The research objectives for the issue of increased credit card spending among the working population of Malaysia are to determine the factors responsible for the increase in credit card spending and to evaluate the relation between the factors.
The research questions associated with the issue of increased credit card spending are reflective of the role of consumer attitude in determining the spending behaviour and what are the external factors are responsible for the rise in consumer spending.
The concept of business evolved with the introduction of standard entities suited for exchange. In ancient times, grains, copper coins or jewellery were used as currency and were exchanged for products and services. The gradual progress of human civilization brought the standard forms of currency as they are known today. As per Bassa, Lusardi and Yakoboski, consumer credit was provided even in ancient times. Probably a thousand-year-old industry, the domain of credit cards has witnessed usurers and pawnbrokers (Bassa, Lusardi & Yakoboski, 2014). These agencies and individuals were dealing with a small base of borrowers. However, the trend of credit cards has marked the onset of a new phenomenon through which the masses can borrow money. Credit card spending has been facilitated by liquidity which was the earlier reason for inhibition among consumers for spending.
As per the research of Jusoh and Lin, the four major variables which have a dominant effect on consumer credit card spending in Malaysia are self-esteem, materialism, compulsive buying and budget constraints (Jusoh & Lin, 2012). The above factors are interrelated to each other with respect to credit card spending and in this case, the compulsive buying factor is the independent variable and can have varying impacts on the other three. A detailed description of each variable is provided below for an understanding of the issue and the scope of the research.
Self-esteem can be defined as the personal apprehension of the feelings of an individual about personal worth. The degree of self-esteem denotes the positive impression a person has about oneself. The implications of self-esteem allow an individual to look for the perceptions of people in the surrounding environment. Modern society has changed conventional definitions of power and now increased wealth is an indicator of power. Kim and Chatterjee say that the self-esteem of a person also comprises the status of the individual which is reflected in the products owned by an individual rather than the person’s professional and personal identity. Compulsive buying is promoted by attacks on self-esteem (Kim & Chatterjee, 2013). If individuals find that they do not have substantial resources to buy products for their status, they will buy products by using credit cards. Hence self-esteem is a major indicator of credit card spending behaviour among working adults in Malaysia.
Materialism is denoted as the innate desire of an individual for material objects or worldly possessions. Individuals who prefer materialism are specific about their buying choices and they view purchasing new goods as a personal objective. Materialistic buyers also face the highest risks of compulsive buying since they are less likely to be satisfied with products which will prompt them to buy more.
Budget constraints comprise price and income which are major determinants for compulsive buying. According to Ming, Chong and Mid, compulsive buying is observed in working adults in Malaysia and the primary reason included budget constraints (Ming, Chong & Mid, 2013). If the constraints are strict for people with low disposable income, then the chances of credit card expenditure decrease. However, higher disposable income can promote compulsive buying.
Compulsive behaviour is an independent variable among all the four variables considered as reasons for the increase in credit card spending among working adults in Malaysia. Compulsive behaviour is attached to the inherent traits of a human being. Compulsive buying is reflective of the consistent urge to buy something or the other without any specific reason to buy. Omar says that compulsive buying has been termed as a predominant cause for credit debt (Omar et al., 2014). The impact of the other variables on the compulsive buying factor has been mentioned above which shows that compulsive buying is exhibited for countering low self-esteem, addressing materialistic needs and coping with budget limitations.
The key objective of this research is to find the impact of self-esteem, budget constraints and materialism on the compulsive credit card expenditures among the working class of adults in Malaysia. The research model is derived from various studies of researchers in the past. The dependent and independent variables are considered aptly for the evaluation of the research. The primary model represents the impact of four variables or themes on compulsive buying (Seligman et al., 2014). Apart from the three factors mentioned above, impulsive buying also has a dominant effect on compulsive credit card expenditures and credit card misuse.
The research methodology involved the distribution of a questionnaire survey among different locations of the Klang Valley. The empirical data was collected from different sources i.e. working adults in the neighbourhood. The selected respondents had access to a minimum of one credit card despite the differences between government and private sector employees. Approximately 300 questionnaires were distributed in the locality of the Klang valley (Serido et al., 2014). The replies of various respondents were statistically represented in the form of means, frequencies and percentages in order to determine the demographic and economic variations which have an impact on credit card spending (Xiao, Chatterjee & Kim, 2014).
The data collection methods are clearly observed from the research methodology section and they are found to be quantitative. Evaluation of consumer expenditures and their relations with the different factors mentioned in the research is possible only through a quantitative approach.
The strategy for the research is based on the different hypotheses which can be formulated from the research model. The research model highlights specific relations between the dependent and independent variables. The independent variables include compulsive buying and credit card misuse which can be combined to reflect the impression of higher credit card expenditures (Shim et al., 2013). For example, a decrease in the self-esteem of a person leads to compulsive credit card expenses in order to conceal low self-esteem.
The sampling process and techniques followed for data collection are as follows. The respondents were sampled in a specific location in the Klang Valley which is the site of the target population. The Klang Valley is located near Kuala Lumpur, the capital city of Malaysia and is home to numerous working civilians.
The survey questionnaire was handed out to almost 300 people out of whom only 230 responses were obtained. The responses were refined to find the questionnaires which had appropriate responses for all the variables considered for the research (Sotiropoulos & d’Astous, 2013). The demographics of the respondents were analyzed and it was found that men and women comprised of equivalent proportions of the population. The incomes and academic qualifications of different respondents were also noted from the survey results.
The results showed different perspectives on the pressing issue of research. First of all, the respondents claimed credit card knowledge and the increase in the number of credit card companies as a major influence on credit card expenditures. Thereafter, the four major variables as mentioned in the report above have a prominent effect on the independent variables of credit card expenditures. The research design implicated the collection of research data from samples of the population (Taft et al., 2013). The objective of sampling was achieved by selecting Klang Valley as the location for the survey. The data collection methods included a collection of respondent data in various formats such as socio-demographic and economic facets of the patterns of credit card expenses.
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