A note on households’ choice of emergency finance

Abstract

This note examines demographic and socioeconomic characteristics as predictors of emergency finance in Australian households. The data is from the Household Expenditure Survey Confidentialised Unit Record Files and relates to 6,892 households. Emergency finance is defined as the ability to raise $2,000 within a week and its potential sources include own savings, loans from deposit-talking institutions, finance companies, credit cards, family and friends, welfare or community organisations and selling household assets. Characteristics examined included family structure, household income, age, sex and marital status, ethnic background and housing value. Multinomial logistic models indicate income, housing value and status are key factors influencing the ability to raise emergency finance. The model is more accurate predicting the inability to raise emergency finance and emergency finance sourced from own savings and deposit-taking institutions.