How explicit consumer credit information affects intent to purchase on credit: an experiment
International Journal of Bank Marketing
ISSN: 0265-2323
Article publication date: 25 January 2024
Issue publication date: 1 July 2024
Abstract
Purpose
Consumer culture is promoting immediate gratification, and the rise of digital financial services is increasing the risk of indebtedness while debt reduces well-being and affects mental health. The authors assess the effects of consumer information provision, debt literacy, chronic debt and attitudes toward debt on the intent to purchase on credit.
Design/methodology/approach
An online survey including an experiment with a credit offer vignette was conducted in a representative sample of Estonia (n = 1204). Treatment conditions depicted either the total cost and duration of the credit agreement or the annual percentage rate.
Findings
Receiving modified information resulted in a 26 to 30 percentage points decrease in propensity to purchase on credit. Purchasing on credit was associated with attitudes towards credit and chronic debt, but not with debt literacy.
Research limitations/implications
The findings reveal large effects of information provision and highlight the limited effects of debt literacy on credit decisions. Limitations may emerge from differences in financial regulation across countries.
Practical implications
The authors' results highlight the importance of applying behavioural insights in consumer credit information provision, both in the financial sector and policy. Testing the messages allows having evidence-based solutions that promote responsible purchasing on credit.
Originality/value
The findings call for changes in credit information provision requirements. Their effect is significantly larger compared to the literature, emphasizing the role of credit information provision in less regulated online markets.
Keywords
Acknowledgements
This research was funded by the Estonian Ministry of Finance and the Estonian Research Council, project name “Credit market research for the Ministry of Finance II” RITA2/099. The financial sponsor did not play a role in writing the study. The authors would like to thank the participants of the International Association for Research in Economic Psychology (IAREP) 2022 conference for their valuable feedback.
Citation
Pulk, K. and Riitsalu, L. (2024), "How explicit consumer credit information affects intent to purchase on credit: an experiment", International Journal of Bank Marketing, Vol. 42 No. 5, pp. 1007-1035. https://doi.org/10.1108/IJBM-06-2023-0347
Publisher
:Emerald Publishing Limited
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