). Financial Literacy, Financial Education, and Downstream Financial Behaviors. Management Science, 60(8), 1861-1883. https://doi.org/10.1287/mns c.2013.1849
Gash, M., and Gray, B. (2016). The Role of Financial Services in Building Household Resilience in Burkina Faso. Washington DC: CGAP
Gili, M., Roca, M., Basu, S., McKee, M., & Stuckler, D. (2013). The mental health risks of economic crisis in Spain: evidence from primary care centres, 2006 and 2010. The European Journal of Public Health, 23(1), 103-108. https://doi.org/10.1093/eurpub/cks035
Global Findex Survey. (2017). pp 79-80
Gray, B., Gash, M., Crookston, B., and Aleotti, V. (2015). How Do You Know “Resilience†When You See It? Characteristics of Self-Perceived Household Resilience Among Rural Households in Burkina Faso. Davis, CA: Freedom from Hunger. Washington DC: CGAP.
Murtin, F. and d’Ercole, M. M. (2015). Household wealth inequality across OECD countries: new OECD evidence, OECD Statistical Brief, No. 1, OECD.
Pal, R., Torstensson, H., & Mattila, H. (2014). Antecedents of organizational resilience in economic crises—an empirical study of Swedish textile and clothing SMEs. International Journal of Production Economics, 147, 410-428. https://doi.org/10.1016/j.ijpe.2013.02.031
RBI Financial Stability Report Issue. (2021) No. 22, pp 29-30.
Seltzer Y, C McKay, A Britt, P Martin and J Won. (2014). Insights Into Action, What Human-Centered Design Means for Financial Inclusion. Washington, DC: Consultative Group to Assist the Poor.
Ynesta, I. and De Queljoe, M. (2017). Statistical Insights: What does household debt say about financial resilience? OECD ECOSCOPE. https://oecdecoscope.wordpress.com/2017/10/13/statistical-insights-what-does-household-debt-say-about-financial-resilience/