Does Gender Matter in the Relationship between Money Attitudes and Loan Default? A case study among Small and Medium Enterprises (SMEs) Owner-managers
|International Journal of Economics and Management Studies|
|© 2020 by SSRG - IJEMS Journal|
|Volume 7 Issue 9|
|Year of Publication : 2020|
|Authors : Dr. Jihan Ahmad|
How to Cite?
Dr. Jihan Ahmad, "Does Gender Matter in the Relationship between Money Attitudes and Loan Default? A case study among Small and Medium Enterprises (SMEs) Owner-managers," SSRG International Journal of Economics and Management Studies, vol. 7, no. 9, pp. 79-88, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I9P110
Small and Medium Enterprises (SMEs) play an important role in most economies, particularly in developing countries. However, the fast-growing and the honoured of importance roles contributed by SMEs have been shadowed bytheir high rate of bankruptcy and have been criticized for poor loan quality management, which leads to loan default. Even there are abundant previous research has been conducted to study the ability of SMEs, only a few had a look at the money attitude as the determinant factor. Thus, the objectives of this study are to access the significant relationship of the determinant factor that influence SME owner-manager decision to default on loan repayment.This study employed a cross-sectional research design in which 612 questionnaires were distributed to the SME owner-manager within the state of Kedah, Malaysia. The data is analyzed by PLS-SEM using SmartPLS 3.0. The finding explained that Power-prestige, Retention-time have a significant relationship on Loan Default while the interaction effect of gender has no significant effect on the relationship. The study empirically supports the Default Behaviour Theory that perceived individual choices to default are driven by different determinant factors. In addition, the finding could be presumed as a guide to the SMEs to understand the attitude and characteristics they hold to make the decision and perform their financial management commitment. The feature of cross-sectional data employed in his study, which were collected at one point in time, restricted the researcher from observing and, consequently, examining the dynamic feature of the effects of determinant factors on loan default.
SMEs, Owner-manager, Loan Default, Power-prestige, Retention-time, Religiosity.
 Abor, J and Quartey, P., The issue in SMEs in Ghana and South Research, Journal of Finance and Economics Issues, 39 (2010) 218-228.
 Acquah, H.D. and J. Addo, J., Determinants of Loan Repayment Performance of Fishermen: Empirical Evidence from Ghana,CercetăriAgronomiceîn Moldova, 4 (2011) 89-97.
 Addae-Korankye, A., Causes and Control of Loan Default/Delinquency in Microfinance Institutions in Ghana,American International Journal of Contemporary Research, 4 (2014) 36-45.
 Afolabi J. A., Analysis of Loan Repayment among Small Scale Farmers in South Western Nigeria- A Discriminant Approach, Journal of Social Science, 17 (2008) 83-88.
 Ahmad, N. H and Seet, P., Dissecting Behaviours Associated with Business Failure: A Qualitative Study of SME Owners in Malaysia and Australia, Asian Social Science, 9 (2009) 98-104.
 Al- Mamun A.; Abdul Wahab S.; Malarvizhi C. A, “Empirical Investigation on Repayment Performance of AmanahIkhtiar Malaysia’s Hardcore Poor Clients, International. Journal of Business and Management, 6 (2011) 125-133.
 Al- Mamun, A., Wahab, S. A., Malarvizhi, C. A. and Mariapun, S., Examining the Critical Factors Affecting the Repayment of Microcredit,. Provided by AmanahIkhtiar Malaysia. International Business Research, 4 (2011) 141-152.
 Alam, S. S., Janor, H. Zanariah, Che-Wel, C. A. and Ahsan, N, Is Religiosity an Important Factor in Influencing the Intention to Undertake Islamic Home Financing in Klang Valley,. World Applied Sciences Journal, 19 (2012) 1030-1040.
 Alam, S. S., Mohd, R. and Hisham, B., Is religiosity an important determinant on Muslim consumer behaviour in Malaysia?,Journal of Islamic Marketing, 2 (2011) 83-96.
 Al-Azzam, M., Hill, R. C., and Sarangi, S., Repayment performance in group lending: evidence from Jordon, Journal of Development Economics, 97(2) (2012) 404-414
 Allen-Ile, C. O. K and Eresia-Eke, C. e ., The Role of Management on Propensity for Loan Default By Small Business, Journal of Business and Management Dynamic,(2008) 14-27.
 Allport, G., The Individual and His Religion. A Psychological Interpretation, (1950) (London: Constable).
 Allport, G. and Ross, J., Personal religious orientation and prejudice, Journal of Personality and Social Psychology, 5 (1967) 432-443.
 Al-Mamun A. et al., Investigating the Effect of the Utilization of Microcredit on Hardcore Poor Clients Household Income and Assets, Asian Social Science, 7 (2011) 141-152.
 Al-Sharafat, A., Qtaishat, T. and Majdalawi, M. I, Loan Repayment Performance of Public Agriculture Credit Agencies: Evidence from Jordan, Journal of Agriculture Science, 5 (2013) 221-229.
 Ameyaw-Amankwah, I., Causes and effects of loan defaults on the profitability of OkomfoAnokye Rural Bank,Thesis, unpublished. KNUST., (2011).
 Baele, L., Farooq, M. and Ongena, S.,Of religion and redemption: Evidence from default on Islamic loans,Journal of Banking & Finance, 44 (2014) 141-159.
 Balogun, E.D. and Alimi, A., Loan Delinquency Among Small Farmers in Developing Countries: A Case Study of the Small-Farmer Credit Programme in the Lagos State of Nigeria,CBN Economic and Financial Review, 26 (1988) 36-44,
 Bhardwaj S. &Bhattacharjee. K (2010). “Modelling Money Attitudes to Predict Loan Default.” The IUP Journal of Bank Management, 9 (2010) 12-20
 Brehanu, A., and Fufa, B., The repayment rate of loans from semi-formal financial institutions among small-scale farmers in Ethiopia: Two-limit Tobitanalysia,The Journal of Socio-Economics, 37 (2008) 2221-2230.
 Cassar, A., Luke C. L. &Wydick B., The effect of social capital on Group loan repayment: Evidence from field experiments”. The Economic Journal, 117 (2007)85–106.
 Cavana, R. Y., Delahaye, B. L. and Sekaran, U., Applied Business Research Qualitative and Quantitative Method,. Australia: John Wiley & Sons Ltd, (2001).
 Chang K. H., An Empirical Study on Default Factors for US Sub-prime Residential Loans,The Journal of International Management Studies, 8 (2013)200-206
 Dalberg., Report on Support to SMEs in Developing Countries Through Financial Intermediaries, SME Briefing Paper, EIB Draft Version (Geneva: European Investment Bank)., (2011).
 Desarbo, W. S. and Edwards, E., Typologies of compulsive buying behaviour: a constrained cluster wise regression approach,Journal of Consumer Psychology. 5 (1996) .231-261
 Durvasula, S. and Lysonski, S, Money, Money, Money- How Attitude Towards Money Impact Vanity and Materialism? - the Case of Young Chinese Consumers”. Journal of Consumer Marketing. 27 (2010) 169-179.
 Economic Census Report 2011- SME Corporation Malaysia. Retrieve at www.smecorp.gov.my/vn2/node/59 on 25/8/2013
 El-Menouar, Y.,The Five Dimension of Muslim Religiosity,Result of an Empirical Study. The method, Data, Analysis, 8 (2014) 53-78.
 Epstein M. J. &Yuthas K., Microfinance in Culture of Non-Payment”. Journal of Developmental Entrepreneurship, 15 (2010) 35–54.
 Falahati, L. and Hj.Paim, L., A comparative study in Money Attitude among University Students: A Gendered View,Journal of American Science, 7 (2011) 1144-1148.
 Fidrmuc and Hainz,Default Rates in the Loan Market for SMEs: Evidence from Slovakia,William Davidson Institute Working Paper Number ., (2010) 854.
 Forman, N., Mind over Money. Toronto: Doubleday., (1987)
 Furnham, A. (1984). Many sides of the coin: the psychology of money usage. Personality and Individual Different, 5 (1984) 501-509.
 Godquin M., Microfinance Repayment Performance in Bangladesh: How to Improve the Allocation of Loans by MFIs”. World Development, 32 (2004) 1909–1926.
 Greene, J. and Gangemi, J., Taking Tiny Loans to the Next Level”, Business Week. New York., (2006)
 Hafez, M. I. A. K., El Sahn, M. F. and A. Rahman, D, The Effect of Egyptians' Money Attitudes on Compulsive Buying with the Role of Credit Card Use,The Macro theme Review. 2 (2013) 73-88.
 Hossain, F., Small Loans, Big Claims. Foreign Policy, 12 (2002) 79-82.
 Hou S C and Lin Z H ,An Empirical Study of Money Attitudes, Credit Card Use and Compulsive Buying Among Undergraduates in Taiwan, Working Paper Series, Graduate School of Marketing Management, National Chung Cheng University, Taiwan. Retrieved from http://aplikasi.kpkt.gov.my/ucapan.nsf., (2009).
 Hussain, J., Millman, C. and Matlay, H., SME financing in the UK and in China: A Comparative Perspective, Journal of Small Business and Enterprises Development, 13 (2006) 584-599.
 2015 The SME Corp Website [Online]. Available: http://www.smecorp.gov.my/index.php/en/vn2/node/335 retrieved date 6/10/2015
 2015 The SME Corp Website [Online]. Available: http://www.smecorp.gov.my/index.php/en/guides/2015-12-21-10-49-38/list-of-companiesretrieved date 30/11/2015
 Idris, K. M., Bidin, Z. and Saad, R. A., Islamic Religiosity Measurement and Its Relationship with Business Income Zakat Compliance. JurnalPengurusan, 34 (2012) 3 – 10.
 Jouault, A. and Featherstone, A. M., Determining the Probability of Default of Agricultural Loans in a French Bank. Journal of Applied Finance & Banking, 1 (2011) 1-30.
 Khalique, M., Isa, A. H., Shaari, J. A. N and Ageel, A., Challenges Faced by Small and Medium Enterprises (SMEs) in Malaysia, International Journal of Current Research. 3 (2011) 398-401.
 Khraim, H., Measuring Religiosity in Consumer Research from an Islamic Perspective, Journal of Economics and Administrative Science, 26 (2010) 52-78.
 dissertation, Northcentral University, (2015)
 Knight, T and Hossain, F. and Rees, C. J., Microfinance and the Commercial Banking system: a perspective from Barbados, Progress in Development Study, 9, 115-125.
 Kohansal M. R &Mansoori H. (2009). “Factors Affecting on loan repayment performance of Farmers in Khorasan-Razavi Province of Iran”. Paper presented at the International Research on Food Security, Natural Resource Management and rural development. The University of Hamburg.
 Krauss, S. E, Hamzah, A. and Idris, F., Adaptation of Muslim Religiosity Scale for Use within Four Different Faith Communities in Malaysia.”Review of Religious Research. 49 (2007) 147-164.
 Kuhn M. E. and Darroch, M., Factors affecting rural medium-term loan repayment: Evidence from a South African development finance institution, Paper presented at the International Association of Agricultural Economists (IAAE), Aldershot, UK., (1999).
 Lau Teck Chai and Tan Booi Chen, Religiosity as an Antecedent of Attitude towards Green Product: An Exploratory on Young Malaysian Consumers, ASEAN Marketing Journal. 1 33-41.
 Lau, T. C., Choe K.L and Tan L. P ., The Moderating Effect of Religiosity in the Relationship between Money Ethics and Tax Evasion, Asian Social Science, 11 (2013)213-220.
 Li, D., Jiang, Y., An, S. Shen, Z. and Jin, W., The influence of money attitude on young Chinese consumers’ compulsive buying. Young Consumers, 10 (2009) 98-100.
 Magali, J. J., Factors Affecting Credit Default Risks for Rural Savings and Credits Cooperative Societies (SACCOS) in Tanzania,European Journal of Business and Management 5 (2013) 60-73.
 Matlay, H. and Westhead, P., Virtual teams and the rise of e-entrepreneurship in Europe, International Small Business Journal, 23 (2005) 279-300.
 McCann, F. and McIndoe-Calder, T., Determinants of SME Loan Default: The Importance of Borrower-Level Heterogeneity, Research technical paper. The central bank of Ireland., (2012).
 McHugh, S. and Ranyard R., Credit repayment decisions. The role of long-term consequence information, economic and psychological factors.”Review of Behavioral Finance 4 (2012) 98-112. Retrieved from DOI 10.1108/19405971211284880
 Medina, J. F., Saegert, J. and Gresham, A., Comparison of Mexican-American and Anglo American attitudes toward money,The Journal of Consumer Affairs, 30, 124–144.
 Mitchell, T. R and Mickel, A., The meaning of money: an individual difference perspective, The Academy of Management Review, 24 (1999) 568-578.
 Mokhlis, S., Relevancy and Measurement of REligiodity in consumer behaviour research, International Business Research, 2 (2009) 75-84
 Mokhtar S.H. et al. (2012).“The determinant of microcredit loans repayment problem among microfinance borrowers in Malaysia”. International Journal of Business and Social Research, 2 (2012) 33-45.
 Morduch, J. (1998). “Does Microfinance Really Help the Poor? New Evidence from the Grameen Bank”. Journal of Development Economics, 60 (1998) 229-248.
 Mosley, P. and Rock, J ., Microfinance, Labor Market, and Poverty in Africa: A Study of Six Institutional, Journal of International Development, 16 (2004) 467-500.
 Muhammad, M. Z., Char, A. K., Yasoa, M. R. and Hassan, Z., Small and Medium Enterprises (SMEs) Competing in the Global Business Environment: A Case of Malaysia,International Business Research, 3 (2010) 66-75.
 Murray, J., Default on Loan, United States Business Law and Guide., (2011).
 Nawai, N. and Shariff, M.N., Loan Repayment Problems in Microfinance Programs that use Individual Lending Approach: A Qualitative Analysis,Journal of Transformative Entrepreneurship, l (2013) 93-99.
 Nguyen, C.H., Access to credit and borrowing behaviour of rural households in a transition,paper presented at International Conference on Rural Finance Research Moving Results into Policies and Practices, (2007) 19-21 March, Rome.
 Nguta, M.H. and Guyo, H.S., Factors Influencing loan repayment Default in Microfinance Institutions.The experience of Imenti North District, Kenya, International Journal of Applied Sciences and Technology, 3 (2013) 80-84.
 Norenzayan, A. and Shariff A. F., The origin and evolution of religious prosociality, Science, 322 (2008) 58-62.
 Nyahende, V. R., The Influence of Students’ Loan Borrowers’ Characteristics on Default Rate in Tanzania, Higher Education Studies, 3 (2013) 26-48.
 Obamuyi, T.M., An Exploratory Study of Loan Delinquency Among Small and Medium Enterprises (SMEs) in the Ondo State of Nigeria, Journal of Labour and Management in Development, 8 (2007) 1-10.
 Okurut F. N. &Kinyondo A. A ., Determinants of loan repayment performance in microcredit institutions: Evidence from Tanzania, Asian African journal of economics and econometrics, 9 (2009) 337-345.
 Onyeagocha, S. U. O. et al., Determinants of Loan Repayment of Microfinance Institutions in the Southeast States of Nigeria, International Journal of Social Science and Humanities,1 (2012) 4-9.
 Panigrahi, A.K., Risk Management In Micro, Small And Medium Enterprises (MSMEs) In India: A Critical Approach, Asia Pacific Journal Of Marketing & Management Review, 1(4) (2012)
 Papias M. M., Repayment Behavior in credit and saving cooperative societies, Empirical and Theoretical evident. International Journal of Social Economics, 36 (2009) 608-624.
 Paul A. Y ., Size matters: the late payment problem”. Journal of Small Business and Enterprise Development. 18 (2011) 732-747.
 Phau, I. and Woo, C.,,Understanding compulsive buying tendencies among young Australians, Marketing Intelligence and Planning, 26 (2008) 441-458.
 Rehman, A. U. and Shabbir, M. S, The Relationship between Religiosity and New Product Adoption, Journal of Islamic Marketing, 1 (2010) 63-69.
 Reiss, F. (2006). Retrieved from www.publishinggame.com/artwhysmallbusinessesfail.htm
 Robert, J. A and Jones E., Money attitude, credit card use, and compulsive buying among college students. Journal of Consumer Affairs, 35 (2006) 213-240.
 Robert, J. A., Sepulveda, M. and Cedar, J., Demographic and Money Attitude: A test of Yamauchi and Templers’ money attitude scale in Mexico, Personality and Individual Difference, 27 (1999) 19-35.
 Roslan and MohdZaini A. K., The determinant of Microcredit Repayment in Malaysia: The Case of Agrobank, Humanity and Social Science Journal, 4 (2009) 5-52.
 Roslan, A.H. and MohdZainiAbdKarim, M. Z. A., Determinant of Microcredit Repayment in Malaysia: The case of Agrobank, Humanity and Social Sciences Journal 4 (2009) 45-52.
 Rubinstein, C. R., Survey Report on Money, Psychology Today. 23 (1981) 103-126.
 Sabri, M. F, Hayhoe C. R and Ai, G. L., Attitude, Values and Belief Towards Money: Gender and Working Sector Comparison,Journal of Social Science and Humanity. 14 (2006) 121-130
 Salah, S. A and Ndubisi, O. N., An Evaluation of SME Development in Malaysia, International Review of Business Research Papers, 2 (2006) 1-14.
 Salleh, M. S., Religiosity and Development: A Theoretical Construct of an Islamic-Based Development,International Journal of Humanities and Social Science. 2 (2012) 266-274.
 Schmitz, H., Collective Efficiency: Growth Path for Small Scale Industry, Journal of Development Studies, 31 (1995) 529–66.
 Schultz, P. W., Zelezny, L., Dalrymple. N. J., A multinational perspective on the relation between Judeo-Christian religious beliefs and attitudes of environmental concern,Environment and Behavior, 32 (2000) 576-591.
 Shariff, A. F., and Norenzayan. A., God Is Watching You Priming God Concepts Increases Prosocial Behavior in an Anonymous Economic Game,Psychological Science, 18 (2007) 803-809.
 Sharma, M. and Manfred Zeller M., Repayment Performance in Group-Based Credit Program in Bangladesh: An Empirical Analysis, World Development, 25 (1997) 1731-1742.
 Sinha, M. K, Dhaka, J. P and Mondal, B., Analyzing social attributes of loan default among small Indian Dairy farms: A discriminating approach, Academic Journal. 9 (2014) 2354-2558.
 Souiden, N. and Rani, M, Consumer attitude and purchase intentions towards Islamic banks: the influence of religiosity, Journal of Bank Marketing,33 (2015) 143-161.
 Stark, R. and Glock, C. Y., American Piety: The nature of religious commitment. Berkeley,UniversityCaliforna Press, (1968).
 Swain, R. B, Sanhb, N. V and Tuanc, V.V., Microfinance and Poverty Reduction in the Mekong Delta in Vietnam,African and Asian Studies, 7 (2008) 191-125
 Taiwo Awiyemi T. T & Olowa O. W., The determinant of loan repayment Potential of Group Borrowers in the Oyo State of Nigeria, Agriculture Journal, 5 (2010) 12-18.
 Tambunan, T. T. H., The Indonesian case of Enterprising Communities: People and Places in the Global Economy,Journal Development of Small and Medium Enterprise in A Developing Country,5 (2011)68-82.
 Taneja, R. M, Money Attitude_ AnAbridgement, Journal of Arts, Science and Commerce. 3 (2012) 94-98.
 Tang T. L. P, The meaning of money revisited, Journal of Organizational Behavior, 14 (1993) 197-202.
 Tang T. L. P, The meaning of money: Extension and Exploration of the Money Ethic Scale in a sample of a university student in Taiwan, Journal of Organizational Behavior,14 (1993) 93-99.
 Tang T. L. P. and Gilbert, P. R., Attitude Toward Money as Related Intrinsic and Extrinsic job satisfaction, stress, and work-related attitude., , Personality and Individual Difference, 19 (1995) 327-332.
 Teah, M., Lwin, M and Cheah, I., Moderating role of religious beliefs on attitudes towards charities and motivation to donate,Asia Pacific Journal of Marketing and Logistics. 26 (2014) 738-760.
 Wei-Shein, W. (2014, September). “SME Bank aims to cut non-performing loans. The Star, Retrieved from http://www.thestar.com.my/Business/Business-News/2014/09/02/SME-Bank-aims-to-cut-NPLs-Its-targets-to-bring-the-figure-down-to-about-5-in-three-years/?style=biz.
 Vandenberg, P., Poverty Reduction through Small Enterprises, SEED Working Paper No. 75 (2006)
 Venkataramanaiah, S. and Parashar, S, P., Enhancing the Competitiveness of SMEs through industrial cluster: The Indian experience, International Journal of Technology Management and Sustainable Development, 6 (2007) 227-243.
 Verse: 283: Al-Baqarah: Al-Quran
 Wang, L., Lv, W. and Jiang, L., The impact of Attitude variables on credit debt behavior,Nankai Business Review International. 2 (2011) 120-139.
 Wong, J,.An Analysis of Money Attitudes: Their Relationships and Effects on Personal Needs, Socudentity and Emotion, Journal of Leadership, Accountability and Ethics. 8 (2010)
 Wongnaa, C. A and Awunyo-Vitor, D.,Factor Affecting Loan Repayment Performance among Yam Farmers in the Sene District, Ghana,Agris on-line Papers in Economics and Informatics. 6 (2013) 111-121
 World Bank.,Accelerating catch-up: Tertiary Education for Growth in Sub-Saharan Africa,Washington, DC: World Bank., (2008a).
 World Bank.,Project Appraisal Document; Science and Technology Higher Education Program, Tanzania’. Washington DC: World Bank ., (2008b)
 Yamauchi, K. T. and Templer, D. I., The Development of Money Attitude Scale, Journal of Personality Assessment, 46 (1982) 522-528.