A Field Research to Identify Psychological Factors Influencing the Debt Repayment Behavior in Turkey

Authors

DOI:

https://doi.org/10.5195/emaj.2018.156

Keywords:

Debt repayment, personality, attitude, psychological factors, qualitative method

Abstract

This research aims to exploratively search relevant psychological determinants for debt repayment behavior. In this regard, the research question is: Which psychological factors affect the debt repayment behavior? Some research in literature argue that the socio-economic factors alone may not be sufficient to explain debt and repayment behavior, and some other factors should be also utilized. This study will focus on psychological factors consisting of personality and attitudes. To the our best knowledge, in Turkey there is very limited amount of research conducted in this area and as one of the highest individual credit using countries it is essential to use psychological factors in credit risk evaluation processes. Thus, this research, examines effects of personality characteristics and attitude on debt repayment behavior in the context of Turkish culture, and is expected to fill a gap and to contribute to both national and international literatures. The study utilizes qualitative research methodology to explore psychological determinants and their effects on debt repayment behavior. In depth interview research methodology has been used to explore the personality characteristics and attitude influencing debt repayment behavior.  The research findings revealed that, the responsibility, long term orientation, sanction fear, sense of collectivism, rational decision making and risk aversion are main characteristics of regular payers, while external locus of control, irresponsibility, short term orientation,  irrational decision making, emotional imbalance are common characteristics of irregular payers. So, according to findings, , conscientious, time orientation, sanction fear, sense of collectivism, locus of control and decision making style can be enlisted as primary personal and attitudinal factors explaining the repayment behavior.

References

Achtziger, A., Hubert, M., Kenning, P., Raab, G. and Reisch, L. (2015). Debt out of control: The links between self-control, compulsive buying, and real debts. Journal of Economic Psychology 49:141–149.

Armstrong, D., Gosling, A., Weinman, J., & Marteau, T. (1997). The place of inter-rater reliability in qualitative research: an empirical study. Sociology, 31(3), p. 597-606.

Arya, S., Eckel, C. and Wichman, C. (2013). Anatomy of the credit score. Journal of Economic Behavior & Organization, 95:175– 185.

Denzin, N. K. (1978). The research act: a theoretical introduction to sociological methods. New York: Mcgraw Hill.

Dessart & Kuylen (1986). The nature, extent, cause and consequence of problematic debt situations. Journal of Consumer Policy, 9, 311–334.

Gathergood, J. (2012). Self-control, financial literacy and consumer over-indebtedness. Journal of Economic Psychology 33: 590–602.

Harrison, N., Agnew, S. Serido, J. (2015). Attitudes to debt among indebted undergraduates:A cross-national exploratory factor analysis. Journal of Economic Psychology, 46: 62-73.

Hofstede, G. (1980). Culture and organizations. International Studies of Management & Organization, 10(4), 15-41.

Jick, T. D. (1979). Mixing qualitative and quantitative methods: triangulation in action. Administrative Science Quarterly, 24(4), p. 602-611.

Kamleitner, B., Hoelzl, E. and Kirchler, E. (2012), Credit Use: Psychological perspectives on a multifaceted phenomenon. International Journal of Psychology, Vol.47, Issue1, pp.1-27.

Kaptan, Özgür Burak (2011), Bireysel kredilerin risk ve tüketici davranışı açısından analizi, Doktora Tezi, Ankara Üniversitesi / Sosyal Bilimler Enstitüsü / İşletme Anabilim Dalı, Ankara.

Kitzinger, Jenny (1995).Qualitative Research: Introducing Focus Groups. BMJ (Clinical research ed.), 311: 299-302.

Lea, E. G. S., Webley, P., & Levine, R. M. (1993). The economic psychology of consumer debt. Journal of Economic Psychology, 14, 85–119.

Lea, S. E., Webley, P., & Walker, C. M. (1995). Psychological factors in consumer debt: Money management, economic socialization, and credit use. Journal of economic psychology, 16(4), 681-701.

Livingstone, M. S., & Lunt, K. P. (1992). Predicting personal debt and debt repayment: Psychological, social and economic determinants. Journal of Economic Psychology, 13(1), 111–134.

Lusardi, A. and Tufano, P. (2009). Debt literacy, financial experiences, and overindebtedness, CFS Working Paper, No. 2009/08, (http://nbn-resolving.de/urn:nbn:de:hebis:30-63796)

McCrae, R. R., & Costa, P. T. (1987). Validation of the five-factor model of personality across instruments and observers. Journal of personality and social psychology, 52(1), 81.

Mewse, A.J., Lea, S.E.G. and Wrapson, W. (2010), First steps out of debt: Attitudes and social identity as predictors of contact by debtors with creditors. Journal of Economic Psychology 31:1021–1034.

Miles, M. B., & Huberman, A. M. (1984). Drawing valid meaning from qualitative data: Toward a shared craft. Educational researcher, 13(5), 20-30.

Norvilitis, M. J., Merwin, M. M., Roehling, V. P., Young, P., & Kamas, M. M. (2006). Personality factors, money attitudes, financial knowledge, and credit-card debt in college students. Journal of Applied Social Psychology, 36(6), 1395–1413.

Nyhus, E. K., & Webley, P. (2001). The role of personality in household saving and borrowing behaviour. European journal of personality, 15(S1), S85-S103.

Özkan, Canan (2014), Türkiye’de Kredi Kartı Kullanıcı Profili Ve Davranışı Analizi, Uzmanlık Yeterlilik Tezi, Türkiye Cumhuriyet Merkez Bankası Bankacılık ve Finansal Kuruluşlar Genel Müdürlüğü, Ankara.

Robb, A. C., & Sharpe, D. L. (2009). Effect of personal financial knowledge on college students’ credit card behavior. Journal of Financial Counseling and Planning, 20(1), 25–34.

Rogers, P., Rogers, D. and Securato, J.R. (2015). About Psychological Variables In Application Scoring Models. Revista de Administracao de Empresas, 55 (1): 38-49.

Shuchman, P., 1983. The average bankrupt: A description and analysis of 753 personal bankruptcy filings in nine states. Commercial Law Journal, 288-307.

Spector, P. E. (1982). Behavior in organizations as a function of employee's locus of control. Psychological bulletin, 91(3), 482.

Stone, B. and Maury, R. V. (2006), Indicators of personal Wnancial debt using a multi-disciplinary behavioral model. Journal of Economic Psychology 27: 543–556.

Stumm, S. O’Creevy, M.F. and Furnham, A. (2013). Financial capability, money attitudes and socioeconomic status: Risks for experiencing adverse financial events. Personality and Individual Differences 54:344–349.

Sullivan, AC., 1982. Consumer bankruptcy study II: Personal bankruptcy: Causes, costs, and benefits (Monograph No. 24). Purdue University: Credit Research Center.

Tokunaga, H. (1993). The use and abuse of consumer credit: Application of psychological theory and research. Journal of Economic Psychology, 14, 285–316.

Vieira, K.M., Rovedder de Oliveira, M.O. and Kunkel, F. I. R. (2016). The Credit Card Use and Debt: Is there a trade-off between compulsive buying and ill-being perception? Journal of Behavioral and Experimental Finance, 10:75–87.

Wang, L., Lu, W. and Malhotra, N.K.(2011), Demographics, attitude, personality and credit card features correlate with credit card debt: A view from China, Journal of Economic Psychology 32: 179–193.

Webley, P. (1994). The role of economic and psychological factors in consumer debt. In: Progress Report 21. VSB-CentER Savings Project, Tilburg University, the Netherland (In Wang et al., 2011,Demographics, attitude, personality and credit card features correlate with credit card debt: A view from China, Journal of Economic Psychology 32: 179–193).

Zhang, T., & DeVaney, S. A. (1999). Determinants of consumer’s debt repayment patterns. Consumer Interest Annual, 45, 65-70.

Zhu, Y. L., & Meeks, B. C. (1994). Effect of low-income families ability and willingness to use consumer-credit on subsequent outstanding credit balance. Journal of Consumer Affairs, 28(2), 403–422.

Downloads

Published

2019-01-16

Issue

Vol. 8 No. 2 (2018)

Section

Articles

License

Authors who publish with this journal agree to the following terms:

  1. The Author retains copyright in the Work, where the term “Work” shall include all digital objects that may result in subsequent electronic publication or distribution.
  2. Upon acceptance of the Work, the author shall grant to the Publisher the right of first publication of the Work.
  3. The Author shall grant to the Publisher and its agents the nonexclusive perpetual right and license to publish, archive, and make accessible the Work in whole or in part in all forms of media now or hereafter known under a Creative Commons Attribution 4.0 International License or its equivalent, which, for the avoidance of doubt, allows others to copy, distribute, and transmit the Work under the following conditions:
    1. Attribution—other users must attribute the Work in the manner specified by the author as indicated on the journal Web site;
    with the understanding that the above condition can be waived with permission from the Author and that where the Work or any of its elements is in the public domain under applicable law, that status is in no way affected by the license.
  4. The Author is able to enter into separate, additional contractual arrangements for the nonexclusive distribution of the journal's published version of the Work (e.g., post it to an institutional repository or publish it in a book), as long as there is provided in the document an acknowledgement of its initial publication in this journal.
  5. Authors are permitted and encouraged to post online a prepublication manuscript (but not the Publisher’s final formatted PDF version of the Work) in institutional repositories or on their Websites prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work. Any such posting made before acceptance and publication of the Work shall be updated upon publication to include a reference to the Publisher-assigned DOI (Digital Object Identifier) and a link to the online abstract for the final published Work in the Journal.
  6. Upon Publisher’s request, the Author agrees to furnish promptly to Publisher, at the Author’s own expense, written evidence of the permissions, licenses, and consents for use of third-party material included within the Work, except as determined by Publisher to be covered by the principles of Fair Use.
  7. The Author represents and warrants that:
    1. the Work is the Author’s original work;
    2. the Author has not transferred, and will not transfer, exclusive rights in the Work to any third party;
    3. the Work is not pending review or under consideration by another publisher;
    4. the Work has not previously been published;
    5. the Work contains no misrepresentation or infringement of the Work or property of other authors or third parties; and
    6. the Work contains no libel, invasion of privacy, or other unlawful matter.
  8. The Author agrees to indemnify and hold Publisher harmless from Author’s breach of the representations and warranties contained in Paragraph 6 above, as well as any claim or proceeding relating to Publisher’s use and publication of any content contained in the Work, including third-party content.

Revised 7/16/2018. Revision Description: Removed outdated link.