Chinese Americans Tend to Borrow Less

A new study by Rui Yao (the same researcher who found that Chinese Americans prefer riskier investments), found that while 72 percent of Chinese-American households hold a mortgage, only five percent of those households have outstanding auto loans, and only three percent have any other type of consumer debt. Yao has a few ideas for why there’s not as much debt in Chinese American households. “This result may reflect some unique aspects of the Chinese culture,” Yao said. “Credit and debt are relatively new concepts to the Chinese. Having ties to a country where most purchases are made with cash, debt may not be an acceptable option for low- income households that are aware that debt needs to be repaid with interest in the future. It may also be that high levels of debt for those with relatively higher income reflect relatively higher mortgage balances.”