Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia
Over-indebtedness in relation to consumer loans represents an important issue for consumers as it impacts their financial well-being. Identifying the risk factors associated with over-indebtedness is crucial in overcoming this problem. Existing literature shows that behavioral biases influence indiv...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2024.2449191 |
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| author | Fazelina Sahul Hamid |
| author_facet | Fazelina Sahul Hamid |
| author_sort | Fazelina Sahul Hamid |
| collection | DOAJ |
| description | Over-indebtedness in relation to consumer loans represents an important issue for consumers as it impacts their financial well-being. Identifying the risk factors associated with over-indebtedness is crucial in overcoming this problem. Existing literature shows that behavioral biases influence individuals’ financial decision making. This study analyses the relationship between behavioral biases and over-indebtedness among consumer loan holders in Malaysia. It aims to investigate whether self-control bias, overconfidence, mental accounting, and availability bias are linked to over-indebtedness. The analysis is done based on a sample of 433 credit card or personal loan holders. The results indicate that self-control bias is linked to higher overall over-indebtedness. Meanwhile, overconfidence and mental accounting are linked to lower overall over-indebtedness. Availability bias is shown to worsen credit card debt repayment decisions. These findings highlight the need for financial education programs that address self-control issues and raise awareness of behavioral biases, helping consumers make more informed financial decisions. Additionally, policymakers in Malaysia can leverage these insights to design targeted strategies that reduce over-indebtedness in managing consumer loans. |
| format | Article |
| id | doaj-art-fb67000be1c94b718e54b502fab3f2bc |
| institution | Kabale University |
| issn | 2332-2039 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj-art-fb67000be1c94b718e54b502fab3f2bc2025-01-11T06:22:19ZengTaylor & Francis GroupCogent Economics & Finance2332-20392025-12-0113110.1080/23322039.2024.2449191Behavioral biases and over-indebtedness in consumer credit: evidence from MalaysiaFazelina Sahul Hamid0Bristol Business School, University of the West of England, Bristol, UKOver-indebtedness in relation to consumer loans represents an important issue for consumers as it impacts their financial well-being. Identifying the risk factors associated with over-indebtedness is crucial in overcoming this problem. Existing literature shows that behavioral biases influence individuals’ financial decision making. This study analyses the relationship between behavioral biases and over-indebtedness among consumer loan holders in Malaysia. It aims to investigate whether self-control bias, overconfidence, mental accounting, and availability bias are linked to over-indebtedness. The analysis is done based on a sample of 433 credit card or personal loan holders. The results indicate that self-control bias is linked to higher overall over-indebtedness. Meanwhile, overconfidence and mental accounting are linked to lower overall over-indebtedness. Availability bias is shown to worsen credit card debt repayment decisions. These findings highlight the need for financial education programs that address self-control issues and raise awareness of behavioral biases, helping consumers make more informed financial decisions. Additionally, policymakers in Malaysia can leverage these insights to design targeted strategies that reduce over-indebtedness in managing consumer loans.https://www.tandfonline.com/doi/10.1080/23322039.2024.2449191Behavioral biasself-controloverconfidencemental accountingavailability biasover-indebtedness |
| spellingShingle | Fazelina Sahul Hamid Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia Cogent Economics & Finance Behavioral bias self-control overconfidence mental accounting availability bias over-indebtedness |
| title | Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia |
| title_full | Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia |
| title_fullStr | Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia |
| title_full_unstemmed | Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia |
| title_short | Behavioral biases and over-indebtedness in consumer credit: evidence from Malaysia |
| title_sort | behavioral biases and over indebtedness in consumer credit evidence from malaysia |
| topic | Behavioral bias self-control overconfidence mental accounting availability bias over-indebtedness |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2024.2449191 |
| work_keys_str_mv | AT fazelinasahulhamid behavioralbiasesandoverindebtednessinconsumercreditevidencefrommalaysia |