Health-Related Non-Financial Costs of Financial Debt on Asian Americans: Evidence from Consumer Finance Monthly Survey

We examine whether Asian Americans are more likely to report higher debt stress and health impact of debt. We find that Asians who borrowed from friends and family are more likely to report higher debt stress. For subsamples limited to other debt-types, we do not find significant coefficient for the Asian variable in the estimates of an ordered Probit model predicting debt stress. There is no evidence that Asians borrow more from friends and family, yet they report higher health impact of debt than other ethnicity/race. Since very few people borrow from friends and family and such loans comprise less than one percent of household debt, the results suggest such loan elicit very high levels of anxiety for Asians. Our findings suggest that though tighter societal networks among Asians facilitate easier access to finance at lower interest costs, their shame and stigma culture also imposes significant nonfinancial costs.