Abstract
Bound rationality theory is used to study the role of information disclosure in influencing credit card user’s repayment behaviour in Malaysian. Eight types of information disclosure analysed on the actual credit card users which divided into three prior define groups. Data collected by using the survey response of 413 card users in the northern region of West Malaysia. The finding of the discriminant analysis confirms that minimum payment due is the most contributing information disclosure which discriminant amongst the groups. Conditional on attributes of the data, quadratic discriminant analysis (QDA) outclassed the other discriminant analysis. QDA-resubstitution enable the credit card users to correctly classified repayment behaviour at 85 percent. Addition to that, for prediction purposes, 84 per cent of credit card users were correctly classified. The findings of this study highlight the importance of information disclosure in influencing credit card repayment decision. These findings have implications for policy maker, card users and issuers.
Highlights
Credit card allows the user to enjoy the ease of “buy-now-pay-later” concept, earn cashback rewards and bonuses
Data were collected in the northern region of West Malaysia
The Quadratic Discriminant Analysis (QDA) is preferred over other technique based on the error count and unequal covariance matrix criteria as defined by previous literature (Boedeker & Kearns, 2019; Tate, 2010; Fulcomer et al, 1974)
Summary
Credit card allows the user to enjoy the ease of “buy-now-pay-later” concept, earn cashback rewards and bonuses. Min and Kim (2003) postulates that credit card is manly used for two purposes, day-to-day transactions and borrow money. In case of day-to-day transaction, credit card enables to use unsecured credit as per limit set by credit card companies. Credit card user withdraws cash money for short-term loan. Based on credit card repayment behaviour, users are divided into mainly two categories transactors and revolvers. Credit card transactors pay full payment and avoid incur interest charges. Credit card revolvers pay minimum payment of their balance and incur interest charges. In line with revolvers decision making, credit card classified revolvers the way they choose repayment decision (Jørgensen and Igel, 2021).
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