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The Effect of Attitudes Towards Money on Over-Indebtedness Among Microfinance Institutions’ Customers in Tanzania

Author

Listed:
  • Pendo Shukrani Kasoga

    (The University of Dodoma)

  • Amani Gration Tegambwage

    (The University of Dodoma)

Abstract

Microfinance institutions (MFIs) are believed to be the best source of finance for lifting the poor from poverty. However, the vast majority of MFIs’ customers in the world appear to be over-indebted. This study investigates the effect of the four attitudes towards money (FAM), namely security, love, freedom, and power, on over-indebtedness among MFIs customers in Tanzania. This relationship has not been investigated in previous studies. The study used an analytical cross-sectional design involving a survey of 428 MFI customers using a semi-structured questionnaire. Structural equation modeling (SEM) was employed for data analysis. The findings show that power (β = 0.432, p = 0.000), love (β = 0.114, p = 0.004), and freedom (β = 0.101, p = 0.02) significantly and positively affect over-indebtedness, while security (β = -0.243, p = 0.003) negatively and significantly affects over-indebtedness. This study provides an alternative way for MFIs to reduce over-indebtedness by focusing on borrowers’ attitudes towards money. This will, in turn, enhance loan repayment rates, sustainability of MFIs, poverty reduction and quality of life among MFI customers.

Suggested Citation

  • Pendo Shukrani Kasoga & Amani Gration Tegambwage, 2024. "The Effect of Attitudes Towards Money on Over-Indebtedness Among Microfinance Institutions’ Customers in Tanzania," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 19(3), pages 1365-1384, June.
    • Handle: RePEc:spr:ariqol:v:19:y:2024:i:3:d:10.1007_s11482-024-10294-0
    DOI: 10.1007/s11482-024-10294-0
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    References listed on IDEAS

    as
    1. French, Declan & McKillop, Donal, 2016. "Financial literacy and over-indebtedness in low-income households," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 1-11.
    2. Paul, Justin & Criado, Alex Rialp, 2020. "The art of writing literature review: What do we know and what do we need to know?," International Business Review, Elsevier, vol. 29(4).
    3. Amani Gration Tegambwage & Pendo Shukrani Kasoga, 2023. "Strengthening customer loyalty through financial satisfaction in the banking industry," Nankai Business Review International, Emerald Group Publishing Limited, vol. 15(3), pages 461-477, October.
    4. Cesar Leandro, Julio & Botelho, Delane, 2022. "Consumer over-indebtedness: A review and future research agenda," Journal of Business Research, Elsevier, vol. 145(C), pages 535-551.
    5. Pendo Shukrani Kasoga, 2021. "Heuristic biases and investment decisions: multiple mediation mechanisms of risk tolerance and financial literacy—a survey at the Tanzania stock market," Journal of Money and Business, Emerald Group Publishing Limited, vol. 1(2), pages 102-116, November.
    6. Amani Gration Tegambwage & Pendo Shukrani Kasoga, 2022. "Loan repayment among group borrowers in Tanzania: the role of relationship quality," Future Business Journal, Springer, vol. 8(1), pages 1-11, December.
    7. MacKenzie, Scott B. & Podsakoff, Philip M., 2012. "Common Method Bias in Marketing: Causes, Mechanisms, and Procedural Remedies," Journal of Retailing, Elsevier, vol. 88(4), pages 542-555.
    8. Pendo Shukrani Kasoga & Amani Gration Tegambwage, 2022. "Psychological traits and investment decisions: the mediation mechanism of financial management behavior – evidence from the Tanzanian stock market," Journal of Money and Business, Emerald Group Publishing Limited, vol. 2(2), pages 213-227, September.
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    More about this item

    Keywords

    Customer attitude; Money; Over-indebtedness; Poverty reduction; Quality of life;
    All these keywords.

    JEL classification:

    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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