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Article
Publication date: 8 July 2019

Francisco Guzman, Audhesh Paswan and Niranjan Tripathy

Personal finance influences everything we buy and is a key driver of all economies. It has attracted significant research attention, mostly grounded in rational economics…

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Abstract

Purpose

Personal finance influences everything we buy and is a key driver of all economies. It has attracted significant research attention, mostly grounded in rational economics. However, it has not received adequate research attention in the consumer behavior literature. This study aims to address this gap by looking at some of the consumer-centric antecedents of short- and long-term personal financial planning, i.e. self-other orientation, cognitive style and time orientation.

Design/methodology/approach

A self-administered survey was used to collect data from full time employees. Hypotheses were tested using multiple regression analyses.

Findings

Both short- and long-term financial planning are positively associated with non-impulsive and analytical decision-making styles; whereas self and other orientation are only associated with short-term financial planning. Intuitive decision-making is not associated to either short- or long-term financial planning.

Research limitations/implications

While analytical and long-term orientation are still important for personal finance, in the short run, consumers are also driven by self and other orientation.

Practical implications

The results are relevant for both products and services that have long-term and short-term financial implications for consumers.

Originality/value

This study explores financial planning decision-making from a consumer behavior perspective, and addresses a gap in consumer behavior literature.

Details

Journal of Consumer Marketing, vol. 36 no. 6
Type: Research Article
ISSN: 0736-3761

Keywords

Article
Publication date: 24 May 2013

Taejun (David) Lee, TaiWoong Yun and Eric Haley

This research aims to examine the effects of financial services advertising disclosures by pairing a content analysis documenting how mandatory financial disclosures are presented…

3092

Abstract

Purpose

This research aims to examine the effects of financial services advertising disclosures by pairing a content analysis documenting how mandatory financial disclosures are presented in mutual fund advertisements with a between-subjects experiment assessing whether inclusion of the disclosures influences consumer responses to advertisement, brand and company evaluations.

Design/methodology/approach

This research examines the effects of financial services advertising disclosures by pairing a content analysis documenting how mandatory financial disclosures are presented in mutual fund advertisements with a between-subjects experiment assessing whether the inclusion of the disclosures influences consumer responses to the ad, brand and company.

Findings

The findings show more positive consumer responses for perceived advertising responsibility, recall, and cognitive response as well as higher risk perception when consumers are exposed to the financial disclosures in mutual fund advertisements. Also, the results indicate a mediating role of positive cognitive responses on attitude toward the mutual fund company only when consumers are exposed to advertising disclosures.

Originality/value

The paper extends knowledge of whether and how required information disclosures pertaining to mutual funds influence investors ' psychological responses in mutual fund advertising contexts. From a managerial perspective, it has implications for financial services advertising and other social marketing campaigns by uncovering the effects of advertising-as-information in financial decision-making. From a public policy standpoint, the paper is among the first to make explicit claims regarding the role of advertising disclosure in retail investment circumstances.

Details

Journal of Services Marketing, vol. 27 no. 2
Type: Research Article
ISSN: 0887-6045

Keywords

Article
Publication date: 31 May 2022

Yuanyuan (Gina) Cui

This research examines whether anthropomorphizing artificial intelligence (AI) chatbots alters consumers' risk preferences toward financial investment options involving…

1457

Abstract

Purpose

This research examines whether anthropomorphizing artificial intelligence (AI) chatbots alters consumers' risk preferences toward financial investment options involving differential risks.

Design/methodology/approach

An experimental approach has been adopted with three studies, all featuring a between-subjects design.

Findings

Through three studies, the findings document that, in a financial decision-making context, anthropomorphizing AI leads to significantly greater risk aversion in investment decision-making (Study 1). This occurs because AI-enabled chatbot anthropomorphization activates greater psychological risk attachment, which enacts consumers to manifest stronger risk aversion tendency (Studies 2 and 3).

Originality/value

Anthropomorphizing AI has undeniable relevance in the contemporary marketing landscape, such as humanoid robotics and emotion AI algorithms. Despite of anthropomorphism's significance and relevance, the downstream impact of anthropomorphism remains unfortunately underexplored.

Details

International Journal of Bank Marketing, vol. 40 no. 6
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 5 May 2021

Sungyong Chun and Devon S. Johnson

Consumers who experience social exclusion often prefer high-risk financial products over low-risk financial products. The aim of this study is to examine how this effect can be…

Abstract

Purpose

Consumers who experience social exclusion often prefer high-risk financial products over low-risk financial products. The aim of this study is to examine how this effect can be attenuated by applying the theories of mental budgeting and pain of payment. The authors’ aim in pursuing this research is to improve the effectiveness of financial professionals and others in educating consumers on healthy financial practices. Understanding how social exclusion experiences influence financial decision-making is essential for continued progress in consumer financial education.

Design/methodology/approach

The authors examine the effect of consumers experiencing social exclusion on preference for high-risk financial products using an experimental design involving the manipulation of social exclusion/inclusion experiences. Data were collected from 148 consumers of mutual fund investment services via Amazon Mechanical Turk.

Findings

The study found that consumers experiencing social exclusion are more likely to make high risk investments. It also found that this effect is moderated by consumers' level of mental budgeting such that at high levels of mental budgeting the effect of social exclusion on investment choice is attenuated. The study further finds that the moderating effect of mental budgeting is mediated by pain of payment.

Social implications

The findings of this study suggest that policymakers can reduce unduly risky personal investment behavior by triggering mental budgeting thoughts using methods such as advertising and explicit mention of transaction fees.

Originality/value

The present study builds on existing research demonstrating the adverse behavioral consequences of social exclusion but refines our understanding by demonstrating the attenuating effect of mental budgeting and the mediating effect of pain of payment on high risk financial purchases.

Details

International Journal of Bank Marketing, vol. 39 no. 5
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 13 February 2017

Jeanette Carlsson Hauff and Jonas Nilsson

Choosing how to invest one’s assets is one of the more important decisions consumers are faced with. However, determining the objective financial quality of complex investment…

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Abstract

Purpose

Choosing how to invest one’s assets is one of the more important decisions consumers are faced with. However, determining the objective financial quality of complex investment products such as mutual funds is not an easy task for consumers. Against this background, this study aims to clarify the potential impact of one, not necessarily rational, cue on consumer perceptions of financial quality in the investment context: the country-of-origin (COO) of the mutual fund or stock.

Design/methodology/approach

Two Web-based experiments are used to test the study’s hypotheses.

Findings

COO is found to impact investors’ evaluation of the financial metrics of mutual funds, both in terms of perceived risk and potential return. Moreover, the results of Experiment 2 show that although a strong financial brand can partially overcome the COO effect, the extent of this effect is moderated by whether the fund utilizes an active or passive management style.

Research limitations/implications

Although mutual fund providers with a strong financial country image (CI) may leverage that image and build on their home country’s brand, providers from countries with a poor financial CI may do well focusing on passive management to minimize negative COO influence.

Originality/value

The results highlight that COO can be an important source of sub-optimal investment decisions. These insights are of high importance for efforts to improve consumer decision-making and for individual service providers.

Details

European Journal of Marketing, vol. 51 no. 2
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 3 July 2017

Bruce A. Huhmann

Literacy represents one’s ability to process and produce materials related to a domain. One type of this higher-order, global individual difference variable is consumer financial

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Abstract

Purpose

Literacy represents one’s ability to process and produce materials related to a domain. One type of this higher-order, global individual difference variable is consumer financial literacy. It stems from one’s financial information processing capacity, prior financial knowledge, and proficiency in optimizing financial decisions and managing financial resources. The paper aims to discuss these issues.

Design/methodology/approach

The research matching perspective theoretically explains findings related to literacy, including those in this special issue. Optimal processing arises as available and required processing resources correspond. Thus, cognitive comprehension and behavioral application/decision-making outcomes following financial marketing communication exposure are optimized when consumer financial literacy matches the level needed for successful processing. Insufficient or excess available resources harm outcomes.

Findings

The resource-matching perspective clarifies consumers’ increasing financial difficulties. Consumers limit personal finance efforts because required resources overwhelm limited financial literacy. However, education or experience can expand consumer financial literacy. Alternatively, financial service marketers may accommodate low consumer financial literacy by simplifying financial information presentation. Consumers reward firms that show sensitivity to their domain-specific literacy limitations with stronger loyalty.

Research limitations/implications

Construct definition is vital to advance research. Yet, financial literacy has no generally accepted definition. This paper’s definitions should aid understanding of the psychological underpinnings of financial literacy’s components.

Originality/value

Much has been written about consumers’ inability to manage personal finances. This paper provides a unified, theoretical explanation for consumers increasing financial literacy difficulties and suggests ways that consumers, financial service providers, and public policy makers can overcome these difficulties.

Article
Publication date: 13 July 2015

Jaakko Aspara, Amitav Chakravarti and Arvid O. I. Hoffmann

This study aims to examine the interplay between focal and background goals in consumer financial decision-making and identify conditions that lead individuals to trade-off…

1096

Abstract

Purpose

This study aims to examine the interplay between focal and background goals in consumer financial decision-making and identify conditions that lead individuals to trade-off financial returns for background goals.

Design/methodology/approach

The current research reviews the relevant literature on consumer financial decision-making and goal systems theory to develop a set of hypotheses that is tested using three experiments.

Findings

The experiments show that individuals who have been subtly primed with self-expressive background goals, or experienced progress toward the focal goal of financial returns, accept lower financial returns for the opportunity to invest in stocks that allow for increased self-expression. Further, while subtly primed background goals exert a non-normative influence on investment decisions, explicit cues about an investment’s background goal-instrumentality create a backlash effect, and decrease individuals’ willingness to trade-off financial returns.

Research limitations/implications

Future research could confirm the robustness of the findings of the present research by using different priming tasks and alternative ways of making the background goal explicit to individuals.

Practical implications

To achieve greater attraction among individual investors, it helps to frame a financial product or stock in communications materials in a way that sends subtle signals with which investors can identify. Such signals could include stressing the product/company’s home country (addressing individuals’ patriotism) or a particular product domain (addressing individual investors’ desire for interesting/exciting current/future products).

Originality/value

While previous research suggests that investment choices may be influenced by self-expressive motivations, to date, it remains unclear whether and when individual investors are actually willing to trade-off the focal goal of maximizing financial returns for the opportunity to satisfy alternative background goals.

Details

European Journal of Marketing, vol. 49 no. 7/8
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 24 June 2022

V.K. Parvathy and Jyothi Kumar

Financial capability is considered to be an important concept that has drawn the attention of many world nations. While the literature suggests various studies on financial

Abstract

Purpose

Financial capability is considered to be an important concept that has drawn the attention of many world nations. While the literature suggests various studies on financial capability and financial wellbeing, focus on their combined significance has been limited. The purpose of this paper is to examine how financial capability affects the financial wellbeing of women in community-based organizations and how decision-making ability mediated this relationship.

Design/methodology/approach

In total, 1,000 women who are associated with the community-based organization – Kudumbashree in the state of Kerala, India participated in the survey-based study.

Findings

The structural equation modelling results show that there exists a significant relationship between financial capability and the financial wellbeing of women in CBOs. Further, decision-making ability was identified as a significant mediator in this relationship thus establishing a partial mediation effect.

Practical implications

The financial social workers can focus their activities on promoting financial capability and decision making aspects of women from middle/low income families to facilitate their financial wellbeing. The scope for financial socialisation and proper orientation is more for the women associated with the community based organisations. This opportunity can be made use by the government authorities and other practitioners to change their financial outlook and contribute towards the empowerment of these women from the grass root level.

Originality/value

The studies related to financial literacy and financial inclusion are available in the Indian context, but the conceptualization of financial capability is still an under-researched area in India. Hence, this study is an attempt to explain the capability-wellbeing relationship from a financial point of view in the Indian context, and further establishes its connection with the individual's decision-making ability. To strengthen the research base, the study was conducted among the women in the community-based organization who belong to middle and low-income families.

Details

Managerial Finance, vol. 48 no. 9/10
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 9 April 2020

David S. Dobson and Karolien Poels

Mortgage lenders often combine a variety of framing strategies when developing mortgage advertisements. To date, these frames have mostly been studied separately. This paper…

Abstract

Purpose

Mortgage lenders often combine a variety of framing strategies when developing mortgage advertisements. To date, these frames have mostly been studied separately. This paper, however, studies the combined framing effects of message valence, specificity, and temporality on consumers' mortgage decision-making.

Design/methodology/approach

A mixed methods design was used. First, 13 unique print ads collected from a Canadian newspaper were analyzed for content. Second, a 2 × 2 × 2 scenario-based experiment with 400 undergraduate participants examined the framing effects of valence, specificity and temporality on attitudes toward the mortgage advertising message, the product advertised, and the brand, as well as on consumers' behavioral intentions toward the advertised mortgage product.

Findings

The content analysis suggests that combined framing does exist in print ads. A positive message with a fixed term and a specific interest rate were the most commonly used frames. The experiment revealed that, for behavioral intentions, the main effect of the message temporality was significant. The effects of advertising a long-term mortgage on behavioral intentions were more favorable than those of advertising a short-term mortgage.

Practical implications

This research provides a combined framing model for designing advertising strategies for the financial services industry to market complex financial products, such as mortgage loans to consumers. This is relevant to lenders when designing a persuasive package or ads for potential customers.

Originality/value

This study is the first of its kind to investigate the effects of combinations of message frames on consumers' mortgage decision-making, while also advancing the understanding of message framing theory for the financial services industry.

Details

International Journal of Bank Marketing, vol. 38 no. 4
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 21 December 2022

Lachlan Schomburgk and Arvid Hoffmann

The purpose of this study is to examine how mindfulness reduces consumers’ buy-now-pay-later (BNPL) payment scheme usage and how that relates to their overall well-being.

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Abstract

Purpose

The purpose of this study is to examine how mindfulness reduces consumers’ buy-now-pay-later (BNPL) payment scheme usage and how that relates to their overall well-being.

Design/methodology/approach

This study uses partial least squares structural equation modeling to test the hypotheses of a conceptual framework which is rooted in the extant literature, using an approximately representative sample of Australian consumers (N = 275).

Findings

This study finds empirical evidence for the ability of mindfulness to reduce BNPL usage through increasing consumersfinancial self-control and decreasing their impulse buying tendency. This study also obtains empirical evidence that greater BNPL usage is associated with lower subjective evaluations of consumers’ overall well-being by increasing their current money management stress and decreasing their expected future financial security.

Research limitations/implications

Future research could build on the effect of mindfulness that the authors find in this study and how it could be leveraged as a protective mechanism for consumersfinancial decision-making. Such research could involve mindfulness-based interventions, such as instant messaging within smartphone applications. Doing so would also help assess causality, thus addressing the limitation of the cross-sectional nature of this study.

Practical implications

The findings have implications for public policymakers and business practitioners. Financial counselors are encouraged to include the measurement of personality traits such as impulse buying tendency and financial self-control in intake meetings with clients and consider the benefits of offering short mindfulness training. Given the negative effect of BNPL usage on consumersfinancial and overall well-being, and the reputational risks this implies, BNPL providers are recommended to take more responsibility to ensure consumers do not fall into a debt trap, while retailers are advised to take steps to make payment processes more “mindful.”

Originality/value

Although mindfulness has established effects on consumer behavior, its beneficial influence on consumer financial decision-making has rarely been explored. This study also contributes to a better understanding of the antecedents and consequences of consumers’ BNPL payment scheme usage. Although its prominence is increasing in daily life, and despite the concerns of consumer advocates, policymakers and regulators regarding its risks, the topic of consumers’ BNPL usage has received little attention in academic research so far. Finally, this study extends the emerging financial well-being literature by demonstrating how BNPL usage can reduce consumers’ overall well-being through the mediating effect of increasing current money management stress and decreasing expected future financial security.

Details

European Journal of Marketing, vol. 57 no. 2
Type: Research Article
ISSN: 0309-0566

Keywords

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