Abstract
Research background
Debt behaviour is an aspect of financial behaviour that reflects a person’s behaviour regarding borrowing money. In order to understand the factors that influence debt behaviour among students in Indonesia and Malaysia, it is crucial to conduct research on this matter. While the majority of the people in these two countries are Malay, it is possible that there are differences in their debt patterns.
Purpose
This study aims to empirically clarify the influence of parental subjective norms, parental financial teaching, peer influence, and debt literacy on debt behaviour among undergraduate students in Indonesia and Malaysia.
Research methodology
This study’s sample included 160 Indonesian and 160 Malaysian students. Using partial least squares structural equation modelling, the factors affecting debt behaviour were identified.
Results
The factors significantly influencing debt behaviour at the 5% alpha level in Indonesia include parental subjective norms, parental financial teaching, and debt literacy, whereas those in Malaysia include parental subjective norms, peer influence, and debt literacy. A consistent finding across both countries is the impact of parental subjective norms and debt literacy, suggesting that parents as role models and knowledge and skills related to debt management are crucial for enhancing students’ borrowing behaviour.
Novelty
There is a lack of research on the impact of debt literacy on debt behaviour, and no previous comparisons have been undertaken between Indonesia and Malaysia. A novel discovery in this study is that although Indonesia and Malaysia are cognate countries, the impact of parents and peers on shaping financial behaviour varies slightly.