The existing literature on household wealth accumulation has hitherto recognized the lifecycle
effects, household socio-economic characteristics, bequest motives, and intergenerational
transfers as important factors affecting household net wealth. The two empirical essays in this
thesis expand the literature by emphasizing the likely roles that a household's tenure choice and
home equity borrowing decisions have in its wealth accumulation process.
The first essay, entitled "Homeownership and Household Wealth Accumulation", tests
whether homeownership has placed the owner household on a more favorable wealth
accumulation path, based on past observations that the values of owner-occupied housing have
grown at a real rate greater than those of financial or other tangible assets. The premise is that,
while the tenure choice decision is affected by a household's net wealth, the housing tenure
chosen could place a household on different wealth accumulation paths over its life-cycle.
Controlling for selection bias arising from tenure status, the results indicate that typical
homeowners and renters have distinct wealth accumulation processes. While homeownership
improves the wealth position of homeowners, the renter households are, however, better off in
their existing tenure than otherwise. It appears that households self-select themselves into the
appropriate tenure that optimizes their wealth accumulation paths.
The second essay on "Household Consumption/Investment Behavior and Home Equity
Loans" investigates which behavioral model underpins the homeowners' consumption and
investment decisions of home equity loan funds, and how these decisions impact portfolio
decisions and wealth accumulation. It concludes that the 'life-cycle model' and the 'precautionary
savings model' prevail over the 'bequest motive model' in motivating the household
consumption/investment decisions of home equity loans. Home equity loans alter the illiquid
nature of housing investment through convenient tapping of housing equity, and reduce
household preference to hold liquid assets to meet precautionary needs. Their presence
encourages loan users to hold smaller shares of liquid cash and financial assets in total assets,
and to diversify from housing asset to business, real estate and illiquid nonhousing assets. They
generally reduce homeowners' net wealth, reflecting a tendency for borrowed funds to be
consumed or invested in loss-incurring assets. / Business, Sauder School of / Graduate
| Identifer | oai:union.ndltd.org:UBC/oai:circle.library.ubc.ca:2429/6212 |
| Date | 05 1900 |
| Creators | Thang, Doreen Chze-Lin |
| Source Sets | University of British Columbia |
| Language | English |
| Detected Language | English |
| Type | Text, Thesis/Dissertation |
| Format | 9599448 bytes, application/pdf |
| Rights | For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use. |
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