Planned behavior with saving and borrowing intentions – how do consumers make ends meet?
Kent Eriksson, Cecilia Hermansson, Malin Malmström, Mark Sanctuary, Hsu-Chi WengPurpose
The ability to make ends meet has long been a critical issue tied to individuals' financial well-being. This study proposes and analyzes a structural model to explain the antecedents of making ends meet behavior, grounded in the theory of planned behavior.
Design/methodology/approach
Data were collected through a survey of bank customers from a large Swedish retail bank (N = 14,617). Structural equation modeling includes antecedents to making ends meet, such as social learning, financial confidence, risk attitude, saving and borrowing intentions. To account for demographic and socioeconomic factors, group analysis was conducted across gender and income groups to evaluate the model's applicability.
Findings
Results reveal that social learning, financial confidence and risk attitude collectively shape behavioral intentions to save and borrow. Saving intention positively contributes to the ability to make ends meet, while borrowing intentions decrease this likelihood. Additionally, the study finds that financial information received through social surroundings differently predicts saving intention and borrowing intention. The model's applicability across gender and income groups underscores the importance of these behavioral constructs in shaping make ends meet.
Practical implications
Based on these insights, we propose that financial institutions seeking to enhance clients' ability to make ends meet could focus on delivering effective financial guidance and relative information on financial management. Specifically, it is essential to support individuals with limited resources in initiating saving, even in small amounts, while simultaneously reducing their reliance on borrowing to address financial gaps. By implementing initiatives that promote efficient money management techniques and offering programs that enhance financial literacy, banks can play important role in strengthening responsible financial behavior and improving financial well-being.
Originality/value
This study advances understanding of the antecedents of making ends meet grounded in the theory of planned behavior. The proposed structural model integrates social learning, financial confidence and risk attitude as key factors shaping saving and borrowing intentions to explain making ends meet behavior. Notably, incorporating borrowing intention offers a more comprehensive perspective by revealing its potential counteracting effect on achieving financial stability. Our findings highlight the significant impact of social learning – through economic and financial information from sources such as family and banks – on saving and borrowing intentions.