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Propensity toward indebtedness: evidence from Malaysia

Nurul Azma, Mahfuzur Rahman, Adewale Abideen Adeyemi and Muhammad Khalilur Rahman

Review of Behavioral Finance, 2019, vol. 11, issue 2, 188-200

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.

Keywords: Indebtedness; Behavioural factor; Financial literacy; Materialism; Emotion; G32; G110; M300 (search for similar items in EconPapers)
Date: 2019
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