Gender differences in attitudes towards credit, terms of trade, and the household balance sheet

Changes in lending and financial innovations in the last 20 years increased access to debt. Consumers embraced the conveniences of debt, and social changes encouraged debt use. As a result, household debt grew considerably. Little is known about how these changes in the availability of debt affected women's finances. It does seem that bankruptcy rates grew, particularly for women, with women accounting for 30% of all bankruptcy filings in 1997 (Sullivan and Warren 1999). No previous research focuses on understanding differences in household debt by gender. We do not know if women prefer different relative amounts of debt, if they use different types of lending arrangements, and if they choose different balance sheet ratios relative to men. The objective of this dissertation is to determine the extent to which gender differences in attitudes towards credit, and gender differences in the terms of borrowing can explain gender differences in household balance sheets. To accomplish the objectives, I use the 2007 Survey of Consumer Finances (SCF). When I compare never married women to all respondents, never married women are more accepting of most kinds of debt. This is consistent with conceptions of women as spendthrifts but not consistent with the conservative attitudes towards investment by women. However, when I look more specifically at gender by limiting the analysis to just never married women and never married men, there are no detectible gender differences in attitudes towards the use of credit.When I compare never married women to all respondents, never married women pay higher interest rates on credit card debt. However, when I look specifically at gender by limiting the sample to never married women and never married men, there are no detectable gender differences in interest rate loan costs. Finally, I show that despite their greater acceptance to borrow, never married females tend to have stronger balance sheet ratios than married/cohabitating households. Despite no differences in attitudes towards credit, never married women have weaker household balance sheets than never married men, indicating that never married women are borrowing more, relative to their available resources.