Determinants of credit card spending and debt of Chinese consumers

2019 ◽  
Vol 37 (2) ◽  
pp. 545-564 ◽  
Author(s):  
Liqiong Lin ◽  
Mohamad Dian Revindo ◽  
Christopher Gan ◽  
David A. Cohen
Keyword(s):  
Rapid Growth ◽  
Credit Card ◽  
Credit Cards ◽  
Demographic Characteristics ◽  
Chinese Government ◽  
Credit Card Debt ◽  
Chinese Consumers ◽  
Content Type ◽  
Positive Effects ◽  
Credit Card Use

PurposeThe rapid growth of credit card use in China poses the potential for card overuse and the accumulation of increased debt. The purpose of this paper is to report on an investigation into the determinants of overall credit card spending and card-financed debt by Chinese consumers.Design/methodology/approachThis study focusses on two dependent variables: credit card monthly spending and card debt. The spending measure is based on consumer outlay for the month preceding the survey. Card debt is the consumers’ outstanding credit card debt when the survey was conducted. Three groups of independent measures are used: socio-demographic characteristics, card features and consumer attitude towards money. Both card spending and card debt are estimated with OLS methods. Data was obtained from the 2013 China Household Finance Survey of 1,920 households in 29 provinces and 262 counties across China that used credit cards over the survey period.FindingsThe empirical findings suggest consumers’ attitude towards money is more important in explaining card spending and debt variation than socio-demographic characteristics and card features. The credit limit set for a card, obligations to other loans and the method of paying for ordinary shopping exhibit positive effects on both card spending and card debt, while age exhibits a negative effect. Further, card spending is positively correlated with card debts, but the factors that determine card spending do not necessarily affect card debt and vice versa. Minimum card debt payments, cash advances, card tenure and interest-bearing debt have no effect on card spending but have positive effects on card debt. In addition, gender and income have opposite effects on card spending and debt.Practical implicationsThe relationships we have documented suggest several actions the Chinese Government could consider dealing with credit card debt risk. Controlling the aggressive promotional campaigns that card issuers use to attract consumers and aggressive credit policies should be a focus of attention. The Chinese Government might, for example, impose minimum age and income requirements for granting credit cards and prohibit issuance of new cards to applicants who are already in debt with other types of credit. In addition, more stringent criteria to curb increases in card limits and tighter control over cash advances made on cards should be applied. Minimum payment amounts can also be increased in order to reduce credit card debt risk.Originality/valueDespite ample documentation of consumers’ credit card behaviour, the literature is deficient in at least two areas of enquiry. First, most previous research has investigated either credit card spending behaviour or card debt, but not both. Second, with few exceptions, most research has investigated a range of specific factors that affect credit card use. In contrast, this study investigates card spending as well as card debt behaviour using a wide variety of consumer dimensions particularly relevant to credit card use and resulting debt. In addition, this study focusses on Chinese consumers, who traditionally prefer to save first and delay spending. The impact of the rapid growth of credit card use on this traditional Chinese orientation towards spending is dynamic. Documenting the influence of the individual factors examined in this study is likely to be of value to both policy makers and institutions that offer and manage credit in this changing environment.

scholarly journals Credit card cue effect

2019 ◽  
Vol 38 (2) ◽  
pp. 368-383
Author(s):  
King Yin Wong ◽  
Michael Lynn
Keyword(s):  
Credit Card ◽  
Design Methodology ◽  
Credit Cards ◽  
Well Being ◽  
Financial Security ◽  
Consumer Spending ◽  
Content Type ◽  
Moderation Effect ◽  
Show Evidence

Purpose The extant literature has mixed results regarding the credit card cue effect. Some showed that credit card cues stimulate spending, whereas others were unable to replicate the findings or found that cues discourage consumer spending. The purpose of this paper is to investigate how consumers’ sensitivity to the pain of payment affects their mental associations about credit cards and how the differences in credit card associations moderate the credit card cue effect on spending, providing a possible explanation for the mixed results in the literature. Furthermore, this paper examines the role of consumers’ perceived financial well-being, measured by their perceptions of current and future wealth and their sense of financial security, in mediating this moderation effect. Design/methodology/approach An experimental study was conducted with a sample of 337 participants to test the hypothesized model. Findings After being shown credit card cues, spendthrift participants had more spending-related thoughts and less debt-related thoughts, perceived themselves as having better financial well-being and consequently spent more than tightwad participants. Originality/value To the authors’ knowledge, this is the first study to investigate the direct link between an exposure to credit card cues and perceived financial well-being, and one of the few to show evidence of the moderating effect of consumers’ sensitivity to the pain of payment on spending when credit card cues are present. This study suggests that marketers may use credit card cues to promote consumer spending, whereas consumers, especially spendthrifts, should be aware of how credit card cues may inflate their perceived financial well-being and stimulate them to spend more.

Does knowing overcome wanting? The impact of consumer knowledge and materialism upon credit card selection with young consumers

2015 ◽  
Vol 16 (1) ◽  
pp. 50-70 ◽  
Author(s):  
Jakob Cakarnis ◽  
Steve Peter D'Alessandro
Keyword(s):  
Comparative Study ◽  
Survey Research ◽  
Credit Card ◽  
Design Methodology ◽  
Credit Cards ◽  
Consumer Knowledge ◽  
Content Type ◽  
Young Professionals ◽  
The Impact ◽  
Selection Of

Purpose – This paper investigates the determinants of credit card use and misuse by student and young professionals. Critical to the research is the impact of materialism and knowledge on selection of the appropriate credit card. Design/methodology/approach – This study uses survey research and partial least squares to investigate credit card behaviors of students versus young professionals. Findings – In a comparative study of young professionals and students, it was found that consumer knowledge, as expected, leads to better consumer selection of credit cards. Materialism was also found to increase the motivation for more optimal consumer outcomes. For more experienced consumers, such as young professionals, it was found that despite them being more knowledgeable, they were more likely to select a credit card based on impulse. Originality/value – This paper examines how materialism may in fact encourage some consumers to make better decisions because they are more motivated to develop better knowledge. It also shows how better credit card selection may inhibit impulse purchasing.

Materialism and Credit Card Use by College Students

2000 ◽  
Vol 86 (2) ◽  
pp. 643-652 ◽  
Author(s):  
Mary Beth Pinto ◽  
Diane H. Parente ◽  
Todd S. Palmer
Keyword(s):  
College Students ◽  
Credit Card ◽  
Credit Cards ◽  
The United States ◽  
College Campuses ◽  
Spending Patterns ◽  
Significant Difference ◽  
Students Attitudes ◽  
The Relationship ◽  
Credit Card Use

Much has been written in the popular press on credit card use and spending patterns of American college students. The proliferation of credit cards and their ease of acquisition ensure that students today have more opportunities for making more credit purchases than any other generation of college students. Little is known about the relationship between students' attitudes towards materialism and their use of credit cards. A study was conducted at three college campuses in the northeastern part of the United States where a total of 1,022 students were surveyed. Students' attitudes toward use of credit and their credit card balances were evaluated relative to their scores on Richins and Dawson's Materialism Scale (1992). Our findings suggest no significant difference between those individuals scoring high versus low on the Materialism Scale in terms of the number of credit cards owned and the average balance owed. Individuals high on materialism, however, significantly differed in terms of their uses for credit cards and their general attitude toward their use.

Lending a hand: perceptions of green credit cards

2018 ◽  
Vol 36 (7) ◽  
pp. 1329-1346 ◽  
Author(s):  
Lei Huang ◽  
Julie Fitzpatrick
Keyword(s):  
Social Exchange ◽  
Undergraduate Students ◽  
Credit Card ◽  
Symbolic Interaction ◽  
Environmental Concern ◽  
Credit Cards ◽  
Medium Size ◽  
Content Type ◽  
The Usa ◽  
The Impact

Purpose The purpose of this paper is to explore the impact of donation amount and framing on financial products, this research investigates consumers’ attitudes and behaviors toward cause-related credit cards with different donation sizes and framing types. Design/methodology/approach This research investigates consumers’ perceptions of green credit cards using two experiments with a between-subject design (n =297) and a mixed design (n =238), respectively. All the participants, recruited from a major state university in the USA, are undergraduate students who use credit cards. Findings A medium-size donation optimizes the outcome of a cause-related credit card offer. Moreover, a donation framed as cash rewards has stronger effects on a consumer’s perception and consequent reactions to the “green” credit cards than an annual percentage rate framing. Finally, consumers with high levels of environmental concern and propensity to volunteer have stronger intention to adopt and are more likely to recommend the proposed credit card. Originality/value Building upon the theories of social exchange and symbolic interaction, this research is the first to provide empirical evidence regarding the application of volunteerism and perceived consumer effectiveness for financial institutions and their cause-related marketing campaign partners in selecting suitable environmental causes.

E-commerce gives exporters greater access to China

2019 ◽  
Keyword(s):  
Government Policy ◽  
Rapid Growth ◽  
Consumer Goods ◽  
Overseas Chinese ◽  
Chinese Consumers ◽  
Content Type ◽  
Cross Border ◽  
The Cross

Subject Cross-border e-commerce in China. Significance Cross-border e-commerce allows consumer goods companies outside China to sell directly to Chinese consumers without a formal legal presence in China. Government policy has supported the rapid growth of this industry while cracking down on unofficial channels. Impacts Consumer goods that cannot otherwise be sold in China can be sold through the cross-border e-commerce channel. Chinese e-commerce companies are increasing emphasis on their cross-border e-commerce platforms. Sales to overseas Chinese who resell products in China will become less important to well-known brands.

How website quality affects online impulse buying

2018 ◽  
Vol 30 (1) ◽  
pp. 235-256 ◽  
Author(s):  
Umair Akram ◽  
Peng Hui ◽  
Muhammad Kaleem Khan ◽  
Yasir Tanveer ◽  
Khalid Mehmood ◽  
...  
Keyword(s):  
Credit Card ◽  
Sales Promotion ◽  
Equation Modeling ◽  
Impulse Buying ◽  
Website Quality ◽  
Content Type ◽  
Impulse Purchases ◽  
The Impact ◽  
The Relationship ◽  
Credit Card Use

Purpose The purpose of this paper is to investigate the impact of website quality on online impulse buying behavior (OIBB) in China, and assess the moderating roles of sales promotion and credit card use. Design/methodology/approach An online and personal survey from 1,161 online shoppers belonging to three big cities of China – Beijing, Shanghai, and Nanjing – was conducted. A random sampling technique was utilized for data collection. Data were analyzed using validity and reliability tests, confirmatory factor analysis, and structural equation modeling. Findings Three major findings discovered are: first, the website quality positively affects the OIBB; second, the sales promotion significantly influences OIBB and acts as a strong moderator on the relationship between website quality and online impulse buying; and third, the online impulse purchases are positively influenced by use of credit card, and the use of credit card enhances the relationship between website quality and online impulse buying. Research limitations/implications First, the website quality positively affects the OIBB; second, the sales promotion significantly influences OIBB and acts as a strong moderator in the relationship between website quality and online impulse buying; and third, online impulse purchases are positively influenced by credit card use. Moreover, credit card use enhances the relationship between website quality and online impulse buying. Originality/value This research is the first to investigate the relationship between website quality and OIBB in China, with sales promotion and credit card use as moderators.

Consumer intention and credit card adoption in Vietnam

2018 ◽  
Vol 30 (4) ◽  
pp. 779-796 ◽  
Author(s):  
Oanh Dinh Yen Nguyen ◽  
John F. Cassidy
Keyword(s):  
Technology Adoption ◽  
Southeast Asia ◽  
Credit Card ◽  
Developing Economies ◽  
Strong Support ◽  
Credit Cards ◽  
Transitional Economy ◽  
Perceived Usefulness ◽  
Reference Source ◽  
Content Type

Purpose There is limited research on consumer intention and credit card adoption in the transitional economies of Southeast Asia. The purpose of this paper is to investigate the key elements that influence an individual’s intention of adopting credit cards in the transitional economy Vietnam. Design/methodology/approach A questionnaire was developed based on the technology adoption literature. After data cleaning, 595 responses were deemed valid. Factor analysis (EFA and CFA) was utilized on split samples, and a structural equation model developed to identify the influential technology adoption factors. Findings The analysis found strong support for the hypotheses theoretically developed. In the transitional economy of Vietnam, consumer’s intention to adopt credit cards was influenced by “Perceived usefulness (PU),” “Perceived ease of use (PEOU),” “subjective norm (SN),” “perceived self-efficacy (PSE)” and “Anxiety”. However, “perceived financial cost (PFC)” was not a significant factor. Research limitations/implications The use of cross-sectional data does not enable the analysis of time sequence of the determinants of consumer intention. Practical implications This research provides a body of knowledge on modern banking payment systems and credit card utilization factors in the transitional economy of Vietnam which has relevance for other transitional as well as developing economies of Southeast Asia, and is a good reference source for foreign investors, banks and card service companies. Originality/value To date, there are no studies that explore the interaction between “PU,” “PEOU,” “PFC,” “SN,” “PSE,” “Anxiety” and “Behavioral Intention” in the context of the Vietnamese credit card market, nor other transitional markets in Southeast Asia.

Self-Destructiveness and Credit Card Debt

1997 ◽  
Vol 81 (2) ◽  
pp. 634-634 ◽  
Author(s):  
Joseph Politano ◽  
David Lester
Keyword(s):  
College Students ◽  
Credit Card ◽  
Credit Cards ◽  
Credit Card Debt

In a sample of 41 college students, poor use of credit cards was not associated with a measure of general self-destructiveness.

scholarly journals The easy-money effect: credit card spending and hard-work reminders

2017 ◽  
Vol 34 (7) ◽  
pp. 541-551 ◽  
Author(s):  
King-Yin Wong ◽  
Michael Lynn
Keyword(s):  
Implicit Association Test ◽  
Credit Card ◽  
Design Methodology ◽  
Credit Cards ◽  
Association Test ◽  
Hard Work ◽  
Implicit Association ◽  
Consumer Spending ◽  
Content Type ◽  
Practical Implications

Purpose This research paper aims to examine the proposed easy-money effect of credit cards, which stimulates consumers to overspend. This paper shows how such an easy-money effect can be weakened. Design/methodology/approach In Study 1, an implicit association test was conducted with a sample of 169 participants to test the proposed credit card easy-money effect. In Study 2, experimental data were collected online from 365 participants to test the effectiveness of a hard-work reminder in weakening credit cards’ easy-money effect on consumer spending. Findings The proposed credit card easy-money effect exists, with spendthrift (ST) participants associating money with hard work less in the implicit association test after being presented with a credit card cue versus neutral cue. The results from Study 2 show that ST participants spent more on their dinner than tightwad participants when shown a credit card cue. However, this effect could be weakened when STs were also reminded of their hard work by a picture accompanied with words. Practical implications This paper suggests that credit cards’ spending-stimulating effect is due to consumers’ associations between credit cards and easy money. Based on this notion, this paper suggests conditions in which credit cards will stimulate more and less spending. Originality/value This is the first research attempt to examine the credit cards’ easy-money effect and the effectiveness of reminding consumers of their hard work to mitigate credit cards’ long-established spending-stimulating effect.

Do education sector credit cards differ with other credit cards in Malaysia?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md. Mahmudul Alam ◽  
Yusnidah Binti Ibrahim ◽  
Jaka Sriyana
Keyword(s):  
Credit Card ◽  
Credit Cards ◽  
Education Sector ◽  
Business Managers ◽  
Content Type ◽  
Staff Members ◽  
Secondary Sources ◽  
Different Types ◽  
Credit Card Market ◽  
Financial Regulatory

Purpose The credit card market is very large and segmented by targeting different types of consumers. One type of credit card is one that specifically targets people in the education sector, for instance, students, teachers and other staff members. This study aims to compare the features of education and other credit cards in Malaysia. Design/methodology/approach The study analyzes data concerning 234 credit cards by using descriptive statistics and a one-way analysis of variance test. Findings Out of 234 credit cards, this study found only two credit cards especially target education sector customers. The study evaluated 13 features of these credit cards and found that only 2 features are statistically significantly different from other conventional credit cards in Malaysia. These features are interest rate and cash withdrawal charge fees. Originality/value This is an original study based on the compilation of data from secondary sources. The findings will provide valuable insights to financial regulatory policymakers, academics and business managers.

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