Discussion Papers In Economics
And Business
Financial behavior for status seeking purposesof consumers in emerging markets. A case studyof suburban Jakarta, Indonesia.
A.R.S. Ibn Ali

Discussion Paper 21-21

November 2021

Graduate School of Economics
Osaka University, Toyonaka, Osaka 560-0043, JAPANFinancial behavior for status seeking purposes of consumers inemerging markets. A case study of suburban Jakarta, Indonesia.
A.R.S. Ibn Ali

Abstract
This study addresses the influencing factors on financial behavior of consumers inemerging markets. In particular, we examine the role of psychographic variables (i.e.,
lifestyle, brand loyalty, and personality) and demographic variables (i.e., age, income,education, family size, and occupation) in affecting individual decisions to use several
types of consumer loans. A survey was conducted to collect data from 447 Indonesian
consumers, and a probit model analysis was used to measure the effect of the variables.
The results revealed that the effect of psychographic and demographic variables varies
depending on financial product types (i.e., housing loans, car loans, and motorbike loans).
Saving is positively associated with the use of car loans, but is negatively associated withthe use of motorbike loans. The findings could be useful for marketers of financial
products to improve market segmentation and target their offerings more effectively.
JEL Classification: G21, G41, G51, G53
Keywords: Microcredit, status consumption, emerging markets, psychographic variables,
demographic variables, financial behavior.

1 Introduction
Microcredit refers to small loans for individuals who need funds for income-generating
programs or immediate family needs, such as health or schooling expenditures. Its
importance and popularity have grown over the last decade in many developing countries(Mersland, 2005). Microcredit is issued to help people improve their quality of life byproviding them a small amount of money for a limited time (Zoynul, 2013). According toRahman (2009a), consumer credit is used to buy consumer products and services, forpersonal spending, for non-business purposes, and to improve one's quality of living. For
example, forms of consumer credit such as bank loans are given to individuals who wantto purchase consumer durables to improve their lifestyles.
Beck and Siegel (2016) point out that many forms of consumer credit are used for
personal, household, or agricultural purposes – not for industrial or business purposes.
Consumers can immediately purchase household goods by borrowing money. Thus,
microcredit helps consumers improve their financial efficiency while maintaining theirsocial and recreational habits. For example, consumers employ microcredit to purchasehousehold goods such as washing machines, sewing machines, cars, motorcycles, andcomputers. Microcredit allows people to use these goods right away. Consumers also use
microcredit to do their jobs, and to engage in professional, recreational, and social
activities. Microcredit can help alleviate poverty by enabling low-income people to havean opportunity to raise their livelihood (Félix and Belo, 2019). This is critical for
consumers in developing countries as many of them earn low incomes.
Microfinance has been used in many developing countries, such as Bangladesh, to help
poor people improve their living standards (Alam et al., 2020). It is also reported thatmicrocredit enable consumers to display their achievements and uniqueness, giving rise1

to new lifestyles among consumers in developing markets (Nabi, O’Cass, and Siahtiri,2017). Such financial products are considered to improve people's quality of life byallowing them to pay for unaffordable or unsustainable goods or services. Before theemergence of microcredit, people would save their money to buy a new good or service;
however, they can now obtain the cash flow they need right away by applying for loans(Sbaih and Massad, 2016). The rising population and the struggle for improved living
conditions have paved the way for the consumer credit industry (Khawar and Abbas etal., 2018).
Previous studies indicate that financial behavior may vary among people from different
social classes, socioeconomic status, and demographic characteristics (Temizel, Sayılır,and Sevim, 2017). However, it is currently unclear how the use of microcredit varies
depending on consumers’ lifestyle and behavioral characteristics. Addressing this issue
could help deepen our understanding of financial behavior in emerging markets andprovide marketers with useful insights for developing an effective marketing strategy.
This study aims to narrow the gap in the literature. We focus on consumer purchasing
behavior of microcredit products that are intended to enhance the purchaser’s status. We
conducted a survey to collect data from Indonesian consumers to identify their purchasingof microcredit products with the intention to seek social status. We attempt to explain how
financial behavior is influenced by consumer lifestyles. The main contribution of thisstudy is twofold. First, it helps to better understand how consumer purchasing of financial
products varies among consumers with different lifestyle characteristics. Second, it
provides marketers with insights in order to improve market segmentation and target theirproducts effectively.

2

2 Literature Review
2.1 Financial behavior and status consumption
Consumer financial behavior is a domain of micro-economics, behavioral finance, andmarketing (Van Raaij, 2012). Among financial products, consumer loans are the mostpopular products for consumers in developing countries. According to Beckett, Hewer,and Howcroft (2000), consumer loans refer to all forms of credit available to individuals
or groups of individuals to purchase products and services for personal use. People indeveloping countries face difficulty in satisfying their needs for high-priced products, inaddition to meeting their basic needs. Individuals' incomes are insufficient to meet theseneeds and live comfortably. Consequently, they require significant financial assistancefrom additional sources, such as banks and other financial institutions. Banks extend loans
to individuals and organizations for various reasons, depending on their requirements anddesires. Consumers can conveniently purchase various goods by borrowing money. Thisborrowing includes home loans, educational loans, car loans, personal loans, and propertyloans. Such financial services enable people to realize their aspirations, although they
have to repay the loan over a long period of time (Patro, 2015). According to Mariyono(2019), microcredit has a positive impact on a variety of expenditures, including accessto high-priced products that can elevate one’s standard of living. Furthermore,commercial banks play an important role for individuals and society by lending capital.
Consumers can improve their financial efficiency while maintaining their social andrecreational habits by using brands (Rahman, 2009a).
Consumers buy expensive goods to satisfy their needs for self-actualization andrecognition from other people. In other words, purchasing expensive products can help3

consumers attain higher social status (Bergman, 2010). In the literature, statusconsumption is defined as the motivating process whereby individuals attempt to improvetheir social standing through the conspicuous purchase of commercial goods that convey
or signify status for them as well as for other people (Bock, Eastman, and McKay, 2014).
Status consumption is an individual’s motivational construct that reflects their desire topurchase for the sake of social prestige. Choi and Burnham (2020) argue that consumers’desire for identity drives them to search out goods and services that reflect their status.
Because status-seeking entails considering one's social position, it can have a more
substantial impact on social-self brand perceptions than on inner-self brand perceptions.
Many customers in developing countries are pursuing higher status and are buying goods
that demonstrate their accomplishments and individuality as their wealth grows (Nabi,
O’Cass, and Siahtiri, 2017). For consumers in developing countries, the pursuit of statusconsumption can hardly be realized unless they obtain financial support from other parties,
such as banks. In this study, we focus on the use of financial products (i.e., loans) byconsumers in Indonesia in order to investigate their status-seeking behavior and elucidate
how such behavior is influenced by their lifestyle.
2.2 Psychographic Variables
Psychographics was a term first introduced by Demby (1974) that encompasses
psychological and demographic aspects of individuals. In order to better understandconsumer behavior and design more appropriate advertising, the authors suggest the needto add psychological variables rather than simply relying on geodemographic variables(Ngwenya and Paas, 2012). According to Baharun et al. (2011), consumers are classified
into distinct categories based on their lifestyle and personality in psychographic
segmentation. In general, geographic segmentation, demographic segmentation, and4psychographic segmentation are the three types of segmentation. Each approach has its
distinct traits. In this study, we focus on the role of psychographic and demographic
variables in explaining financial behavior. With respect to psychographic variables, we
focus on the role of lifestyle, brand loyalty, and personality. With respect to demographic
variables, we examine the influence of age, income, education, and family size. In thefollowing discussion, we describe the potential effect of these variables.

52.3 LifestyleLifestyle is the positioning of individuals which creates the direction of life and reflects
the value characteristics in every action in a pattern of behavior (Haryanto, Febrianto, andCahyono, 2019). According to Rahman (2009b), people's lifestyles are assessed based on
how they spend their time, what they value in their immediate environment, and how they
see themselves and the world around them. Rahman outlined the components that makeup lifestyle. These include interests in family, house, career, environment, leisure, fashion,
food, media, and achievements; and opinions on social issues, politics, industry, economy,
education, future, and culture. Lifestyle information helps marketers understandcustomers’ basic needs and how products fit into their lives. Consumer financial productportfolios are the combinations of products, such as checking accounts, saving accounts,
loans, and investment products, that individuals own. These portfolios have received
considerable attention in the extant literature. This is because the combinations in whichsuch products are owned can be useful for gaining insight into households’ financial
strategies, detecting consumers' interests in specific financial products, and assessing thepriorities of consumers in owning various financial products (Ngwenya and Paas, 2012).
Kamleitner and Kirchler (2007) suggest the four most common reasons for taking out aloan. Three of these reasons can roughly be categorized as lifestyle maintenance (o protect
investments, balance out income demands, and cope with financial crises or adversity).
The fourth reason can be classified as lifestyle enhancement (to take advantage of
exceptional circumstances). For example, 82% of US citizens were reported to use
consumer credit when buying a car.

6

2.4 Brand loyalty
Brand loyalty has emerged as an important marketing concept for many customer-driven
businesses. Evidence from previous studies suggests that customers with a high level ofloyalty tend to spend more money and purchase more frequently than other customers. It
is well known that customer loyalty is linked to various purchasing habits, including priceaversion, word-of-mouth advertising, and improved tolerance with respect toproduct/service consistency (Kim, Lee, and Lee, 2008). Moreover, self-brand relations
have been found to be a major determinant of communication behavior among consumers(Choi and Burnham, 2020). Regardless of their income level or social standing, loyal
consumers appear to be willing to spend more money on luxury products to enhance theirstatus. However, due to limited incomes, many consumers in developing countries rely
on loans to afford expensive products that can help them attain a desired social status(Chan, To, and Chu, 2015).
2.5 Personality
According to Onditi (2013), personality is a trait that differentiates people from each other.
Nevertheless, similarities among people can be found. Individuals with various
personalities might behave in a variety of ways in the same circumstances. Individuals'
characteristics such as habits, regular patterns or ways of thinking, speaking, and acting
are included in their personality. Being energetic, punctual, dependable, or benevolent are
examples of personality traits. The importance of personality variables—in addition toother components such as risk propensity and subjective frame of reference—must be
considered when evaluating the influence of attitudes on credit utilization (Cosma andPattarin, 2012). According to Nandan and Saurabh (2016), human behavior is complex,
7and the financial aspect of human behavior is even more complex. The financial behaviorof a person depends on a large number of personal and environmental influences.
Personality traits might be a determining factor for why certain people are more disposed
to use money as a means of influencing and impressing others (Mayfield, Perdue, andWooten, 2008). This is because consumers purchase items not just to possess, own, andconsume them, but also to build a personal image, express their personality, and solidify
their position in society (Pelau and Chinie, 2018). In addition, Brown and Taylor (2014)
infer that personality traits change during the course of a person's life.
2.6 Demographic Variables
Individuals with various demographic traits behave in a variety of ways in the same
circumstances. In the marketing field, demographic variables have been used to explain
different consumer responses. Age, income, education, culture, and nationality are someof the demographic features frequently referenced. These variables can influence
customers’ repurchase behavior by contributing to a range of thresholds or tolerance
levels (Onditi, 2013). In addition, demographic factors are frequently critical drivers ofhappiness (Geldenhuys and Henn, 2017).
2.7 AgeAge has been shown to play an important role in various aspects of consumer behavior(Frangos et al., 2012). Consumers’ preferences, attitudes and buying behavior are
influenced by their age (Limbu, Huhmann, and Xu, 2012). Marketers also tend to assess
how a person's needs and wants change as they get older. There is also an indication that
financial behavior may be influenced by a consumer’s age. For example, credit card use
is negatively correlated with age; that is, younger persons use credit cards more frequently
than older individuals (Stafford, 1996). Young people have been described as stressing
8

the significance of material goods, being more concerned with consuming than saving,
and considering money as a necessary component of personal achievement. As a result, awide range of credit behaviors and borrowing requirements emerge (Chau and Ngai,2010). Young people nowadays are making an increasing number of financial decisions
at their earlier ages. Their social position is evolving, and they are taking on new
economic obligations (Frączek and Klimontowicz, 2015). These obligations include
financial decisions on saving, credit cards, mortgages, retirement insurance, andinvestments (Rutherford and Fox, 2010).
2.8 Income
In marketing, income is the most frequently used criterion for market segmentation.
Household income determines the capacity to buy durable and nondurable goods, savemoney, and even borrow money. Furthermore, higher-income households are better able
to select high-quality products and acquire status-enhancing things, such as appliances
and automobiles (Dahana, Kobayashi, and Ebisuya, 2018). Customers with a high income
are also typically less reluctant to accept high interest rates on housing loans (Heyns,2007). In contrast to higher income groups who use credit to improve their lifestyles, lowincome households are more likely to utilize consumer credit to maintain their lives(Kamleitner, Hoelzl, and Kirchler, 2012). Microfinance institutions help low-income
families grow their microbusinesses, increase their income earning ability, and raise theirliving standards (Ammar, Musa Ahmed, and Ammar is student 2016). According toWright (1999), compared to individuals who did not borrow, microcredit program
borrowers have a higher per capita income rate. Using Canadian data, Kamleitner, Hoelzl,
and Kirchler (2012) also find that credit utilization rises as income rises, but also as saving
falls.
9

2.9 Education
Individuals can obtain personal financial management knowledge through education,
which can improve their financial literacy and impact their financial behavior inadulthood. Thus, households with higher levels of education are more likely to be able tosave and have greater access to financial services. Furthermore, research shows that
education is linked to purchasing behavior (Dahana, Kobayashi, and Ebisuya, 2018).
Education opens the door to higher-paying jobs and, as a result, improved living standards.
In earlier studies, higher wages and socioeconomic status were positively associated withlife satisfaction (Geldenhuys and Henn, 2017). More young people are pursuing higher
education now than in past generations, thanks to better access to student loans andchanges in government regulations (Rudi, Serido, and Shim, 2020). Education is regarded
as an investment in human capital. Tuition fees, study materials, and the indirect cost of
postponed labor market involvement are included in the investment costs. The
opportunity cost of attending school, which is the final component, is generally the mostcritical expense for students in higher education. Higher future wages, improved
employment stability, and greater career prospects are all advantages of pursuing higher
education (Canton and Blom, 2004). Lower-income students are more likely to borrowmoney than are their higher-income counterparts. Similarly, compared to theircontinuing-generation classmates, first-generation college students are more likely toborrow money. For example, student borrowing has reached record levels in the UnitedStates, recently surpassing $1.59 trillion, with the average student loan debt per household
tripling over the past 20 years (Board of Governors of the Federal Reserve, 2019). In 2017,nearly two out of three graduating undergraduate students took out student loans, with an10average debt per student of $28,650 (The Institute for College Access & Success, 2018)(Air 2020).
2.10 Family size
Family size governs the amount spent on various products such as food, clothing, andother necessities. Intuitively, a family with a larger size would purchase products ingreater quantities than a family with a smaller size (Kumar and Kumar, 2019). Thus,
family size is considered to influence consumer dependence on the credit market, wherelarger families would rely on microcredit products more than smaller families. Even if
they do not have all the necessary financial resources at the time of purchase, families can
immediately benefit from their purchases. The use of financial products will be paid forwith future earnings (Constantin and Cristinel, 2017).
2.11 Occupation
Working circumstances are more strongly linked to occupation than other socioeconomic
variables. Occupation is a measure of one's place in the socioeconomic hierarchy (Wanget al., 2018). Thus, a person's occupation or job has an impact on their purchasing
decisions. The type of employment has a significant impact on lifestyles, purchasing
choices, and decisions. A doctor's purchase may readily be distinguished from that of alawyer, teacher, clerk, merchant, or landlord. As a result, marketing managers must devise
various marketing tactics to meet the purchasing motivations of various professionalgroups (Ali and Ramya, 2016). Nouman et al. (2013) indicate that households with higher
education, more money, and larger family size might have a greater opportunity to use
financial products.

11

3 Method
3.1 Sample
We conducted a survey to collect data for analysis in suburban Jakarta, the capital ofIndonesia. We considered Indonesia to be an appropriate country to collect data for thisstudy because it is an emerging country with an increasing number of middle-class people
who aspire to raise their status. Furthermore, Indonesia was one of the Asian countries
that introduced commercial microfinance relatively early. The country’s gross domestic
product (GDP) per capita has been consistently increasing over the past decade, indicatingthat people's income is rising (Rachmawati, 2015). Indonesia has a population of 261
million, ranking it fourth in the world after China, India, and the US (BPS, 2018). The
demographic profile is young (average age of 28.6 years in 2016), with about 45 million
people aged between 15 and 24 years (BPS, 2016). Indonesia’s economy is growing at afast rate (over 5% per year). The country is ranked as the world’s tenth- largest economy
based on purchasing power parity and is a G20 member (Setiawan, 2015; The World Bank,
2018; Johan, Rowlingson, and Appleyard, 2021). In this survey, we collected household
information concerning behavioral, demographic, and psychographic variables because
we want to examine how consumer financial behavior is influenced by these variables.
Hired interviewers were instructed to go to several places, such as traditional markets,
shopping centers, and economically deprived areas, to find potential respondents. We
were able to collect data from 447 respondents offering complete information. Wheninterviewers found potential respondents, they would ask for participation in the survey
in exchange for a financial reward.

12

3.2 Data description
At the higher end, respondents aged 20 to 30 years accounted for 32.76% of the overall
sample, and those aged 40 to 50 years accounted for 16.14% of the sample. At the lower
end, participants aged between 60 and 70 years, and those aged above 70 years, accounted
for 1.79% and 0.22% of the sample respectively. In terms of respondents’ income, thehighest percentage of participants earned between Rp500,000 and Rp25,000,000 annuallyat 60.40% of the sample. Regarding education, 11.85% of participants had elementary
school, 2.68% of participants had graduate school, and 14.09% of participants had juniorhigh school. Senior high school and undergraduate levels were at 50.33% and 13.90% of
the sample respectively. Vocational school participants were at 7.15%. With respect tofamily size, more than half of the participants lived with their spouses and children.
Living alone and living with a spouse were at 4.92% and 16.33% of the sample
respectively. Living with parents and living with parents and children were at 5.14% and11.18% respectively. Respondents outside these family categories were at 2.70%. In
terms of occupation, the highest percentage of respondents were office workers at 45.19%of the sample. Farmers, fishermen, and business owners were at 0.22%, 0.44%, and 6.04%
respectively. Public servants and teachers participated at rates of 7.15% and 0.90%
respectively. Outside these occupations, 20.35% and 19.71% of respondents fell into thecategories of “other” and “uncertain” respectively. The highest quality-conscious andhighest safety-conscious respondents were at 55.48% and 65.99% respectively. Those
who use the internet 0-4 hours daily were the highest percentage of respondents at 92.62%.
With respect to weekend activities, the highest percentage of respondents stayed at home
and the lowest percentage went shopping, at 73.15% and 3.13% of the sample respectively.
Respondents who go out to eat 1-2 times a week were the highest percentage of13

respondents at 51.68%. Respondents with monthly savings of between Rp100,000 and
Rp500,000 represented the highest percentage in this survey.
Table 1 displays the sample’s descriptive statistics. The sample size was determined using
a test where the margin of error is less than 5%. The results show that buying behavior issignificantly affected by concerns about quality and safety. With respect to motorcycle
loans, those who spend less time on the internet, go shopping less frequently, and are
more likely to eat out, have a lower saving tendency, and are less quality-conscious. Car
loan users who go shopping during the weekend have high quality-consciousness, savemore money, and place less importance on product safety relative to other consumers.
With respect to housing loans, individuals who spend their weekends shopping are more
likely to use the product than other consumers. The results also suggest that theprobability of housing loan adoption increases with the amount of money an individual
spends on housing.

14

Table 1 Descriptive statistics of the sample
Variables

Sample size

Percentage

Age
20’s

140

31.31%

30’s

153

34.22%

40’S

102

22.90%

50’S

42

9.39%

60’s

8

1.79%

older than 70’s

1

0.22%

Rp100.000 – Rp500.000

22

4.93%

Rp500.000 – Rp.2.500.000

270

60.40%

Rp2.500.000 – Rp.10.000.000

105

23.48%

Rp10.000.000 – Rp.35.000.000

42

9.39%

More than Rp35.000.000

8

1.80%

Elementary school

53

11.85%

Graduate school

12

2.68%

Junior high school

63

14.09%

Senior high school

225

50.33%

Undergraduate school

62

13.90%

Vocational school

32

7.15%

Living alone

22

4.92%

Living with husband/wife73

16.33%

Living with husband/wife and children

267

59.73%

Living with parents

23

5.14%

Living with parents and children

50

11.18%

Other

12

2.70%

Farmer1

0.22%

Fisherman

2

0.44%

Office worker

202

45.19%

IncomeEducation

Family size

Occupation

15

Other91

20.35%

Owned business

27

6.04%

Public servant

32

7.15%

Teacher4

0.90%

Uncertain

88

19.71%

0-4 Hours

414

92.62%

5-8 Hours

24

5.36%

9-12 Hours

8

1.80%

13 or More Hours

1

0.22%

Going shopping

14

3.13%

Going to entertainment spots

35

7.85%

Other

51

11.40%

Spending time with friends

20

4.47%

Staying at home327

73.15%

1 to 2 times

231

51.68%

3 to 5 times

43

9.62%

Almost everyday

34

7.61%

Almost never do

139

31.09%

066

14.77%

0 – Rp100.00079

17.68%

Rp100.000 – Rp500.000

216

48.32%

Rp500.000 – Rp2.500.000

50

11.18%

Rp2.500.000 – Rp10.000.000

32

7.15%

4

0.90%

1- Not Important

8

1.80%

2

24

5.36%

3

167

37.36%

4- Important

248

55.48%

Internet

Weekend activities

Eating Outside

SavingMore than Rp10.000.000
Quality

Safety16

1- Not Important

10

2.23%

2

12

2.70%

3

130

29.08%

4- Important

295

65.99%

3.3 Model-free evidence
Prior to the analysis, we summarized the data to find some model-free evidence regarding
microcredit usage by the respondents. Figure 1 depicts microcredit usage for various age
categories. Individuals aged between 20 and 30 years appear to be the highest loan taking
group, while those aged between 60 and 70 years rarely take loans. Younger individuals
are more likely to use home loans and car loans (70% and 52% respectively). Motorbikeloans, appliance loans, and others loans are also popular with young customers. Overall,
we find that young individuals aged between 20 and 30 years were highly motivated touse credit loans. This is consistent with previous studies suggesting that generation Y(those born between 1977 and 1994) is socialized in a materialistic culture. As a result,they are more compelled to engage in status-seeking spending in order to demonstrate
their affluence and purchasing power (Kim and Jang, 2014). Furthermore, middle-income
young individuals appear to be the highest loan taking segment. This reflects the findingsof Johan, Rowlingson, and Appleyard (2021) that young people have an essential role inpromoting middle-income group growth, and that middle-income group economic
involvement is a predictor of long-term market growth. In terms of buying behavior,
middle class consumers are more likely to be conscious about price and quality, but areless interested in brand. According to Erdem (2008), in the case of regularly purchased
convenience products, there is a substantial positive connection between price and quality.
17

10’s

20’s

30’s

40’S

50’S

60’s

older than 70’s

70%

52%

50%

46%
40%
32%
20%
10%
00%

0%
0%
0%

Home Loan

22%
15%
7%
4%
00%
0%
Car Loan

32%

31%
26%28%

20%

17%
17%

15%
01%

7%
0%
0%

00%

5%
2%
0%

Motorcycle Loan Appliances Loan

8%
00%

12%

8%
0%

Other Loan

00%

2%
0%

Taking No Loan

Figure 1. Microcredit use for different age levels
Figures 2 and 3 show the relationship between price-consciousness, qualityconsciousness, and the use of several loan products. Both price and quality
consciousness were measured using a 4-point scale (1 = not important, 4 = very
important). As shown in Figure 2, individuals with high price-consciousness are more
likely to adopt loans than those with low price-consciousness. This is particularly truefor home, car, motorcycle, and appliance loans. Also, quality-conscious individuals
have a high tendency to use loans. As shown in Figure 3, the percentages of qualityconscious individuals who use loans to buy a house or car are 70% and 85%
respectively. Although not as high as the figures for these product categories, thepercentage of quality-conscious individuals was also high in other product categories.

18

1

2

3

4

59%

56%

54%

50%
45%

50%

47%
45%

42%
33%

33%

27%
11%

5%
0%

5%8%

8%

7%7%

0%

Home Loan

3%5%

0%

Car Loan

Motorcycle Loan Appliances Loan

Other Loan

Taking No Loan

Figure 2. Microcredit use for different price consciousness levels

1

2

3

4

85%
70%
56%
38%

15%
10%
5%
Home Loan

15%0%0%
Car Loan

55%

50%
50%

49%

41%

37%

11%
2%

2%5%

Motorcycle Loan Appliances Loan

0%0%
Other Loan

1%3%
Taking No Loan

Figure 3. Microcredit use for different quality consciousness levels
3.4 Analytical model
We employed a probit model to estimate the effect of the variables on microcredit
adoption. The dependent variables are the states of whether consumers took a housing
loan, car loan, or motorbike loan. We used the maximum likelihood method to estimate
the model parameters for each dependent variable19

4 Results
The results of the probit model analysis are shown in Table 1. With respect to housing
loans, individuals who spend their weekend on shopping are more likely to use theproduct than other consumers. The results also suggest that the probability of housing
loan adoption increases with individuals’ spending on housing. People who go shopping
during the weekend, have high quality-consciousness, save more money, and put lessimportance on product safety adopt car loans more than other consumers. The results formotorbike loans reveal that individuals who spend less time on the internet and go
shopping less frequently tend to adopt motorbike insurance more than other consumers.
Furthermore, those who are more likely to eat outside the home, have a lower saving
tendency, and are less quality-conscious show a higher likelihood of adopting motorbikeloans.

Table 2. Estimation results of probit model
Housing Loan

Car Loan

Motorbike Loan

Estimate

p-Value

Estimate

p-Value

Estimate

p-Value-13.661.00-15.74

0.99

5.34

0.99

Work

0.01

0.90

0.05

0.51

0.00

0.96

TV

0.08

0.19

0.03

0.66

0.01

0.78

Book

0.11

0.47

0.02

0.90

0.10

0.18

Internet
Going
shopping
Entertainment
Spending
time withfriendothers

0.03

0.63

0.01

0.92

-0.11

0.01

0.90

0.08

1.09

0.07

-1.32

0.02

-0.37

0.43

0.43

0.25

-0.36

0.19

-0.02

0.98

0.23

0.78

-0.13

0.71

0.00

1.00

0.48

0.33

0.49

0.02

(Intercept)

20

Eating
outsideSaving

0.15

0.41

0.02

0.93

0.27

0.00

-0.14

0.79

2.38

0.01

-0.57

0.03

Housing

0.64

0.00

0.49

0.02

0.06

0.05

Education

0.03

0.43

-0.01

0.87

0.02

0.15

Price

0.00

0.99

0.11

0.65

0.08

0.43

Quality

0.00

0.99

0.70

0.05

-0.31

0.01

Brand

-0.13

0.45

-0.30

0.12

0.11

0.21

SafetyTraditional
marketIndividual
storeSuper market.

-0.10

0.64

-0.72

0.00

-0.03

0.79

-0.49

0.20

-0.72

0.19

-0.28

0.16

-0.32

0.39

0.11

0.78

0.04

0.86

-5.29

0.99

0.73

0.21

-0.25

0.56

Mall

-4.05

1.00

-3.29

0.99

0.61

0.40

others

-3.97

1.00

-3.73

1.00

-4.21

0.99

Brand loyalty

-0.19

0.19

0.10

0.68

-0.02

0.81

Age20

4.21

1.00

3.74

1.00

-5.33

0.99

Age30

4.95

1.00

4.21

1.00

-5.66

0.99

Age40

4.13

1.00

3.54

1.00

-5.84

0.99

Age50

-0.26

1.00

4.61

1.00

-6.02

0.99

Age60

-0.16

1.00

5.68

1.00

-10.09

0.98

Age70

3.71

1.00

5.79

1.00

-11.250.98

Family size

-0.08

0.57

-0.13

0.45

-0.05

0.50

Note. Bolds indicate significant estimates at 𝛼 = 0.05

5 Discussion
This study examines the influencing factors on the financial behavior of consumers inemerging markets. By implementing probit model analysis to examine financial products,
we confirmed the role of psychographic and demographic variables in affecting individual
decisions to use several types of consumer loans. First, we find that customers of housing
loans who spend their weekend on shopping are more likely to use the product than other21

customers. The likelihood of housing loan assumption increases with individual
expenditure on housing. Second, car loan users are more likely to go shopping during
weekends, have high quality-consciousness, save more money, and put less importanceon product safety. Third, people using motorbike loans spend less time on the internet, go
shopping less frequently, and tend to adopt motorbike insurance more than otherconsumers. Furthermore, motorbike loan users tend to eat outside, save less, and be lessquality and safety conscious.
We found that saving is positively connected with the use of car loans, and is negatively
associated with the use of motorbike loans. Furthermore, individuals with high price andquality consciousness are more likely to adopt loans. This is especially true for housing
loan and car loan users.

6 Implications
The emerging markets worldwide are enormous, and will continue to grow in the future(Dahana et al., 2018). This phenomenon reveals promising business opportunities in thesemarkets, as many consumer needs remain unmet (Prahalad, 2005). A primary unmet needis the need for status. Thus, most consumers, regardless of their income level or social
standing, are willing to spend large sums of money on luxury products to improve theirstatus. However, to engage in status consumption, most consumers will buy luxury goods
with credit cards or through lending products so as to fulfill their personal desires (Chan,
To, and Chu, 2015).
Previous studies indicate that financial behavior may vary among people due todifferences in social class, socioeconomic status, and demographic characteristics (Shimet al., 2009; Prihantoro et al., 2011; Temizel, Sayılır, and Sevim, 2017). This study
22contributes to the literature by clarifying the factors that affect consumers’ decisions to
use several types of consumer loans in emerging markets in order to engage in statusconsumption.
Our findings can help identify the consumer’s financial behavior in relation to statusconsumption propensity. We believe that these findings are critical, and that financialorganizations can use them to better aim their marketing efforts at target customers. This
study also indicates that for status-seeking purposes, consumers are more likely to takehousing loans, car loans, and motorcycle loans. With respect to housing loans, individuals
who spend their weekend shopping are more likely to use the product than otherconsumers. Those who go shopping during weekends, have high quality-consciousness,save more money, and put less importance on product safety tend to adopt car loans.
Individuals who spend less time on the internet, are more likely to eat outside, have alower saving tendency, and are less quality-conscious have a higher likelihood of adopting
motorbike loans.
We acknowledge that excessive spending on financial products may not be desirable froma societal perspective. This could particularly be true for consumers with low incomes, as
their need to borrow money for status enhancement could lead to financial difficulties in
the future.
This situation could eventually lead to social issues such as criminality and inadequate
education, which are likely to result in a decline in people’s well-being. Therefore, it isimportant for policymakers to prevent low-income consumers from engaging in statusconsumption excessively.

23

7 Limitations and future research direction
This study examined the influencing factors on financial behavior of Indonesian
consumers that are willing to engage in status consumption. Our probit model analysis
revealed that the effect of psychographic and demographic variables varies depending on
financial product types (i.e., housing loans, car loans, and motorbike loans). Saving is
positively associated with the use of car loans, but is negatively associated with the useof motorbike loans. Our results suggest that for status-seeking purposes, consumers are
more likely to use housing loans, car loans and motorbike loans. We believe that ourfindings contribute to the modern literature by providing not only novel evidence to better
understand status consumption propensities in emerging countries but also practicalguidance for firms in more effectively targeting their products.
We also note some limitations of this study. First, we only examined the status-seeking
approach and financial behavior of consumers in one country. Further research using
samples from different countries would improve this study’s generalizability, although we
expect that the principles we found would also apply in other emerging markets. Second,
we only investigated the tendencies of status consumption in relation to financial products.
Future research may need to address how our results would be different for products thatare consumed in a more private context. In the developing world, the emergence of
microcredit and other financial services has contributed to a growth in awareness of theintra-household economy. It has become clear that the financial services sector must
understand financial activities within households if credit and other financial services areto be distributed effectively (Pahl, 2008). Therefore, incorporating motivations into theframework would be a direction for future research.
24

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