A Field Research to Identify Psychological Factors Influencing the Debt Repayment Behavior in Turkey

Abstract

This research aims to exploratively search relevant psychological determinants for debt repayment behavior. In this regard, the research question is: Which psychological factors affect the debt repayment behavior? Some research in literature argue that the socio-economic factors alone may not be sufficient to explain debt and repayment behavior, and some other factors should be also utilized. This study will focus on psychological factors consisting of personality and attitudes. To the our best knowledge, in Turkey there is very limited amount of research conducted in this area and as one of the highest individual credit using countries it is essential to use psychological factors in credit risk evaluation processes. Thus, this research, examines effects of personality characteristics and attitude on debt repayment behavior in the context of Turkish culture, and is expected to fill a gap and to contribute to both national and international literatures. The study utilizes qualitative research methodology to explore psychological determinants and their effects on debt repayment behavior. In depth interview research methodology has been used to explore the personality characteristics and attitude influencing debt repayment behavior. The research findings revealed that, the responsibility, long term orientation, sanction fear, sense of collectivism, rational decision making and risk aversion are main characteristics of regular payers, while external locus of control, irresponsibility, short term orientation, irrational decision making, emotional imbalance are common characteristics of irregular payers. So, according to findings, , conscientious, time orientation, sanction fear, sense of collectivism, locus of control and decision making style can be enlisted as primary personal and attitudinal factors explaining the repayment behavior.

Investigating Relationships among Personality Characteristics and Repayment Behavior: Quantitative Research in Turkey

“…In Turkey, a few researches have been conducted examining individual determinants of indebtment and repayment behaviors (Özşahin et al, 2018;Özkan, 2014;Kaptan, 2011). Furthermore, among those, the studies of Özkan (2014) and Kaptan (2011) focused on the effects of behavioral and demographic factors on credit card use, debt level, debt structure rather than direct relation between personality characteristics and repayment behavior.…”

“…Conscientiousness, characterized by self-discipline, self-efficacy, orderliness, achievementstriving and dutifulness, has been proposed as one of the determinants of debt repayment behavior in previous studies (e.g. Özşahin et al, 2018;Nyhus and Webley, 2001;Livingstone and Lunt, 1992). For example, Nyhus and Webley (2001) argue that conscientious persons would be expected to keep track of their finance, thus more prone to pay their debts.…”

“…This survey is continuation of a research previously conducted by Özşahin, Yürür and Coşkun (2018), which aimed to explore relevant psychological determinants for debt repayment behavior. They have conducted a qualitative and explorative research to reveal personal characteristics that affect debt repayment behavior in Turkey.…”

Effect of Psychological Factors on Credit Risk: A Case Study of the Microlending Service in Mongolia

“…In the opinion of the interactionist perspective in psychology, individuals' behaviors are not only explained by situational and economic factors but also individuals' needs and personality traits. Based on this approach, it can be seen that individuals' personality traits can be a key indicator of an individual's loan repayment behavior [1].…”

“…International studies show that economic and demographic indicators are widely used to predict loan repayments. In the last decade, rather than just economic and demographic factors, psychological factors consisting of personality traits, attitudes, and behaviors have also been emphasized as potential predictors of repayment behavior in debt-related studies [1].…”