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Propensity toward indebtedness: evidence from Malaysia

Nurul Azma (Department of Accounting and Finance, Management and Science University, Shah Alam, Malaysia)
Mahfuzur Rahman (Department of Finance and Banking, University of Malaya, Kuala Lumpur, Malaysia)
Adewale Abideen Adeyemi (Department of Management Program, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Muhammad Khalilur Rahman (Department of Operation and Management Information Systems, University of Malaya, Kuala Lumpur, Malaysia)

Review of Behavioral Finance

ISSN: 1940-5979

Article publication date: 3 June 2019

Issue publication date: 24 June 2019




The purpose of this paper is to develop a model for studying the propensity towards indebtedness in Malaysia using behavioural factors.


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.


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.


The results of this study would be useful in helping design better models for credit offerings and addressing credit problems in the long run.



Azma, N., Rahman, M., Adeyemi, A.A. and Rahman, M.K. (2019), "Propensity toward indebtedness: evidence from Malaysia", Review of Behavioral Finance, Vol. 11 No. 2, pp. 188-200.



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