Propensity toward indebtedness: evidence from Malaysia

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.

Citation

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. https://doi.org/10.1108/RBF-05-2017-0046