More Knowledge, More Experience, Less Debt? The Mediating Role of Money Management on the Effects of Financial Knowledge and Experience on Consumer Debt

14 Pages Posted: 10 Nov 2018

See all articles by Pallapa Srivalosakul

Pallapa Srivalosakul

Assumption University - Martin de Tours School of Management and Economics

Issara Suwanragsa

Assumption University - Martin de Tours School of Management and Economics

Nopphon Tangjitprom

Assumption University of Thailand

Date Written: July 1, 2018

Abstract

The present study aims to serve two major purposes. The first purpose is to examine whether individuals with better financial knowledge and experience are less likely to be indebted. The second purpose is to examine whether money management acts as a mediator between the influences of financial knowledge and financial experience on consumer debt. Data were collected from questionnaire survey of 440 individuals at working age in Bangkok. Results from regression analysis indicated that individuals who have better financial knowledge and experience do not have less debt. Financial knowledge has insignificant direct impact on consumer debt, while financial experience is associated with higher debt. Financial experience reduces fear and caution when using credit, hence lead to more debt. In addition, when testing the mediating effects of money management, findings revealed that money management does not mediate the influence of financial knowledge on debt, but it mediates the effect of financial experience on debt. Individuals, who can manage their money well, have lower debt, regardless of financial knowledge. Individual who can use their financial experience to better manage their money have lower debt. This study shed lights on policy implementation in reducing debt problem. Financial education that emphasizes only on numeric calculation and mathematic formula may not sufficient to reduce debt burden problem. Policies should aim at shaping consumers’ money management behavior, particularly the behaviors in managing their cash, expenditure, budget, saving, credit, and insurance to reduce their debt burden problems.

Keywords: Financial Knowledge, Financial Experience, Money Management, Debt

Suggested Citation

Srivalosakul, Pallapa and Suwanragsa, Issara and Tangjitprom, Nopphon, More Knowledge, More Experience, Less Debt? The Mediating Role of Money Management on the Effects of Financial Knowledge and Experience on Consumer Debt (July 1, 2018). Asian Administration & Management Review, Vol. 1, No. 2, 2018. Available at SSRN: https://ssrn.com/abstract=3269057

Pallapa Srivalosakul (Contact Author)

Assumption University - Martin de Tours School of Management and Economics ( email )

Suvarnbhumi Campus, MSM Bldg. Floor 2,Bangsaothong
Samuthprakarn 10540
Thailand

Issara Suwanragsa

Assumption University - Martin de Tours School of Management and Economics ( email )

Suvarnbhumi Campus, MSM Bldg. Floor 2,Bangsaothong
Samuthprakarn 10540
Thailand

Nopphon Tangjitprom

Assumption University of Thailand ( email )

592/3 Ramkhamhaeng 24
Hua Mak
Bangkapi, Bangkok 10240
Thailand

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