THE CRITICAL FACTORS INFLUENCING CONSUMER SPENDING BY USING CREDIT CARD

Authors

  • Siti Norbaya Yahaya Universiti Teknikal Malaysia Melaka
  • Mohd Hafiz Bakar Universiti Teknologi MARA

Abstract

In Malaysia, credit card outstanding balance is in a rise and credit card is used widely as a payment instrument. One of the reasons that contribute to the popularity of credit card is Malaysian consumers possessed a positive attitude towards the facility provided by credit cards. In this research, the researcher intended to study on the critical factors influencing consumer spending by using credit cards. Economics, social and technological factors are identified as the factors influencing consumer spending by using credit cards. Besides, descriptive and explanatory studies are applied in this study. This study is conducted using quantitative method. Primary data will be obtained using survey by distributing questionnaire to credit card holders. Furthermore, probability sampling will be applied for selecting 384 respondents. Pilot test, reliability analysis will be done to ensure the consistency of the data. In addition, the results obtained from respondents will be analysed using Statistical Package for Social Sciences (SPSS). Descriptive statistics, Pearson’s correlation coefficient and multiple regression analysis are used to test hypothesis developed by the researcher. From the result, economic, social and technological factors have significant relationship in influencing consumer spending by using credit cards and technological factor is the most significant factor influencing consumer spending by using credit cards. In future research, the researchers can use the proposed new conceptual framework to carry out the study or add other variables for the study.

References

Abdul-Razak, M.N. (2009). The 2010 Budget Speech, available at: http://www.bnm.gov.my/files/budget2010_en_new.pdf (accessed on December 2018).

Ahmed, Z.U., Ismail, I., Sohail, M.S., Tabsh, I. and Alias, H. . (2010). Malaysian consumers’ credit card usage behaviour. Asia Pacific Journal of Marketing and Logistics, Vol. 22 No. 4, pp. 528-44.

Amin, H. . (2008). Factors affecting the intentions of customers in Malaysia to use mobile phone credit cards. Management Research News, 31(7), 493-503.

Amin, H. (2012). Patronage Factors of Malaysian Local Customers toward Islamic Credit Cards. Management Research Review, 35(6), 512 - 530.

Applegate, K. E., Tello, R., & Ying, J. . (2003). Hypothesis testing III: counts and medians. Radiology, 228(3), 603-608.

Awanis, S., & Cui, C. C. . (2014). Consumer susceptibility to credit card misuse and indebtedness. Asia Pacific Journal of Marketing and Logistics, 26(3), 408–429. doi:10.1108/APJML-09-2013-0110.

Baddeley, M. (2004). . (2004). Using e-cash in the new economy: An economic analysis of micro-payment systems. Journal of Electronic Commerce Research, 5(4), 239-253.

Bank Negara Malaysia . (2010). Credit Cards Operations in Malaysia. Monthly Statistical Bulletin, Bank Negara Malaysia, Kuala Lumpur, Malaysia.

Bank Negara Malaysia . (2015). Economic Developments in 2015. available at: http://www.bnm.gov.my/files/publication/ar/en/2015/cp01.pdf (accessed on 8 December 2018).

Bank Negara Malaysia . (2018). Credit Card Operations at Malaysia. available at: http://www.bnm.gov.my/files/publication/msb/2018/10/xls/1.30.xls (accessed on 8 December 2018).

Bank Negara Malaysia . (2018). Number of Cards and Users of Payment Instruments. available at: http://www.bnm.gov.my/index.php?ch=34&pg=163&ac=3&bb=file (accessed on 8 December 2018).

Bernthal, M.J., Crockett, D. & Rose, R.L. . (2005). Credit cards as lifestyle facilitators. The Journal of Consumer Research, 32, 130–145.

Calem, P.S. & Mester, L.J. . (1994). Consumer behaviour and the stickiness of credit card interest rates. Working papers, Rodney L. White Centre for Financial Research, Wharton School, Philadelphia, PA, pp. 3-94.

Chakravorti, S., & Emmons, W. . (2001). Who pays for credit cards? Federal Reserve Bank of Chicago, No. EPS-2001-1.

Chan, L. L., & Idris, N. (2017). Validity and Reliability of The Instrument Using Exploratory Factor Analysis and Cronbach’s alpha. International Journal of Academic Research in Business and Social Sciences, 7(10), 400-410.

Chellappa, R. K., & Pavlou, P. A. (2002). Perceived information security, financial liability and consumer trust in electronic commerce transactions. Logistics Information Management, 15(5/6), 358-368.

Chien, Y.& DeVaney, S. A. . (2001). The effects of credit attitude and socioeconomic factors on credit card and instalment debt. The Journal of Consumer Affairs, Vol. 35, pp.162–179.

Chou, Y., Lee, C., & Chung, J. . (2004). Understanding m-commerce payment systems through the analytic hierarchy process. Journal of Business Research, 57(12), 1423-1430.

Eagly, A. H., & Chaiken, S. . (2007). The advantages of an inclusive definition of attitude. Social cognition, 25(5), 582-602.

Eastin, M. S. . (2002). Diffusion of e-commerce: an analysis of the adoption of four e-commerce activities. Telematics and informatics, 19(3), 251-267.

Effah Nyamekye, G., & Adusei Poku, E. . (2017). What is the effect of inflation on consumer spending behaviour in Ghana? University Library of Munich, Germany.

Feinberg, R. A. . (1986). Credit cards as spending facilitating stimuli: A conditioning interpretation. Journal of consumer research, 13(3), 348-356.

Flavián, C., & Guinalíu, M. . (2006). Consumer trust, perceived security and privacy policy: three basic elements of loyalty to a web site. Industrial Management & Data Systems, 106(5), 601-620.

Foscht, T., Maloles, C. III, Swoboda, B. & Chia, S.L. . (2010). Debit and credit card usage and satisfaction: who uses which and why – evidence from Austria. International Journal of Bank Marketing, Vol. 28 No. 2, pp. 150-65.

Gan, L. L., & Maysami, R. C. . (2006). Credit card selection criteria: Singapore perspective . Nanyang Technological University, School of Social Sciences, Economic Growth Centre, No. 0610.

Geanakoplos, J., & Dubey, P. . (2010). Credit cards and inflation. Games and Economic Behavior, 70(2), 325-353.

Gross, D. B., & Souleles, N. S. . (2002). Do liquidity constraints and interest rates matter for consumer behaviour? Evidence from credit card data. The Quarterly Journal of Economics, 117(1), 149-185.

Gu, J. C., Lee, S. C., & Suh, Y. H. . (2009). Determinants of behavioral intention to mobile banking. Expert Systems with Applications, 36(9), 11605-11616.

Hair, J. F., Anderson, R. E., Babin, B. J., & Black, W. C. (2010). Multivariate Data Analysis: A Global Perspective. (Vol. 7).

Harari, D. . (2017). Household debt: statistics and impact on economy . House of Commons Library Briefing, Paper Number 7584, 12 June 2017.

Hayashi, F. (2012). . (2012). Mobile payments: What's in it for consumers? . Economic Review-Federal Reserve Bank of Kansas City, 35.

Hox, J. J., & Boeije, H. R. . (2005). Data collection, primary versus secondary.

Hsu, C. L., & Lu, H. P. (2004). Why do people play on-line games? An extended TAM with social influences and flow experience. Information & management, 41(7), 853-868.

Hunt, L. . (2009). Credit card holders have to pay service tax or use points. The Star, December 29, available at: https://www.thestar.com.my/business/business-news/2009/12/29/credit-card-holders-have-to-pay-service-tax-or-use-points/ (accessed 8 December 2018).

Kaynak, E., & Harcar, T. . (2001). Consumers' attitudes and intentions towards credit card usage in an advanced developing country. Journal of Financial Services Marketing, 6(1), 24-39.

Khan, M. R., Hossain, S. K., & Rabbi, M. M. I. . (2018). The Strategic Environment Analysis of Islami Bank Bangladesh Limited (IBBL).

Khare, A., Khare, A., & Singh, S. . (2012). Factors affecting credit card use in India . Asia Pacific Journal of Marketing and Logistics, 24(2), 236–256.

Kothari, C. R. . (2004). Research methodology: Methods and techniques. New Age International.

Krejcie, R. V., & Morgan, D. W. . (1970). Determining sample size for research activities. Educational and psychological measurement, 30(3), 607-610.

Kukat, C. . (2014). Opening Credit Card Clearing in China: A two-part analysis. . Note from the Editor 3, 50.

Kumar, R. (2011). Research methodology: A step-by-step guide for beginners. Los Angeles: SAGE.

Laidler, D. E., & Parkin, J. M. . (1977). Inflation: a survey. In Surveys of Applied Economics , pp. 169-237 Palgrave Macmillan, London.

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.

Lee, C. P., Warkentin, M., & Choi, H. (2004). The Role of Technological and Social Factors on the Adoption of Mobile Payment Technologies. AMCIS 2004 Proceedings, 333.

Loke, Y.J. . (2007). Determinants of merchant participation in credit card payment schemes. Review of Network Economics, Vol. 6 No.4, pp.474-94.

Lombardi, M, M Mohanty & Shim . (2017). The real effects of household debt in the short and long run. BIS Working Papers, no 607, January.

Mallat, N., Rossi, M., & Tuunainen, V. K. (2004). Mobile Banking Services. Communications of the ACM, 47(5), 42-46.

Mansor, N. and Mat, A. C. (2009). Islamic Credit Card: Are Demographic Factors a Good Indicator? Asian Social Science, 5(12), P17.

Muijs, D. . (2010). Doing quantitative research in education with SPSS. SAGE.

Newman, I., & Benz, C. R. . (1998). Qualitative-quantitative research methodology: Exploring the interactive continuum. SIU Press.

Nisar, T. M., & Prabhakar, G. (2017). What Factors Determine e-satisfaction and Consumer Spending in e-commerce Retailing? Journal of Retailing and Consumer Services, 39, 135-144.

Norvilitis, J. M., Szablicki, P. B., & Wilson, S. D. . (2003). Factors influencing levels of credit‐card debt in College Students. Journal of Applied Social Psychology, 33(5), 935-947.

Paquin, P., & Weiss, M. S. . (1998). Personal bankruptcies: study finds four key determinants. Journal of Retail Banking Services, 20(1), 49-56.

Phau, I., & Woo, C. . (2008). Understanding compulsive buying tendencies among young Australians: The roles of money attitude and credit card usage. Marketing Intelligence & Planning, 26(5), 441-458.

Pirog, S. F., & Roberts, J. A. (2007). Personality and credit card misuse among college students: The mediating role of impulsiveness. Journal of Marketing Theory and Practice, 15(1), 65-77.

Prelec, D. & Simester,D. . (2001). Always leave home without it: a further investigation of the credit card effect on willingness to pay. Marketing Letters, Vol. 12 No. 1, pp.5-12.

Prelec, D. and Simester,D. . (2001). Always leave home without it: a further investigation of the credit card effect on willingness to pay. Marketing Letters, Vol. 12 No. 1, pp.5-12.

Rani, A. M. S., Nordin, B. S. H., Lau, C. C., Lim, S. L., & Siow, Z. S. . (2017). Rich Debt, Poor Debt: Assessing Household Indebtedness and Debt Repayment Capacity. BIS Paper, No. 9, 153-168.

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

Roberts, J. A. . (1998). Compulsive buying among college students: an investigation of its antedecents, consequences, and implications for public policy. Journal of consumer affairs, 32(2), 295-319.

Roberts, J.A. and Jones, E. . (2001). Money attitudes, credit card use and compulsive buying among American college student. Journal of Consumer Affairs, Vol. 35 No. 2, pp. 213-240.

Royal Malaysian Customs Department . (2018). Guide on Charge Card & Charge Card. available at: https://mysst.customs.gov.my/assets/document/Guide%20On%20Credit%20Card%20And%20Charge%20Card.pdf (accessed on 8 December 2018).

Royne Stafford, M. (1996). Demographic Discriminators of Service Quality in the Banking Industry. Journal of Services Marketing, 10(4), 6-22.

Salami, FK. . (2018). Effect of Interest Rate on Economic Growth: Swaziland as a Case Study. Journal of Business & Financial Affairs, 07(03). doi:10.4172/2167-0234.1000345.

Saunders, M., Lewis, P., & Thornhill, A. . (2016). Research methods for business students. Pearson Education.

Semuel H, and Nurina S. . (2015). Analysis of the effect of inflation, interest rates, and exchange rates on Gross Domestic Product (GDP) in Indonesia. Proceedings of the International Conference on Global Business, Economics, Finance and Social Sciences .

Shah, K. . (2014). Melaka Green City Initiatives Melaka Develop State Phase II. [Online]. . Available at: http://www.asialeds.org/sites/default/files/resource/file/Green_city_action_plan-Datuk-H.-Kamarudin.pdf.

Soman, Dilip . (2003). The Effect of Payment Transparency on Consumption: Quasi-Experiments from the Field. Marketing Letters, 14 (3), 173–83.

Stávková, J., Stejskal, L., & Toufarová, Z. (2008). Factors Influencing Consumer Behaviour. Zemedelska Ekonomika-Praha, 54(6), 276.

Steindel, C. . (2001). The effect of tax changes on consumer spending. Current Issues in Economics and Finance, 7(11), 1.

Sufian, F. . (2009). Factors influencing bank profitability in a developing economy: Empirical evidence from Malaysia. Global Business Review, 10(2), 225-241.

Swartz, N. . (2001). Mandatory m-wallets. Wireless Review, Vol. 18 No. 6, pp.74-80.

Syed Shah Alam, R. A. (2014). What Influence Credit Card Debts in Young Consumers In Malaysia. Journal of Public Administration, Finance and Law.

Tan, J., Chua, W. L., Chow, C. K., Chong, M. C., & Chew, B. C. (2012). PESTLE Analysis on Toyota Hybrid Vehicles. J. Academia Edu.

Tavakol, M., & Dennick, R. . (2011). Making sense of Cronbach's alpha. International Journal of Medical Education, 2, 53.

Teoh, W. M. Y., Chong, S. C., & Yong, S. M. (2013). Exploring the factors influencing credit card spending behaviour among Malaysians. International Journal of Bank Marketing , 31 (6), 481- 500.

Teoh, W. M. Y., Chong, S. C., Lin, B., & Chua, J. W. . (2013). Factors affecting consumers' perception of electronic payment: An empirical analysis. Internet research: Electronic networking applications and policy. 23(4), 465-485.

Thomas, L.C., Oliver, R.W. & Hand, D.J. . (2005). A survey of the issues in consumer credit modelling research. Journal of the Operational Research Society, 56, 1006–1015.

Wang, J., & Xiao, J. J. . (2009). Buying behavior, social support and credit card indebtedness of college students. International Journal of Consumer Studies, 33(1), 2-10.

Warwick, J., & Mansfield, P. . (2000). Credit card consumers: College students’ knowledge and attitude . Journal of Consumer Marketing, 17(7), 617-626.

Wickramasinghe, V., & Gurugamage, A. . (2012). Effects of social demographic attributes, knowledge about credit cards and perceived lifestyle outcomes on credit card usage. International Journal of Consumer Studies, 36(1), 80-89.

Yayar, R., & Karaca, S. S. . (2012). Identifying the factors affecting the consumer credit card ownership: empirical evidence from Turkey. Journal of Applied Economic Sciences, 7(2), 195-204.

Yong, A. G., & Pearce, S. (2013). A Beginner’s Guide to Factor Analysis: Focusing on Exploratory Factor Analysis. Tutorials in Quantitative Methods for Psychology, 9(2), 79-94.

Downloads

Published

2020-12-02

How to Cite

Yahaya, S. N., & Bakar, M. H. (2020). THE CRITICAL FACTORS INFLUENCING CONSUMER SPENDING BY USING CREDIT CARD. The Journal of Technology Management and Technopreneurship (JTMT), 8(1), 117–128. Retrieved from https://jtmt.utem.edu.my/jtmt/article/view/6026

Issue

Section

Journal of Technology Management and Technopreneurship