The Coholding Puzzle: New Evidence from Transaction-Level Data

John Gathergood; Arna Olafsson

doi:10.1093/rfs/hhae016

The Coholding Puzzle: New Evidence from Transaction-Level Data

John Gathergood¹; Arna Olafsson²

¹ School of Economics, University of Nottingham · ² Copenhagen Business School, Danish Finance Institute , Denmark and CEPR

Review of Financial Studies 2026 open access

Abstract Why do individuals pay debt interest when they could use their savings to pay down the debt? We explore why individuals “cohold” debt and savings using detailed and highly disaggregated daily-level data on household finances. We find that coholding mostly occurs in short spells within the month and the level of coholding is typically modest. Periods of coholding are not associated with shocks at the individual level. We show that mental accounting has a role to play in explaining coholding, in particular how individuals allocate different categories of expenditure to accounts in credit and debit.

DOI: 10.1093/rfs/hhae016
Volume: 39 (6)
Pages: 1877-1908
Language: en
Export: BibTeX
Sources: crossref openalex