A Collection of Surveys on Savings and Wealth Accumulation

Description

In this collection of critical surveys the reader is provided with a range of up-to-date work from some of the leading scholars in the area, writing on private and public sector aspects of savings and wealth accumulation.

A survey of savings and wealth accumulation which are important dimensions of research and policy debates
Discusses the measurement of genuine savings and sustainability, the estimation of wealth inequality, and recent developments in consumer credit and defaults
Evaluates the impact of student loans on financial well-being, people’s retirement decisions, and the impact of pension reform
Considers the distribution of wealth across generations and the importance of accurately measuring government debt, the rise of sovereign wealth funds and Islamic banking and finance

A Collection of Surveys on Savings and Wealth Accumulation 4
Contents 8
1 SAVINGS AND WEALTH ACCUMULATION: MEASUREMENT, INFLUENCES AND INSTITUTIONS 10
- Notes 16
- References 16
2 RECENT DEVELOPMENTS IN CONSUMER CREDIT AND DEFAULT LITERATURE 18
- 1. Introduction 18
- 2. Basic Models, Mechanisms, and Tradeoffs 19
- 3. The Rise in Personal Bankruptcies and Consumer Credit 22
- 4. The Importance of Information 24
- 5. Welfare Implications 26
- 6. Delinquency, Informal Bankruptcy, Debt Restructuring, and Collection 28
- 7. The Cyclical Behavior of Credit and Bankruptcy 30
- 8. Challenges Going Forward 31
- Acknowledgements 32

A Collection of Surveys on Savings and Wealth Accumulation 4
Contents 8
1 SAVINGS AND WEALTH ACCUMULATION: MEASUREMENT, INFLUENCES AND INSTITUTIONS 10
- Notes 16
- References 16
2 RECENT DEVELOPMENTS IN CONSUMER CREDIT AND DEFAULT LITERATURE 18
- 1. Introduction 18
- 2. Basic Models, Mechanisms, and Tradeoffs 19
- 3. The Rise in Personal Bankruptcies and Consumer Credit 22
- 4. The Importance of Information 24
- 5. Welfare Implications 26
- 6. Delinquency, Informal Bankruptcy, Debt Restructuring, and Collection 28
- 7. The Cyclical Behavior of Credit and Bankruptcy 30
- 8. Challenges Going Forward 31
- Acknowledgements 32
- Notes 32
- References 35
3 STUDENT DEBT EFFECTS ON FINANCIAL WELL-BEING: RESEARCH AND POLICY IMPLICATIONS 42
- 1. Introduction 42
  - 1.1 Shifting Understanding of Educations Welfare Function in America 44
  - 1.2 Economics of Higher Education and Increasing Indebtedness 45
  - 1.3 Research on Student Debts Effects on Young Adults’ Asset Accumulation 46
  - 1.4 Career and Social Choices 46
  - 1.6 Delinquency and Default 47
  - 1.5 Financial Stress 47
  - 1.7 Overall Debt 48
  - 1.8 Asset Accumulation 49
- 2. Policy Discussion 53
  - 2.1 The Need for Reducing Absolute Borrowing 54
- 3. Conclusion 55
- References 56
- Acknowledgment 56
- Notes 56
4 ISLAMIC BANKING AND FINANCE: RECENT EMPIRICAL LITERATURE AND DIRECTIONS FOR FUTURE RESEARCH 68
- 1. Introduction 68
- 2. A Brief History 69
- 3. Principle of Islamic Banking and Finance 71
- 4. Performance of Islamic versus Conventional Banks 72
- 5. Risks in Islamic Banking? 77
- 6. Other Topical Banking Issues 81
  - 6.1 PSLB versus non-PSLB Types of Finance 81
  - 6.2 Competition 82
  - 6.3 Small Business Lending and Other Issues 82
- 7. Islamic Finance 87
  - 7.2 Sukuk 87
  - 7.1 Islamic Mutual Funds 87
  - 7.3 Islamic Micro and Social Finance 93
- 8. Conclusion and Future Research 93
- Notes 94
- References 96
5 WEALTH INEQUALITY: A SURVEY 102
- 1. Introduction 102
- 2. Measuring Wealth 103
- 3. Inequality Measurement 106
  - 3.1 Principles 106
  - 3.2 Ranking Tools 107
  - 3.3 Measures 113
- 4. Representing Wealth Distributions 117
  - 4.1 Describing Wealth at the Top: The Pareto Distribution 118
  - 4.2 Overall Wealth Distributions 120
- 5. Wealth Inequality and the Structure of Wealth Distributions 121
  - 5.1 Long-Run Inequality Modelling 123
  - 5.2 Age-Adjusted Wealth Inequality Measures 124
- 6. Empirical Implementation 127
  - 6.1 Data: Sources and Methods 128
  - 6.2 Statistical Inference with Survey Data on Wealth 129
  - 6.3 Inference Based on Semi-Parametric Modelling of the Wealth Distributions 132
- Notes 134
- 7. Conclusion 134
- Acknowledgements 134
- References 137
6 DEFINING THE GOVERNMENT'S DEBT AND DEFICIT 148
- 1. Introduction 148
- 2. Defining the Government 151
- 3. Defining the Debt and Deficit 155
  - 3.1 Cash and Accrual 158
  - 3.2 Debt-Deficit Residuals and the Importance of Reconciling Stocks and Flows 159
  - 3.3 Debt-Deficit Residuals and the Valuation of Assets and Liabilities 160
  - 3.4 Real Assets and Full-Accrual Accounting 162
  - 3.5 Off-Balance-Sheet Financing 162
  - 3.6 Comprehensive Accounting 164
- 4. Conclusions 165
- Notes 166
- Acknowledgments 166
- References 167
7 RISE OF THE FIDUCIARY STATE: A SURVEY OF SOVEREIGN WEALTH FUND RESEARCH 172
- 1. What are Sovereign Wealth Funds, and why do we care? 176
  - 1.1 The Historical Evolution of SWFs—From Stabilization to Financial Investor 179
  - 1.2 The Evolving Political Response to Cross-Border SWF Investments 180
  - 1.3 Countries Proposing or Launching SWFs Recently 181
- 2. How are Sovereign Wealth Funds Organized and Operated? 182
  - 2.1 The Internal Governance and Staffing of SWFs—Why it Matters 184
  - 2.2 Widely Varying Transparency Measures and Recent Changes 184
  - 2.3 How Do SWFs Differ from Other Large, Internationally Active Institutional Investors 185
- 3. How SWFs Make Target Selection and Portfolio Allocation Decisions 186
  - 3.1 Normative Assessments of How SWFs Should Invest 186
  - 3.2 Asset Allocations and Portfolio Selections Observed in Practice 193
  - 3.3 Geographic and Industrial Distribution of SWF Investments 199
  - 3.4 Recent Trends in SWF investments 203
- 4. The Impact of SWF Investments on Target Firms 203
  - 4.2 The Impact of SWFs on Target Firm Financial Performance and Value 205
- 5. Conclusions and Extensions 211
  - 5.1 What Lessons Can Be Drawn from Existing SWF Research? 212
  - 5.2 Unresolved Issues and Areas for Future Research 213
- Acknowledgments 214
- Notes 215
- References 217
8 GENUINE SAVINGS AND SUSTAINABILITY 222
- 1. Introduction 222
- 2. The Weak Sustainability Model and Genuine Savings 224
  - 2.1 The General Model: Capabilities-Based Sustainability 224
  - 2.2 Outcome-Based Sustainability: Consumption, Prices and Discounting, NNP and the Hartwick Rule 227
  - 2.3 GS Extensions: Population Growth and Technical Change 230
  - 2.4 Trade Openness and Beyond: Does Structure Matter? 232
  - 2.5 Other Issues: Strong Sustainability and Equity Concerns 234
- 3. Genuine Savings: Empirical Methods 235
  - 3.1 Empirical Evidence on GS 236
- 4. Testing the Predictive Power of GS 241
- 5. Conclusion 245
- Notes 246
- Acknowledgements 246
- References 248
9 SAVINGS IN TIMES OF DEMOGRAPHIC CHANGE: LESSONS FROM THE GERMAN EXPERIENCE 254
- 1. Introduction 254
- 2. Review of the Literature on the Reactions to Pension Reforms 255
- 3. Regimes of Retirement Policies in Germany 258
  - 3.1 Phase 1 (1957–1972): Stability 258
  - 3.2 Phase 2 (1972–1984): Increasing Generosity 258
  - 3.3 Phase 3 (1984–1992): Modest Retrenchment 259
  - 3.4 Phase 4 (1992– 2007): Sustainability Reforms 259
- 4. Empirical Evidence from Germany 262
  - 4.1 Changes in Retirement Behavior 263
  - 4.2 Changes in Savings Behavior 266
  - 4.3 Heterogeneity in Planning and Saving for Retirement 271
- 5. Conclusion: Lessons Learned and Current Developments 273
- Notes 274
- References 275
10 ECONOMIC DETERMINANTS OF WORKERS’ RETIREMENT DECISIONS 280
- 1. Defining Retirement 281
- 2. Retirement Trends and Patterns 282
- 3. The Effect of Public and Private Pensions on Retirement 286
  - 3.1 Why public pensions may affect retirement in theory 286
  - 3.2 Empirical Evidence on Pensions and Retirement Based on Reduced Form Models 288
  - 3.3 Structural Models of Social Security and Retirement 290
  - 3.4 Social Security Claiming and the Earnings Test 291
- 4. Other Factors 293
  - 4.1 Wealth and Savings 293
  - 4.2 Health and Health Insurance 294
  - 4.3 Retirement in a Family Context 295
  - 4.4 Labor Demand 296
- 5. Discussion 298
- Notes 299
- References 300
Index 306
EULA 315

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