Determination of Propensity to Indebtedness
Abstract
The purpose of this study was to determine the determinants that influence the propensity to indebtedness in the millennial generation who live in Jakarta. This study took a sample of 200 respondents from the millennial generation and who live in the city of Jakarta who were collected through a questionnaire using a convenience sampling technique. The data that has been successfully collected is then processed using the PLS-SEM data analysis method. The research design uses a quantitative method with a descriptive approach. This study uses a structural equation model (SEM) with SmartPLS Version 3.3.2 software as a data analysis tool. The results of this study illustrate that there is a negative effect of financial literacy on the propensity to indebtedness. Materialism has a positive effect on the propensity to indebtedness. Meanwhile, risk perception has a negative effect on the propensity to indebtedness and money value has no effect on the propensity to indebtedness.
References
Azma, N., Rahman, M., Adeyemi A.A., & Rahman M.K. (2018). Propensity toward indebtedness: evidence from Malaysia. Review of Behavioral Finance, 11(2), 188-197.
Doosoti, B.A., & Karampour, A. (2017). The impact of behavioral factors on propensity to indebtedness. Journal of advances in computer engineering and technology, 3(3), 145-152.
Flores, S.A.M., & Vieira K. M. (2014). Propensity toward indebtedness: An analysis using behavioral factors. Journal of Behavioral and Experimental Finance 3, 1–10.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate Data Analysis. United Kingdom: Pearson Education.
Muzafari, S., Mowlaie, S., & Bahmani, K. (2016). Relationship between Materialism and Financial Risk with the Mediating Role of Emotions and Indebtedness. Journal of Ecophysiology and Occupational Health, 98-102.
Ottaviani, C., & Vandone, D. (2010). Impulsivity and household indebtedness: evidence from real life. Journal of Economic Psychology, 754-761.
Potrich, A.C.G., & Vieira, K.M. (2018). Demystifying financial literacy: a behavioral perspective analysis. Demystifying financial literacy, Management Research Review, 41(9), 1047-1068.
Rahman, M., Azma N., Masud, Md. A. K., & Ismail, Y. (2020). Determinants of Indebtedness: Influence of Behavioral and Demographic Factors. International Journal of Financial Studies, 10.
Richins, M.L., & Dawson, S.A. (1992). Consumer values orientation for materialism and its measurement: Scale development and validation. Journal of Consumer Research, 303-316.
Tatzel, M. (2002). Money worlds and well-being: an integration of money dispositions, materialism and price-related behaviour. Journal of Economic Psychology, 103-126.
L.A. (2004). Consumers’ financial decisions and the psychology of values.Journal of Financial Service Professionals, 58(6), 68-77.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Copyright for this article is retained by the author(s), with first publication rights granted to the journal. This is an open-access article distributed under the terms and conditions of the Creative Commons Attribution license (https://creativecommons.org/licenses/by-nc-nd/4.0/).
