Social Norms Concerning Financial Liability for Various Indebtedness Experiences and Borrowing Plans: Evidence from Poland*

Abstract

Purpose: This study examines the relationship between social norms and credit use. Design/Methodology/Approach: Analysis of variance and Chi squares were used to analyze the data collected in the survey. Findings: In the survey, model borrowers present the highest level of internalization of norms, along with thoughtfully incurred liabilities that they pay back on time. They treat loans as a standard form of financing that does not involve negative emotions. Unreliable debtors internalize more strongly the norms, thus not paying loans on time or spending more than they earn while acknowledging they will have issues with debt repayment because living with debt is the norm for them. Non-borrowers would only take a loan as a last resort because of the psychological burden. Repaying all liabilities on time is their absolute priority. They would not be able to function normally with debt. People planning loans in the near future treat both the borrowing itself and the failure to repay all loans on time as the norm. Those who do not plan to borrow internalize the norms of avoiding loans, especially those they could not repay, and have a negative association with loans. Practical Implications: Sharing social norms can explain credit use behaviors and may be helpful both for lenders and debt collection companies. Originality/value: Our study has shown significant relationship between social norms and credit use.