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Propensity toward indebtedness: evidence from Malaysia

Author

Listed:
  • Nurul Azma
  • Mahfuzur Rahman
  • Adewale Abideen Adeyemi
  • Muhammad Khalilur Rahman

Abstract

Purpose - The purpose of this paper is to develop a model for studying the propensity towards indebtedness in Malaysia using behavioural factors. Design/methodology/approach - A self-administered questionnaire was distributed among Malaysians who work in Klang Valley, Kuala Lumpur. The questionnaire contained several demographic variables and four behavioural factors: financial literacy, risk perception, materialism and emotions. A total of 201 completed questionnaires were received and the data were tested using structural equation modelling with partial least squares. Findings - This study found that emotion and materialism are statistically significant for a propensity towards indebtedness, while financial literacy and risk perceptions are insignificant for a propensity towards indebtedness. Originality/value - The results of this study would be useful in helping design better models for credit offerings and addressing credit problems in the long run.

Suggested Citation

  • Nurul Azma & Mahfuzur Rahman & Adewale Abideen Adeyemi & Muhammad Khalilur Rahman, 2019. "Propensity toward indebtedness: evidence from Malaysia," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 11(2), pages 188-200, June.
    • Handle: RePEc:eme:rbfpps:rbf-05-2017-0046
    DOI: 10.1108/RBF-05-2017-0046
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    Citations

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    Cited by:

    1. Mpho Modisane & Gisele Mah & Paul Shah, 2023. "Analysis of the Availability of Information for Aspiring Multinational Companies in South Africa," International Review of Management and Marketing, Econjournals, vol. 13(4), pages 1-8, July.
    2. Mahfuzur Rahman & Nurul Azma & Md. Abdul Kaium Masud & Yusof Ismail, 2020. "Determinants of Indebtedness: Influence of Behavioral and Demographic Factors," IJFS, MDPI, vol. 8(1), pages 1-14, February.
    3. Łukasz Kurowski, 2021. "Household’s Overindebtedness during the COVID-19 Crisis: The Role of Debt and Financial Literacy," Risks, MDPI, vol. 9(4), pages 1-19, March.
    4. Lebdaoui, Hind & Chetioui, Youssef, 2021. "Antecedents of consumer indebtedness in a majority-Muslim country: Assessing the moderating effects of gender and religiosity using PLS-MGA," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).

    More about this item

    Keywords

    Indebtedness; Behavioural factor; Financial literacy; Materialism; Emotion; G32; G110; M300;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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