Financial Behavior and Knowledge Regarding Debt Payment and Its Relationship with Sociodemographic Variables

Abstract

The study aimed to determine the relationship between financial behavior and knowledge. We analysed the financial behavior of workers regarding the payment of credit card debt and its relationship with financial knowledge and sociodemographic variables. A non-probabilistic self-determination sample of workers from a corporation with nationwide coverage in Mexico was selected for the study. Three hundred fifty-seven cases were obtained, of which only 188 cases of workers who indicated having a credit card were selected. For the analysis of the data, to verify the relationship between the individual’s decision with the independent variables, as well as the probability that an individual i belongs to the category j = 1, 2…, J, was used in the Multinomial Logit Model. The sample was made up of 61 % men (n = 230) and 32.9 % women (n=124), with 6.1 % (n = 23) missing cases. The main findings showed that financial behavior was related to workers’ knowledge about the financial conditions of credit and the variables of age and monthly income. Knowing the payment dates was significant in making the necessary payment to avoid generating interest and paying the total debt amount. In addition, it is more likely that the person will make the payment needed for not generating interest if they are over 40 years old, and it is more likely that the person will pay the full amount of the debt if they receive three minimum monthly salaries.