Understanding The Impact Of Consumer Attitudes, Knowledge, And Social Factors On The Purchase Behaviours Of Credit Card Users In India And Bangladesh

(Last Name) 1

Understanding the Impact of Consumer Attitudes, Knowledge, and Social Factors

On the Purchase Behaviours of

Credit Card Users in India and Bangladesh

(Professor’s Name)

(Course)

25 October 2014

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Executive Summary

As one of the primary branches of electronic banking, credit cards are financial tools that

provide the option of borrowing funds against the user’s earning potential, usually at the point of

sale or through cash advances dispersed through ATMs. Globally, credit card ownership and

usage has been seen to increase substantially in recent decades (Wickramasinghe &

Gurugamage, 2009). Various factors, including consumer attitudes toward debt, knowledge of

the terms and conditions set forth by credit card agreements, social factors, and advertisements

all work to influence the propensity of consumers to own and use credit cards. This report

focuses on the frequency and impact of credit card usage and ownership in the emerging markets

of South Asia, specifically that of India and Bangladesh.

Key issues associated with the credit card industry of South Asia that bear further

investigation are the factors that work to explain the purchasing behaviours of credit card users

in these emerging markets, the effects of credit card ownership on consumer buying patterns, the

relationship between credit card usage and demographic differences, South Asian consumer’s

approach toward the concept of debt and the impact of debt on credit card ownership and usage,

and the awareness of the financial tool among users. While previously cash was king in this

region of the world, with the increasing pushes toward globalization combined with the

technology infrastructures being implemented in order to accommodate more frequent credit

card usage, it is easy to see how these countries are now surging forward in credit card usage and

acceptance.

The broad objective of the study is to determine credit card ownership and usage

behaviours of cardholders in India and Bangladesh. This study utilizes a descriptive survey as a

means of approaching this particular topic of research. The sample size has been calculated at

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148 with a confidence level of 95% and a precision of 10%. 151 individuals were surveyed with

a structured questionnaire using judgmental sampling as no sampling framework could be

identified. Of these, 34 were female and 117 were male with 127 individuals from Bangladesh

and 24 from India, all of whom represented the working population.

Face validity was used as a means of deciding upon 8 complex variables and 24 simple

variables under the parameters of ownership and usage. The complex variables chosen include

demographic factors, attitude toward debt, promotional factors, features of the credit card, social

factors, buying behaviour, usage particulars, and convenience factors. All questions asked were

based on those 24 simple variables with two additional questions asked as a measure of

ownership (preference to cash) and usage (frequency of usage). For the majority of questions a 5-

point Likert scale was used, with options ranging from “Strongly Agree” to “Strongly Disagree.”

The Cronbach’s Alpha for this research, based on standardized items, was 0.552,

suggesting that the items used to construct the scale have an acceptable internal consistency. In

order to analyse the data gathered from the surveys, a similarity test for gender, marital status,

occupation, and income was completed in order to find the statistical similarities between the

categories. Individually, for ownership and usage, a comparison between the index of all relevant

questions and the two separate composite measures of ownership and usage were conducted.

Inter-item correlation analysis was undertaken in order to determine how well the individual

variables were related to the preference of owning a credit card versus paying in case and the

frequency of card usage. Factor analyses and multiple regression tactics were used in order to

determine the most important variables and the ability of those variables to predict a particular

outcome. In addition, hypothesis testing was done in order to gain better insights into the set

parameters.

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According to the tests of similarity, only occupation, out of all of the demographic factors

identified, affects the preference of the individual to cash; however, for frequency of usage, all

demographic categories had a similar impact. In terms of frequency analysis, an important

finding was the tendency to engage in unplanned buying as a result of credit card ownership was

higher in females than males. Hypothesis testing indicated that the majority of credit card owners

do not possess a positive attitude toward debt in spite of the fact that they do not directly

perceive credit cards as debt devices. Furthermore, the majority of credit card owners are not

aware of the terms and conditions attached to their credit cards, the offers associated with those

cards, or the privileges associated with credit card ownership, though in spite of this lack of

knowledge, they do feel as though those privileges and offers are important factors to consider

when using a credit card. Factors such as the cost of service and the security of the transaction

are also deemed as important to the majority of credit card owners. The study indicated that the

promotional tools that are used within this sector are week and fail to have any direct impact on

credit card usage or ownership within this region. The majority of individuals engaged in

unplanned buying with their credit card, though the exact opposite is true when it comes to

instalment purchases, online purchases, or cash withdrawals. The majority of respondents used

their credit card for electronic purchases, appliance purchases, supermarket purchases, clothing,

and for payment in hotels and restaurants. It was indicated that the majority of respondents do

not often exceed the limit of their credit card.

The index analysis found that variables including the features of the credit cards, the

social factors for ownership and the buying process, usage particulars, credit card features, and

convenience for usage were the most important variables for participants to consider. Correlation

analysis indicated that overall ownership, usage indexes, views on debt, and expenditures on

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electronics and appliances were the most correlated variables. Factor analysis indicated that there

were 13 key variables, while multiple regression analysis indicated that there were three

important variables that explained the variability of ownership and usage including (1) views on

debt, security, and advertising for ownership; (2) expenditure on hotels, restaurants, and

instalment buying; and (3) spending on electronics and appliances for personal use. Overall,

these findings sum up the manner in which certain factors stimulate the average consumer

ownership and usage activities in Bangladesh and India.

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Table of Contents

Executive Summary.......................................................................................................2

Introduction.................................................................................................................10

1.1 Introduction...............................................................................................10

1.2 Background...............................................................................................11

1.3 Research Question....................................................................................12

1.4 Research Objectives.................................................................................13

1.5 Main Issues..............................................................................................13

1.6 Hypotheses..............................................................................................14

1.7 Rationale.................................................................................................14

1.8 Types of References...............................................................................15

1.9 Methodology..........................................................................................16

1.10 Scope and Limitations..........................................................................16

1.11 Expected Results..................................................................................17

1.12 Summary..............................................................................................17

Literature Review....................................................................................................18

2.1 History...................................................................................................18

2.2 Similarities and Differences in Credit Card Ownership........................18

2.3 Economic Development........................................................................19

2.4 Demographic Influences.......................................................................20

2.5 Usage Behaviors...................................................................................21

2.6 Debt Perceptions...................................................................................22

2.7 Summary...............................................................................................23

Methodology..........................................................................................................25

3.1 Research Type......................................................................................26

3.2 Data Collection.....................................................................................26

3.2.1 Primary Data Collection Methods.........................................26

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3.2.1.1 Advantages and Disadvantages..............................28

3.2.2 Secondary Data Collection Methods.....................................28

3.2.2.1 Advantages and Disadvantages..............................29

3.3 Sample Size..........................................................................................29

3.4 Sample Frame.......................................................................................30

3.5 Variable Analysis (Schema).................................................................30

3.6 Measurement of Validity.....................................................................32

3.7 Reliability of Data...............................................................................33

Data Analysis.........................................................................................................35

4.1 Composite Measure of Ownership and Usage....................................35

4.2 Test of Similarity.................................................................................36

4.3 Frequency Analysis.............................................................................37

4.4 Regression Analysis.............................................................................44

4.5.1 Ownership.............................................................................44

4.5.2 Usage.....................................................................................45

Findings..................................................................................................................47

5.1 Findings from Frequency Analysis......................................................47

5.1.1 Demographic Profile of Respondents..................................47

5.1.2 Association between Credit Card Brands and Type............48

5.1.3 Purpose of Usage.................................................................49

5.1.4 Average Monthly Credit Balance........................................49

5.1.5 Association between Consumer Buying and Gender..........49

5.2 Hypothesis Testing Results.................................................................50

5.3 Attitudes towards Debt.......................................................................51

5.4 Knowledge of Credit Card Features....................................................52

5.5 Influence of Promotional Factors........................................................52

5.6 Influence of Social Factors..................................................................52

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5.7 Credit Card Usage in Specific Purchase Situations...........................53

5.8 Purpose of Spending and Scale of Purchase......................................54

5.9 Impact of Convenience on Usage Behaviour.......................................54

5.10 Findings from Objectives.................................................................54

5.11 Findings from Index Analysis.........................................................55

5.12 Findings from Correlation Analysis.................................................57

5.13 Findings from Regression Analysis.................................................58

5.14 Findings from Factor Analysis........................................................58

5.15 Summary.........................................................................................59

Conclusion..........................................................................................................61

6.1 Conclusion.......................................................................................61

6.2 Discussion of Knowledge...............................................................62

References.........................................................................................................64

Table of Figures

Figure 3.1 Determining Sample Size.................................................................30

Table of Tables

Table 3.1 Coordination Schema: Credit Card Ownership........................................................31

Table 3.2 Coordination Schema: Credit Card Usage................................................................32

Table 3.3 Results of Cronbach’s Alpha Test............................................................................. 34

Table 4.1 Similarity between Index Value and Composite Measures of Ownership and Usage35

Table 4.2 Cross Tabulation of Preference to Cash and Different Categories.............................36

Table 4.3 Cross Tabulation of the Frequency of Usage and Different Categories.....................36

Table 4.4 Frequency Analysis: Gender..................................................................................... 37

Table 4.5 Frequency Analysis: Marital Status.......................................................................... 37

Table 4.6 Frequency Analysis: Occupation.............................................................................. 38

Table 4.7 Frequency Analysis: Income.................................................................................... 38

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Table 4.8 Association between Credit Card Brands and Type of Cards Owned.................. 38

Table 4.9 Purpose of Usage.................................................................................................. 39

Table 4.10 Average Monthly Credit Balance...................................................................... 39

Table 4.11 Association between Buying Behaviour and the Gender Differences.................40

Table 4.12 Cross Tabulation of Gender and Different Purposes of Use..............................41

Table 4.13 Inter-Item Correlation......................................................................................... 42

Table 4.14 Regression Analysis Enter – Ownership............................................................. 44

Table 4.15 Stepwise Regression Method.............................................................................. 45

Table 4.16 Regression Analysis of Usage............................................................................ 46

Table 4.17 Stepwise Regression Analysis of Usage.............................................................. 46

Table 5.1 Hypotheses Testing................................................................................................51

Table 5.4 Mean Ratings......................................................................................................... 55

Table 5.5 Medium Means...................................................................................................... 56

Table 5.6 Low Mean.............................................................................................................. 57

Table 5.7 Regression Analysis.............................................................................................. 58

Table 5.8 Factor Analysis..................................................................................................... 59

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Introduction

1.1 Introduction

In this era of rapid technological advancements, it becomes increasingly necessary for

institutions to fulfil customer needs through constant innovation and adjustment. Conveniences

has become one of the driving factors for business transactions and, as a result of this, banking

sectors around the globe, including those in India and Bangladesh, have introduced electronic

banking facilities. One of the primary methods by which the banking sector has worked to

address this desire for convenience is through the provision of credit cards. Credit cards offer the

luxury of affording the individual or the business to which the card has been issued with the

availability of borrowing funds at the point of sale to be paid back at a later date, with interest

(Consumer Financial Protection Bureau, 2014). Visa and MasterCard are the predominant cards

offered within the region (Visa, 2014).

As a result of the worldwide increases in credit card usage and credit card ownership, this

type of payment method is viewed as an active stimulus for changes in consumer purchasing

behaviours (Wickramasinghe & Gurugamage, 2009). This trend of increasing usage and

ownership serves as a means of reflecting the growing popularity of the credit card as a preferred

method of payment for goods and services in lieu of cash, checks, or other forms of payment

(Themba & Tumedi, 2012). Credit cards afford consumers with the benefit of acquiring and

using goods and services without paying for them instantly with cash, removing the burden of

carrying cash and even being used as a method of obtaining those goods and services without the

necessity of having the required amount of funds available to purchase those items or services

(Foscht, et al., 2010). Saturated demand levels for credit cards in developed nations have worked

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to shift the focus of the credit card companies toward emerging markets, opening up a new field

of exploration regarding the behaviours and preferences of individuals within those regions

(Kurtulus & Nasir, 2012). Various factors, including, but not limited to, consumer attitudes

toward debts, knowledge of the terms and conditions of credit cards, social factors, and

advertisements used to influence the propensity to own and use a credit card all play their own

roles in consumer preferences in these emerging areas. As a result of these considerations, this

study will focus on the frequency and the impact of credit card usage and ownership in the

emerging markets of India and Bangladesh.

1.2 Background

In Bangladesh the concept of a credit card is relatively new, with the primary use of this

financial tool to be by individuals living in the metropolitan areas of the country and, more

specifically, in the capital, Dhaka. A large portion of merchants in Bangladesh now accept credit

cards, with all banks in Bangladesh issuing either Visa’s, MasterCard’s, or both, with the

exception of a single bank who issues American Express cards; it is important to note that this

bank is the exception to the rule and does so as a result of its smaller customer base. In spite of

the frequency of credit card usage within the country, the majority of prepaid cards and/or gift

cards are largely unavailable within the country, though Shahjalal Islami Bank has recently

launched a campaign to bring prepaid cards for use in the common customer market. Moreover,

unlike developed economies, the strata of credit card owners in Bangladesh are limited to public

and private service holders and businessmen; it may be argued that the industry has a long way

to go in terms of diversifying its customer base. It should also be understood that the factors that

affect credit card usage and the patterns of consumers in this emerging market and the

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implications of those factors for developing market strategies will not be the same as those found

in developed markets as a result.

India’s credit market has historically played a significant role in assisting the upper class

and the growing middle class populations in meeting their various financial needs and wants.

Institutions that issue credit cards in India range from the large, well-established commercial

banks that are specialized in consumer financing to financing development companies to state or

region based smaller co-operatives. These institutions offer a wide range of cards with credit

options, ranging from the traditional credit card offerings to debit cards that may be used as

credit cards if the need arises. While the market for credit cards is especially large in the urban

areas and metropolitan cities, the credit card culture has also started to spread through the more

rural areas of the country, impacting the lives of all segments of the population. Driving factors

behind the rise of credit card issuance and usage in India include a combination of product

innovations, advancements in technology, and a rising culture of consumerism, areas that have

the greatest affect among the middle class and the “below 40” consumer segments. As it was

explained by an official at the Central Bank of India, “India did not have a credit card culture

because we like to pay off our debts soon. But with marketing, increased e-commerce, the

‘Americanization’ of our culture, and the new generation’s ease with the product, there is a

change in mind-set” (New Indian Express, 2014, p. 1).

1.3 Research Question

The research question that has been identified for the purposes of completing this

research study is: How do consumer attitudes, knowledge, and various social factors affect the

purchase behaviours of credit card users in India and Bangladesh?

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1.4 Research Objectives

The objectives that will be addressed through the completion of this research project

include:

 The determination of credit card ownership and usage behaviours of cardholders in

Dhaka, Mumbai, and Kolkata in order to determine the extent to which these services are

utilized;

 Analyse the consumption trends of the area prior to and after the introduction of credit

cards; and

 To establish the relationship between the changes in behaviour of credit card issuers and

identify consumer behaviour changes regarding the consumption of those products.

Through the application of these objectives to the study it will be possible to determine

the different ways in which ownership and usage behaviours have changed, how noticeable those

changes are prior to the issuance of credit cards in those regions versus after the use of the same

became common practice, and to determine whether or not there is a correlation present between

the way that credit cards are marketed and the behaviours of consumers in regard to their

obtainment and usage.

1.5 Main Issues

The primary issues associated with the credit card industry in South Asia include an

understanding of the different factors that explain the consumer behaviours displayed by credit

card users in emerging markets, the effects of credit card ownership on consumer buying

patterns, the relationship present between credit card usage and demographic differences,

consumers’ approach toward the concept of debt and its impact on credit card usage and

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ownership, and the awareness of this financial tool among users. Previous research primarily

focuses on any one of those parameters of ownership and/or usage; however there are factors that

affect both the ownership parameters and the usage parameters in different ways. Most existing

research on the topic has been done from the perspective of a developed nation, and the impact

of the relatively new concept of credit cards as a means of payment in emerging markets have

yet to be discovered.

1.6 Hypotheses

It is hypothesized that:

 The majority of credit card owners in emerging markets perceive credit cards as debts,

but view those debts with a positive attitude.

 The majority of credit card owners in emerging markets are not aware of the terms and

conditions, offers, or privileges associated with credit card ownership.

 The majority of credit card owners in emerging markets were influenced to get those

credit cards as a result of advertising or promotional marketing.

 The majority of credit card owners in emerging markets engage in unplanned buying.

1.7 Rationale

This study attempts to understand the current state of the South Asian credit card industry

in terms of its ownership and usage behaviours through the use of demographics, behaviours,

consumer attitudes, and consumer knowledge. Little research has been done into this particular

field, and even less into the field in the context of emerging markets. The results of this study

will provide pertinent information regarding the marketing strategies of financial services,

retailers, and businesses in the promotion of credit card usage. The consumer credit card market

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in the developed world has reached the saturation point; as such, the industry will need to

develop the appropriate strategies designed to appeal to the changing customer needs of

individuals in these emerging markets in order to encourage further use of credit cards. Existing

credit card companies will gain insight into the different influences on consumer behaviours. The

primary beneficiaries of this report include:

I. Existing local and international banking institutions that have planned expansion into the

credit card industry.

II. Existing credit card service providers like Visa, MasterCard, and American Express.

III. New entrants into the credit card industry.

IV. Advertising firms who deal with credit card marketing.

V. Researchers and research institutions who wish to conduct further research into this field.

1.8 Types of References

In order to be able to effectively complete this research study, it is necessary to complete

a literature review, affording insight into the current body of knowledge on the matter. To this

end, a search of the school’s online library will be conducted, providing access to relevant

academic journals and peer reviewed articles present within the databases. In addition, a review

of available books on the matter will be undertaken, allowing for the obtainment of appropriate

published literature. Finally, a search of relevant online data will be undertaken, looking for

potential reputable websites as found through the use of such tools like Google and Google

Scholar. Material searched for will include information on credit card usage, advertising

strategies, information on the history of credit cards, and data on credit card ownership.

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1.9 Methodology

In order to complete this study, a descriptive survey will be utilized for the purposes of

obtaining information on the different influencing factors associated with credit card ownership

and usage within these markets and the relative importance assigned to each of those factors.

Qualitative and quantitative data will be obtained to this end. In addition, an interview with five

bankers from Standard Chartered, State Bank of India, HSBC, Citi, and ICICI were interviewed

regarding the current conditions in the India and Bangladesh markets, providing further insight

into the credit card industry in these regions.

1.10 Scope and Limitations

This research study is designed to only obtain data from current credit card holders; as a

result of this fact, through judgmental sampling, the research conducted its survey on the credit

card clients of different banks in three South Asian cities only. As the majority of credit card

holders live within the cities, the sample may be considered representative. Participants ranged

from public and private service holders to businessmen and businesswomen. The main focus was

solely on the ownership and usage aspects of credit card holders based on fixed variables.

The primary limitations faced in the completion of this study include:

 The fact that the sample consists of individuals from only three cities.

 The analysis and interpretation of the data treats the entire sample frame as one entity as

opposed to offering a breakdown by city.

 Certain survey questions may have resulted in unclear data given the fact that they could

be interpreted in a variety of ways by respondents.

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 The population of credit card holders of the three cities is an approximate number based

on the population of credit card holders of a certain bank and their market share.

 The closed ended questions that made up the majority of the survey may have reduced

the survey’s validity.

 Self-administered surveys were not always possible, potentially resulting in participant

confusion.

1.11 Expected Results

It is anticipated that the research will show that the majority of credit card users prefer

credit cards for certain types of purchases while eschewing them in other situations. It is further

expected that certain purchasing behaviours will be clearly displayed based on gender of

respondent. Furthermore, it is anticipated that the majority of users within the metropolitan areas

will have credit cards, but will not be well versed in the manner in which they work or the

associated facts regarding their ideal usage.

1.12 Summary

Chapter 1 of this dissertation has afforded the researcher with the ability of describing the

study and its different components, making projections regarding the data to be gathered, and

identified the specific questions to be answered during the completion of the study. Chapter 2

will provide the literature review, allowing for a clear understanding of background information

on this matter. Chapter 3 will consist of a description of the methodology that has been set forth

for the completion of this study. Chapter 4 will present the results, while Chapter 5 will offer up

a discussion of those results, ending with Chapter 6 providing concluding statements regarding

the research.

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Literature Review

2.1 History

The use of a credit card offers consumers the benefit of acquiring and using goods and

services without paying for them up front, removing the burden of carrying cash and granting

consumers the ability to acquire goods and services prior to having the requisite cash saved up to

pay for those goods in full. Credit cards likewise afford consumers with access to credit without

having to go through financing options fraught with paperwork, but in spite of these benefits, or

perhaps because of them, credit card ownership and usage is associated with increased consumer

debt and unplanned spending (Thomas, 2010; Norm, 2008). While many view the credit card as

primarily a modern convenience, the use of the credit card in developed society first started in

the 1900s (Anderson, 2014). Credit was originally perceived as a beneficial tool for those who

needed something immediately, though the manner in which such cards have been used in recent

years casts doubt on the fact that this was once the case (Anderson, 2014). The use of credit

cards affords started in the 1950s in South Asia with the arrival of American Express who first

started issuing credit cards in 1958 (Anderson, 2014). During the past sixty years, the credit card

industry within the region gradually evolved, with most banks now offering credit card services

to eligible customers.

2.2 Similarities and Differences in Credit Card Ownership

There are many different similarities and differences present in credit card ownership and

usage among the different nations of the world (Wickramsinghe, 2009; Bagnall, et al., 2014).

Similarities in the attitude and manner in which individuals utilize credit cards and perceive

credit cards in America and Canada are present, though there are differences between how credit

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cards are used and perceived when comparing the attitudes of America and Canada to those of

emerging nations (Bagnall, et al., 2014; Themba & Tumedi, 2012). In general, credit card

ownership and usage levels are higher in the countries that have higher per capita incomes and

the necessary infrastructure to process electronic payments, though it is important to note that

with the inclusion of technologies such as card readers that function through smart phones, this is

now not as much of a factor as it once was (Bagnall, et al., 2014; PayPal, 2014). It was

determined that there was a close relationship between the spread of credit card usage in a

particular country and the socioeconomic level of development found within that country (Aker

& Mbiti, 2010). In other words, the more developed the nation, the greater the prevalence of

credit card ownership and usage. In light of this information, it is unsurprising that the credit card

market in India is reported to be low as a result of the fact that approximately 40% of the

population does not own a bank account (Khare, 2011). Failure to own a bank account makes

credit card ownership a far less real possibility for those individuals due to the need to qualify for

a credit card based on income requirements, job status, and/or the amount of money that an

individual has in their bank account, depending on the type of card being applied for.

2.3 Economic Development

The payment industries in India and Bangladesh were approaching $14 billion in 2009,

though it is likely that since that time they have now surpassed that mark (Kamal, Thomas, &

Tinaikar, 2009). Electronic payments have increased significantly, now making up over 48

percent of total value due to the increased electronification of businesses as a result of strides in

globalization in these areas (Kamal, Thomas, & Tinaikar, 2009). These trends of continued

growth in the preference for an electronic medium lend insight into the economic developments

that are taking place within these regions, with payments increasing, debts increasing, and access

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to electronic purchase and payment options likewise on the rise (Kamal, Thomas, & Tinaikar,

2009). Continued increases in these trends will cause expansions within those markets, opening

up a host of new jobs and thus working to boost economic development in the regions.

In spite of this, however, there is not always a direct correlation between the level of

economic development present in countries and the amount of credit card ownership and usage

found within that country however (Goodwin, et al., 2008). Looking to the Middle East, it was

found that, in spite of the similarities in their economic development, there were striking

differences in the number of individuals who owned and used a credit card in the region,

demographically speaking, but regardless of regional location, or the demographics of that

region, credit card usage continues to grow (Visa, 2013). This type of discrepancy in the

ownership and usage of credit cards in two countries of similar economic development and

similar geographical location serves to indicate that other factors play a role in whether or not

credit card ownership is present, aside from whether or not the nation in discussion may be

identified as developed, developing, or emerging. Other research has indicated one possible

hypothesis regarding the matter, the idea that these differences arise as a result of the different

cultural influences present within the country and their effect on the perceptions of credit card

ownership and usage (Bagnall, et al., 2014).

2.4 Demographic Influences

Further research into the matter indicates that credit card ownership and usage behaviours

vary widely based on the demographic characteristics of the sample (Kalckreuth, Schmidt, &

Stix, 2009). Multiple studies have indicated that credit card ownership and usage are affected by

different factors including age, education level, income bracket, gender, marital status, and

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attitude toward the idea of debt, to name just a few (Kalckreuth, Schmidt, & Stix, 2009; Themba

& Tumedi, 2012; Wickramsinghe, 2009; Bagnall, et al., 2014). In Saudi Arabia, credit card

ownership was positively linked to age, education level, income bracket, and attitude toward

debt, while credit card owners in Turkey were influenced by the knowledge base, beliefs, and

attitudes of the owners (Themba & Tumedi, 2012; Kurtulus &Nasir, 2012; Yayar & Karaca,

2012).

Gender differences were another primary are in which differences were present in the

ownership and usage of credit cards (Themba & Tumedi, 2012; Kurtulus &Nasir, 2012; Yayar &

Karaca, 2012; Khare, 2011). In India, it was found that males were more likely than their female

counterparts to own a credit card (Khare, et al., 2011). Studies of other areas indicated that

females were more likely to own and use credit cards than their male counterparts (Bagnall, et

al., 2014). Gender differences were likewise found to play a role in the type of products and

services purchased using credit cards and the manner in which females opted to use their credit

cards (Wickramsinghe, 2009). Females were more likely to use credit cards in the purchase of

household goods, clothing, and personal belongings, while men are more likely to use credit

cards for travel or for food (Bagnall, et al., 2014).

2.5 Usage Behaviours

It is not just men and women who use credit cards differently; studies have shown that

credit card ownership has a direct influence on usage behaviour and vice versa, with individuals

displaying different spending habits when using cash and foregoing credit card ownership versus

those who own and utilize credit cards (Roth, 2008; Bank of America, 2014; Muniz, 2013;

Folgate, 2014). In addition, studies have shown that the number of credit cards that an individual

owns likewise works to influence their usage levels (Why is Credit Card Use Increasing?, 2013;

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Lange, 2014; Ray & Ghahremani, 2014). Credit card usage more than doubled in India and

Bangladesh between 1990 and 2003 and the numbers continued to rise (Kumar, 2013).

The more credit cards that a person has, regardless of their gender, the more likely they

are to utilize credit cards in the purchase of the good or service that they so desire; alternately,

those who had the least amount of credit cards were more likely to be sparing in their use of the

card to purchase goods or services, or were more sparing in their use of the credit card(s) than

individuals who had a greater number of cards available to them (Roth, 2008; Bank of America,

2014; Muniz, 2013; Folgate, 2014). Research indicates that individuals who have two types of

credit cards spend more than those with only one card available to them, a concept that increases

exponentially the more credit cards are owned by the individual (Ray & Ghahremani, 2014). The

lower the interest rates on the credit cards, the more likely the individual is to have multiple

cards (Kumar, 2013).

2.6 Debt Perceptions

While credit card ownership and usage is widespread in certain areas, many of these

individuals have little to no knowledge of the terms and conditions in their card agreement,

making such behaviours increasingly risky for those who have higher interest rates, resulting in

the potential for increased debt (Lange, 2014). An increased adoption of credit cards has

indicated a shift in public attitudes, resulting in the accumulation of debt being perceived as

normal or even natural, a common occurrence in the life of today’s individual and no longer

perceived as taboo, as it was in the past (Arias& Miller, 2010; Ahmed, Amanullah, & Hamid,

2009). Currently debt is perceived as a normal part of the lifestyle of modern society and is

viewed with the laissez-faire attitude that it will be addressed tomorrow, a side effect of the

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increasingly large shift in perception to society as instant gratification (Arias& Miller, 2010;

Ahmed, Amanullah, & Hamid, 2009). Using credit cards to make payments offers the perception

that larger transactions have become more practical and that the buying process as a whole has

become safer, giving an alternative means of funding when the individual is experiencing a cash

flow issue (Arias& Miller, 2010; Ahmed, Amanullah, & Hamid, 2009).

In spite of these perceptions, the improper use of credit cards and the lack of

understanding on the part of the owner regarding the terms and conditions of the card has caused

users to experience insufficient rates of income, trapping the individual into risky debt practices

and locking the user into a permanent struggle with debt (FTC, 2014; Konsko, 2014; Nolo.com,

2014; Luhby, 2013). Other issues arise as a result of the interchangeability with which

individuals perceive credit cards and debit cards, treating them, at times, as synonymous with

one another, in spite of their vast differences (Dwarkadas, 2011).

2.7 Summary

It is evident from the literature review that there is a large body of research into the

matter of credit card use as a whole, especially in recent years; however, in spite of this body of

research, little is present regarding the factors that serve to influence credit card ownership and

usage in emerging nations, specifically that of India or Bangladesh. The present study seeks to

address the lack of literature present regarding these two countries, and it hopes to add additional

insights into the existing body of knowledge encompassing credit card ownership. The majority

of literature reviewed has placed a large emphasis on the factors that impact ownership, however

they have failed to cover the factors that influence credit card usage, the direct influencers of

credit card ownership. In addition, the current body of knowledge fails to address how the same

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variable will influence credit card ownership and credit card usage in different ways. The current

study will not only work to shed light on credit card ownership in Bangladesh and India, it will

also work to explain usage behaviours in those two countries. Chapter 3 will provide the

methodology to be used in the completion of this study. Chapter 4 will offer up the data that has

been obtained as a result of the study and detail its analysis. Chapter 5 will offer up a discussion

of those results, and the dissertation will end with the concluding remarks of Chapter 6.

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Methodology

3.1 Research Type

For the purposes of this study, a descriptive survey was undertaken as a means of

determining the factors that influence the credit card owner’s propensity for ownership and use

of the credit card and the importance associated with each of those differing factors. As a result

of the different types of data being gathered, it was determined that a mixed methodology study

would be ideal for the completion of this project given the fact that some of the data being

gathered, like the demographic information, the income information, and so on, is quantitative in

nature, while other factors, such as the type of spending being done and the reasons for that

spending are of a qualitative nature. Without one type of data or the other, it would not be

possible to conclusively address the research question specified at the start of this study.

An interview of five bankers from Standard Chartered, State Bank of India, HSVC, Citi,

and ICICI respectively were completed. The bankers provided information on the market outlook

as well as feedback and opinion on the banking industry.

3.2 Data Collection

3.2.1 Primary Data Collection Methods

The primary method of data collection consisted of a survey questionnaire designed by

the researcher in order to ensure that all information that the researcher deemed necessary in

order to effectively answer the research question was included in the responses provided by

study participants. The questionnaire was presented to credit card owners in the cities of Dhaka,

Mumbai, and Kolkata. Individuals were randomly selected from individuals in shopping centers,

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being asked a series of preliminary questions regarding whether or not they owned any credit

cards prior to being given the study. Those who agreed to participate in the research were then

given the questionnaire and asked to fill it out to the best of their ability. Any incomplete

questionnaires were discarded. The completed questionnaires resulting from three days’ worth of

surveys provided the data set that would be used for this study. The questionnaire was designed

in such a manner to ensure that all of the simple variables present in the schema were able to be

properly judged, with all simple variables present within the schema placed there as a direct

result of the two primary parameters, credit card ownership and credit card usage, in conjunction

with multiple complex variables. The variables were chosen to ensure that the broad and specific

objectives of the research could be fully met.

The study included both close-ended questions, wherein the participant would respond

either using a 5-point Likert scale or through the selection of a multiple choice answer, and open

ended questions, wherein the participant had to provide a short answer to the question presented.

While the majority of questions were close-ended, there were certain questions that were best

asked and answered as open ended questions in order to work to decrease the potential for the

respondent to be led to a certain answer based on the phrasing of a given question.

Given the fact that the research places specific focus on the working populations of India

and Bangladesh, the majority of the surveys were sent to workplaces via email or social media

messaging, with a few sent to households and directed to the primary income earner within those

households. In this manner it was hoped that the study would receive the greatest selection

possible of the working class, thus ensuring a more accurate sample. All completed surveys were

returned within three weeks, and all individuals selected for survey completion were selected via

judgmental sampling.

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The five banks were contacted and asked if they had any individuals who were willing to

provide information regarding their thoughts on the current market, allowing for additional

background information to be obtained regarding the matter, serving to further assist in the

analysis of data. The information gathered from these bankers was included in the literature

review, as it served as background information to the study.

3.2.1.1 Advantages and Disadvantages of Primary Data Collection Methods

While it is clear that there are many issues with this particular methodology, including a

lack of uniformity in the manner in which surveys were sent out, an inability to conclusively

state as to whether the person the survey was intended for was the individual filling out the

survey, and the potentially leading nature of the questions, given the distance present in this

study and the desire on the part of the researcher for the questionnaires to be self-administered, it

was deemed that this method would be the most expedient in getting the data necessary in order

to move forward with this particular course of study.

3.2.2 Secondary Data Collection Methods

The literature review was completed utilizing a host of primary and secondary sources. It

served as a means of assisting in the identification of the areas of research that had already been

covered and those that needed more attention. Information was collected from online reputable

sources, online databases, the school’s online library, and books, with each reviewed on a case

by case basis.

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3.2.2.1 Advantages and Disadvantages of Secondary Data Collection Methods

While this method of data collection allowed for a wealth of information, it was

determined that the majority of information regarding the credit card industry, while interesting,

was not, on the whole, beneficial to the study. Many of the potential sources that came up were

too broad, too generalized, or did not deal with the topic of credit cards outside of the context of

developed nations or from the perspective of a developed nation; as such, much of the

information found was slightly biased, though with a continual refining of keywords and search

terms, it was possible to create a comprehensive literature review.

3.3 Sample Size

The total number of retail customers, consisting of credit card holders, general account

holders, deposit schemes, retail loans, etc. in Dhaka, Mumbai, and Kolkata is identified as (N) =

2,571,430. The number of credit card holders is thus defined as 610,000 based on this

information. Taking the proportion of credit card holders, and based on the anticipated total

number of individuals who meet the overall requisite qualifications to participate in the study,

the sample size has been identified as 148. The below figure serves as a means of indicating the

manner in which such a number was obtained:

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Figure 3.1: Determining Sample Size

3.4 Sample Frame

Individual credit card holders have been identified as the appropriate sampling units; as

such, a list of all the credit card holders is the sample frame. As a result of confidentiality

agreements and the prevailing banking laws of both countries, no bank was willing to, or could

legally share a list of its credit card customers. As a result of this situation, it was not possible for

the researcher to obtain a complete sampling frame, resulting in the need to rely on judgmental

sampling in order to accomplish this study’s completion, making educated guesses regarding

individuals that might be credit card owners and approaching them after making those

deductions.

3.5 Variable Analysis (Schema)

In order to ensure that the collected data was appropriately analysed, it was necessary to

create a specified set of schema. The coordination schema was created first, working off of the

different parameters of credit card ownership (Table 3.1) and credit card usage (Table 3.2). The

schema consisted of the complex and simple variables identified for each location, the values

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that could be used for each of the different variables, and the corresponding questions on the

survey created.

Table 3.1 Coordination Schema: Credit Card Ownership

(Name, 2014)

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Table 3.2 Coordination Schema: Credit Card Usage

(Name, 2014)

3.6 Measurement of Validity

Validity refers to the extent by which an instrument is able to measure what it is intended

to measure (Colorado State University, 2014). Different types of validity measures include face

validity, predictive validity, and construct validity (Colorado State University, 2014). For the

purposes of this study, it was determined that face validity would be the ideal means of judging

whether or not the items selected for use within the research study create a properly

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representative sample of the variable applications for the research. Face validity involves the

selection of items to measure a variable through observations on whether or not the variables are

truly related to the topic at hand (Colorado State University, 2014). Face validity refers to the

extent by which the variables are able to measure the specific characteristic or trait of interest

(Colorado State University, 2014). The ability of the study to address the research question

effectively is determined in large part on the instruments that are developed for data collection

and the data collection procedures used.

3.7 Reliability of Data

The reliability of the study is determined when the variables developed as a result of the

scales used are identified as effective predictor components in objective models (Colorado State

University, 2014). Given the fact that summated scales are an assembly of interrelated items that

are designed to measure the different underlying constructs of the study, it is essential to know

whether or not the given set of items would elicit the same responses if the questions are recast

and re-administered to the same set of participants (Colorado State University, 2014). Variables

that have been derived from the test instruments may be declared as reliable only when they are

able to provide stable and reliable responses after a repeated administration of the test (Colorado

State University, 2014).

Cronbach’s Alpha, a measure of the internal consistency, or reliability, of the instrument

used in the study, allows for an interpretation of the internal consistency in a test

(Explorable.com, 2010). Cronbach’s Alpha serves to measure how closely the different test items

are related to one another, allowing for a measurement of the same construct (Explorable.com,

2010). The results of the Cronbach’s Alpha test are displayed below, in Table 3.3. A Cronbach’s

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Alpha score of greater than 0.5 is considered to be acceptable for social research

(Explorable.com, 2010). The results for this particular study, based on the standardized items in

this case is 0.552, suggesting that the items have an acceptable level of internal consistency.

Table 3.3 Results of Cronbach’s Alpha Test

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Data Analysis

4.1 Composite Measure of Ownership and Usage

Based on the coordination schema and the different variables that were selected to

explain ownership and usage, the index value identified for ownership was the mean of the 9

simple variables of all samples and the index value for 22 of the simple variables of all of the

samples; however, the mean of the variable identified as a preference to cash, the direct

measurement of the ownership tendency, is the overall ownership index and the mean of the

variable identified as frequency of usage, a direct measurement of the usage behaviour, was

identified as the overall usage index (Table 4.1).

Table 4.1 Similarity between Index Value and Composite Measures of Ownership and Usage

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4.2 Test of Similarity

It is possible to determine the similarity of data in a variety of different ways. The test of

independence is useful for examining the statistical similarities between categories (population).

The following are the results of the chi-square analysis that were conducted for each of the

different categories (Table 4.2 and Table 4.3).

Table 4.2 Cross Tabulation of Preference to Cash and Different Categories

Table 4.3 Cross Tabulation of the Frequency of Usage and Different Categories

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4.3 Frequency Analysis

A frequency analysis of the different variables was undertaken in order to identify the

different percentages at which each of the different variables were present. Variables identified

include gender (Table 4.4), marital status (Table 4.5), occupation (Table 4.6), and income (Table

4.7). The association present between the credit card brand and the type of credit card owned was

likewise analysed (Table 4.8), as was the purpose for which the cards were used (Table 3.9), the

average monthly credit card balance (Table 4.10), and the associations present between the

buying behaviour of the credit card owners and the gender differences of those credit card

owners (Table 4.11). A cross tabulation of data regarding the gender of credit card owners and

the different purposes of usage associated between the two (Table 4.12) and the inter-item

correlation of the different variables (Table 4.13).

Table 4.4 Frequency Analysis: Gender

Table 4.5 Frequency Analysis: Marital Status

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Table 4.6 Frequency Analysis: Occupation

Table 4.7 Frequency Analysis: Income

Table 4.8 Association between Credit Card Brands and Type of Cards Owned

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Table 4.9 Purpose of Usage

Table 4.10 Average Monthly Credit Balance

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Table 4.11 Association between Buying Behaviour and the Gender Differences of Cardholders

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Table 4.12 Cross Tabulation of Gender and Different Purposes of Use

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Table 4.13 Inter-Item Correlation

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4.4 Regression Analysis

A multiple regression analysis is a statistical tool that may be used for the purposes of

finding and identifying the different relationships present between several different variables.

This type of analysis works to ensure that a variety of research questions may be identified in

one analysis, allowing for an understanding of how well a set of variables is able to explain the

amount of variability present with a certain outcome.

4.4.1 Ownership

In order to determine the manner in which credit card ownership is influenced by the

relevant factors, two different regression techniques were utilized. The dependent variable

identified was preference to cash, or ownership, with the substitute method of payment to be

used in place of credit cards is cash and the inclination to own a credit card is influenced by the

different variables identified in the coordination schema. Through the use of the enter regression

method, the results indicated in Table 4.14 were obtained

Table 4.14 Regression Analysis Enter – Ownership

As may be seen by the R square, the model above (Table 4.14) indicates that 52.4% is the

preference level of credit cards over cash for purchases. When taking into consideration the beta

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values, based on this analysis, the top five variables are: view on debt (0.468), security (0.320),

advertising (-0.170), terms and conditions (0.147), and offers and privileges (-0.122).

The stepwise regression method was the second regression analysis performed on the

data, yielding the results as identified in Table 4.15.

Table 4.15 Stepwise Regression Method

As a result of the completed stepwise regression analysis, an adjusted R square value of

51.2% was obtained; from this it may be gathered that the regression analysis on both parts is

accurate, given the comparability of the results. The beta values for this second regression test

indicate that the top two variables are the view on debt (0.438) and security (0.413).

4.4.2 Usage

To be able to holistically judge the use of credit cards in these two countries, it was

necessary to identify the variable for frequency of usage as the dependent variable. Running the

first regression analysis generated the results indicated in Table 4.16. The reliability of the model

stands at 11.2% with the top five variables based on the beta values being identified as: hotels

and restaurants (0.245), instalment buying (0.221), terms and conditions (0.210), electronics and

appliances (0.198), and usage by non-owners (-0.135).

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Table 4.16 Regression Analysis of Usage

In order to attempt to gather better results, a multi-stage regression was also completed

using the stepwise method, the same as was done for the ownership portion. The stepwise

regression model indicated a decrease in the reliability of the mode from 11.2% to 10.2%. Beta

values indicated that the top three contributing variables were hotels and restaurants (0.174),

instalment buying (0.157), and electronics and appliances (0.177). The results of this analysis

may be found in Table 4.17.

Table 4.17 Stepwise Regression Analysis of Usage

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Findings

5.1 Findings from Frequency Analysis

5.1.1 Demographic Profile of Respondents

In order to be able to determine the specifics of credit card ownership and usage, it is first

necessary to create a demographic profile of the respondents, thus ensuring that an accurate

statement regarding the types of persons who utilize and own credit cards may be created. Based

on survey data received, 77.5% of respondents were male and 22.5% of respondents were

female. Approximately 40% of the total sample was unmarried, with the remaining 60%

identifying as married. The majority of males and females who responded to the survey

identified themselves as private sector service holders.

Looking next to the age of the participants, the individuals who responded to the survey

ranged in age from 20 years old at the youngest end of the spectrum all the way up to 62 years

old at the highest end of the spectrum. 19% of those who responded ranged in age from 18 to 30

years old, 44% ranged from 31 years old to 45 years old, and the remaining 37% were 46 years

old or older. The average age of all respondents is 36.72 years old, with a standard deviation of

11; this may be rounded up to state that the average age of those who responded to the survey is

37 years old.

Next, the income bracket information was identified from the collected survey data.

Approximately 20% of respondents indicated that they had a monthly income less than 40,000

BDT and close to 22% indicated that they earned over 150,000 BDT per month; the remainder of

survey respondents indicated that they fell between these two ranges, making anywhere from

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40,001 BDT to 149,999 BDT for month indicating that the majority of respondents are middle

aged and pulling in an average salary for their age bracket.

Finally, reviewing the number of credit cards owned and used by individuals surveyed, it

was determined that, of the lowest income bracket, almost 90% owned only one credit card.

Individuals falling into the middle income bracket were relatively evenly distributed with those

who owned one credit card coming in at approximately 45% and those who owned two credit

cards coming in at approximately 45% of this middle income bracket; the remaining 10% owned

more than two cards. The majority of those who responded who fell into the highest income

bracket, those making more than 150,000 BDT on a monthly basis owned more than one credit

card, though the number of those who owned three or more credit cards was surprisingly low,

coming in at a mere 7.9% of those surveyed.

5.1.2 Association between Credit Card Brands and Type of Cards Owned

A relatively low portion of those responded own American Express Cards, while the

number of those who own Visa cards is far greater than that of ownership of any other card.

Classic cards were indicated to be low in number when compared to the number of Gold cards

and Platinum cards held by the participants. It is likewise important to note that the majority of

those who own American Express cards are those who also own international credit cards,

opening up a potential avenue for future study regarding the travel habits of individuals as a

corollary effect to the type and brand of credit card owned, both by individuals in this region and

individuals around the world.

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5.1.3 Purpose of Usage

After a review of survey data, it may be concluded that the primary purpose of usage of

credit cards within this region is for payment of bills in hotels and in restaurants. Other areas of

usage were relatively consistent, however it was determined that the least likely reason

individuals were to use a credit card within this region was for healthcare expenses. This type of

behaviour lends credence to the idea that those items that are considered to be “luxury” items are

those that are more likely to be charged on credit cards, while those that are considered to be

necessities, such as the payment of medical bills, are more likely to be paid for up front.

5.1.4 Average Monthly Credit Balance

The vast majority of survey respondents indicated that they maintain an average monthly

credit card balance of 50,000 BDT or below, indicating one of two things: either that the

majority of surveyed respondents have some idea of how to maintain the appropriate debt to

income ratio, or that they are limited by the credit limit set forth by them in the terms of service

that they signed when obtaining the credit card. The other two brackets indicated by the survey

results showed individuals who were likely to maintain an average monthly balance of 50,000 to

80,000 BDT per month and those who were likely to carry over 80,000 BDT in credit card

balances per month.

5.1.5 Association between Consumer Buying Behaviours and the Gender Differences of

Cardholders

Cross tabulation and chi-square tests indicated that the primary purpose of credit card

usage within the region was not independent of gender differences. In other words, the type of

purchase and the amount of usage did show noticeable differences in trends based on the gender

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of the credit card owner; the only variable that was shown to be independent of the gender of the

credit card owner was the behaviours associated with cash withdrawals against the credit card.

While analysing the frequency of responses given by participants it was possible to see strong

support across the board for these correlating variables, especially in terms of unplanned buying

practices. Approximately 70% of male respondents indicated that they engaged in unplanned

buying practices as a result of owning a credit card, with the 20% of males indicating that this

was not the case, and the remaining 10% not leaning strongly one way or another. When looking

to the female population sample, however, it was found that 90% of the females who responded

to the survey indicated that they engaged in unplanned buying as a result of owning a credit card,

while only 5% disagreed, stating that they did not engage in unplanned buying because they had

a credit card, and the final 5% not leaning strongly to one direction or another. Based on these

statistics, it is possible to see that not only is there a direct correlation between unplanned buying

and credit card ownership, but that females are far more likely to engage in this behaviour than

their male counterparts. While the chi-square test indicated that there was a certain degree of

dependency between the variables, sample respondents show that there is a symmetry in regard

to agreement versus disagreement regarding this matter.

5.2 Hypothesis Testing Results

For the purposes of this study, it was assumed that the majority of credit card holders

would behave in a certain manner regarding their credit card ownership and usage patterns, as

long as the mean value of the responses received is greater than 0.5 as previously indicated. In

light of this information, it must be stated that the null and alternative hypotheses values are,

respectively: H

: µ≤0.5 and

: µ>0.5. The identified hypotheses were broken down into more

specific options, looking at each of the two directions that could occur as a result of the

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hypotheses being proven or disproven. These hypotheses were tested using a one-sample t-test

due to the fact that the population mean, or the variance of the population, was not known. When

utilizing a degree of freedom set to 150, setting the level of significance at

, α=5% and allowing

the criteria of the acceptance of a hypothesis to occur when

calculated

critical and

rejected

when T

calculated

critical, the results of the hypotheses testing are as follows (Table 5.1)

Table 5.1 Hypotheses Testing

Sl.

AlternateHypothesis (H

)

critical

calculated

Decision

Majorityof thecreditcard owners viewcredit card

as debts.

1.6551

-5.826

Reject H

Majorityof thecreditcards owners haveapositive

attitudetowards debt

1.6551

-5.576

Reject H

Majorityof thecreditcard owners arenot awareof

terms and conditions

1.6551

2.059

Accept H

Majorityof thecreditcard owners arenot awareof

offersand privileges

1.6551

3.367

Accept H

Majorityof thecreditcard owners wereinfluenced

byadvertisingduring creditcard purchase

1.6551

-5.560

Reject H

Majorityof thecreditcard users engagein

UnplannedBuying.

1.6551

3.400

Accept H

5.3 Attitude towards Debt

The majority of credit card owners indicated that they do not have a positive attitude

toward the concept of debt, though they do not perceive the balance on a credit card as debt

associated with themselves. As a result of this separation of concepts in the minds of survey

respondents, it must be stated that the attitude of the consumer regarding the concept of debt

does not affect their credit card usage in any way and as such should not be judged in relation to

each other.

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5.4 Knowledge of Credit Card Features

The majority of respondents indicated that they were not aware of the totality of the terms

and conditions set forth as conditions for their ownership of the credit card, nor were those

individuals aware of the offers and privileges associated with the usage of a particular credit card

while it was being owned. In spite of this, the majority of respondents indicated that the terms

and conditions were important to them when taking into consideration which credit cards to use,

but the offers and privileges associated with the card were not. These facts indicate that the

respondents do not pay attention to these factors prior to owning the credit cards, however, once

they start using the credit cards, the terms and conditions associated with the card become

important to them, as do factors including cost of service and the security of the transaction,

while promotional offers still continue to offer little to no relevance.

5.5 Influence of Promotional Factors

The majority of respondents indicated that they were not influenced by either the

advertisements that they saw or the sales agents who spoke with them during the process of

obtaining a credit card. It may be stated that the promotional tools utilized in this region of the

globe are rather weak, as they fail to have any impact on credit card ownership or usage.

5.6 Influence of Social Factors

While the majority of credit card owners indicated that they were not influenced by either

their peers or family members when acquiring a credit card, there were other social factors that

did play a part in the decision of the individual as to whether or not to obtain a credit card.

Respondents indicated that the majority of their family members did not use their credit cards

frequently and whether or not the individual opted to own and use a credit card was not

influenced by their religious views. The absence of a religious or faith based attitude regarding

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the use of credit cards may be tied in to the attitude of most individuals regarding their

perceptions of the concept of debt. As indicated, the vast majority of respondents did not

consider credit cards to be debt, and as such, the presence or absence of a credit card balance

could not be tied with a religious perspective, in spite of the fact that the concept of borrowing

money with interest is a commonly avoided practice with Muslims due to the negative

connotations and the perception that such a practice is “haram.” On the other hand, the security

afforded by the ability of using a credit card over cash was a driving factor for most survey

respondents, indicating an intense concern for the security of one’s financial state as a driving

factor behind credit card usage.

5.7 Credit Card Usage in Specific Purchase Situations

The majority of respondents indicated, as previously mentioned, that they did engage in

unplanned buying as a result of credit card ownership, but in spite of this, the majority of these

individuals did not engage in the practice of instalment buying, online purchases, or cash

withdrawals when using their credit cards. It may be noted that the incidence of using credit

cards for cash withdrawals may be low given the commonality of using ATM cards within these

two countries; as these individuals already have the availability of withdrawing cash via a card

without the type of interest rates associated with credit cards, it cannot be expected that the

incidence of using credit cards as a means of completing this action would be high. The amount

of online purchases via credit card is low not because of a desire to refrain from using a credit

card on the internet, but because the vast majority of the local currency credit card issuers in this

region do not permit their cards to be utilized for online purchasing, thus negating the possibility

of such an occurrence.

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5.8 Purpose of Spending and Scale of Purchase

Respondents indicated that they were likely to use their credit cards in the purchase of

electronics, appliances, clothing, shopping, and for payment in hotels and restaurants, with the

least likely reasons that they would use their credit cards would be for travel expenses or

healthcare expenses. It must be noted that respondents indicated that the likelihood of exceeding

their limit was low.

5.9 Impact of Convenience on Usage Behaviour

The availability of POS (point of sale) terminals, the frequency of errors and mistakes in

transactions, the duration of those transactions, and the availability of ATM booths were all

rejected by majority opinion in terms of having an effect on credit card owner usage. It is

believed that this is due to the fact that different respondents assigned importance to different

factors and answered accordingly causing more subdued results. These factors may not be

important to the majority of individuals separately, but when viewed collectively, it should be

indicated that they are important to the majority of the population.

5.10 Findings from Objectives

Based on the objectives specified for the study, it is possible to calculate a summated

scale for each of the associated complex variables based on a simple variable index. Once the

summated scale was calculated, it was possible to determine the mean overall ownership

influence, set at 0.2384 and the mean overall usage influence at 0.3377, allowing for

commentary on specific objectives and their associated performances.

Results indicated that, in terms of ownership of credit cards, the attitude towards debt and

promotions were not important influences in terms of either mean or median measures. The

features associated with the different credit cards and the social factors associated with the

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ownership and usage of credit cards did affect the respondent’s preference for owning a credit

card over carrying cash.

Complex variables associated with the usage of credit cards, specifically the buying

process, usage particulars, credit card features, and convenience are all perceived as above par in

terms of the mean overall usage influences, while the variable social factors have been identified

as below par.

As ownership and usage were listed as above the median satisfaction level in data

analysis, it is possible to conclude that they are on the positive side of the scale; however, given

the fact that usage is below the overall mean levels of satisfaction, it may be suggested that there

are external variables that are affecting those overall levels that should be taken into account.

The primary assumption in this case is that the parameter of usage translates into a frequency of

usage.

5.11 Findings from Index Analysis

An index analysis was conducted in order to determine the extent of the influences of

variables on ownership and usage behaviours and the importance placed upon those influences.

To better understand the position of each variable in terms of its perceived importance, Table 5.4

has been created showing the mean ratings grouped into three distinct segments.

Table 5.4 Mean Ratings

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When viewing the results in terms of ownership, the security of the credit card shows,

regardless of the type of analysis completed, that it is of high importance in the driving factors

behind credit card ownership. The security of the credit card relies primarily on the physical

security of the card itself and the privacy of the credit card number. This is followed by the

offers and privileges associated with each card as a result of the fact that the choice of a specific

brand and type of credit card in either India or Bangladesh is based on the perks offered by

issuers given the fact that the core products offered by all issuers are, in essence, the same.

In terms of credit card usage, it was shown that the availability of POS terminals was of

high importance due to the fact that the absence or presence of this item determines whether or

not the credit card owner will be able to use their credit card. In terms of usage, security ranks

high here as well, with frequency of errors trailing as the next most important as this factor plays

in to how convenient using the card actually is. Lastly, the availability of unplanned buying and

the ability to use the card for common expenditures likewise affect the frequency of usage.

Table 5.5 Medium Means

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Factors of moderate importance to ownership are the terms and conditions of the issued

card and the influences of social factors, while the purpose of usage is indicated as one of the

primary factors to take into consideration in the use of credit cards. Additional features such as

the terms and conditions of the card, the offers and privileges associated with the card, and the

cost of service have medium levels of influence on usage behaviours.

Table 5.6 Low Mean

Respondent perceptions on debt, advertising, whether or not credit cards are perceived as

debt and the tactics of sales agents do not have an influence on ownership. By the same token,

the availability of ATMs are not an important factor in credit card usage for respondents as the

ability to withdraw cash is not important, as previously indicated; social factors, such as usage by

non-owners and religious views are not significant either.

5.12 Findings from Correlation Analysis

In terms of the ownership of credit cards, the top five correlated variables for preference

of card ownership include the respondent’s views on debt, security, advertising, terms and

conditions, and offers and privileges.

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In terms of the usage of credit cards, the top five correlated variables for frequency of

usage included expenditures on electronics and appliances, expenditures on hotels and

restaurants, instalment purchases, terms and conditions, and the frequency of errors in

transactions.

5.13 Findings from Regression Analysis

The multiple regression analysis indicated that the variables that had the greatest

dependencies on frequency of ownership and usage of credit cards are detailed in Table 4.7.

Table 5.7 Regression Analysis

5.14 Findings from Factor Analysis

Finally, the factor analysis indicated that there were five factors and their related

variables which served to best explain both credit card ownership and usage; these are detailed in

Table 5.8 below.

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Table 5.8 Factor Analysis

5.15 Summary

When looking at the analysed results in terms of the current literature on the subject,

several key factors did stand out. Credit was originally perceived as a beneficial tool as it served

to afford individuals with the availability to obtain necessary items up front without needing to

worry about whether or not the corresponding amount needed to spend was available to them at

the time (Anderson, 2014). Based on the types of goods and services that respondents indicated

were most commonly purchased, with appliances being up at the top of the list, it is safe to state

that this is still the predominant perception of credit card usage in these emerging markets,

however in order to conclusively state this information additional research would be necessary.

The literature review did indicate that credit card ownership was linked to increased debts

and unplanned spending, facts that were correlated in the answers provided by the respondents

(Thomos, 2010; Norum, 2008). It cannot be stated that there was any indication regarding the

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effect of bank ownership given the fact that all individuals who responded to the survey already

have credit cards, as this was a prerequisite of participant qualification; if more information is

wanted in regard to this detail, additional research will be needed with adjusted study parameters

(Khare, 2011). The literature review indicated that ownership and usage behaviours were heavily

influenced by the demographics of the population, a fact that was correlated directly by the

results of this study (

Kalckreuth, Schmidt, & Stix, 2009; Themba & Tumedi, 2012;

Wickramsinghe, 2009; Bagnall, et al., 2014

). There was no indication that those who spent more

were those who had more than one credit card based on obtained data. Finally, debt perception

played no factor on credit card debt, ownership, or credit card usage, given the fact that the

respondents indicated that they do not perceive credit card balances as debt (FTC, 2014; Konsko,

2014; Nolo.com, 2014; Luhby, 2013). Chapter 6 will present the conclusions and

recommendations associated with the study, offering up a concise wrap up to the study itself.

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Conclusion

6.1 Conclusion

Research has indicated that the consumer credit card market has reached a saturation

point in developed economies; however, international financial institutions and local banks in

emerging markets are indicating sizable growth in the credit card industry as a result of the rising

appetite for consumerism in those markets. Multinational credit card companies are working to

develop effective strategies that will appeal to consumers in those markets, and the needs of

these fast growing developing nations are starting to allow those companies to unlock the

untapped commercial potential in those markets. In order to be able to accomplish such a task,

however, it is essential for those companies to be able to understand the current market

conditions in those areas, gaining a better understanding of the driving forces behind credit card

ownership and usage.

The study has placed specific focus on credit card ownership and usage behaviours in

South Asia, specifically in Bangladesh and India and as a result of that emphasis, has been able

to confirm certain facts regarding the market as a whole. The study has indicated that the

occupation of the individual is the primary factor, out of all of the different demographics

studied, that affects the preference of credit cards to cash ownership. In terms of frequency of

usage, on the other hand, the tendency to engage in unplanned buying was shown to be directly

affected by demographic factors, including allowing for the determination that such actions were

more likely in females than males. While individuals in these areas perceive debt as a negative

concept, they do not perceive a credit card balance as debt, offering an ideal opening for the

further development of the credit card industry in these areas.

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The cost of service and the security of the transactions are considered to be of high

importance to credit card users, though promotional efforts are perceived as low importance,

based on the results provided by respondents to the study. The majority of credit card owners and

users are not familiar with their terms of service, offering another opening for the developing

credit card industry in these regions. The different factors served to indicate that the average

ownership of credit cards on the part of the consumer and the usage activities in Bangladesh and

India were consistent with those of an emerging nation, based on the literature review completed.

6.2 Discussion of Knowledge

In the course of completing this study, I was able to learn not only the best method of

working to address this particular research question, a process that took some reworking in order

to narrow down the scope and process of the study, but I was able to learn the most effective

methods of research as well, determining what did and did not work out. Completing this type of

marketing research indicated to myself that I was ready to be able to complete such reports on a

weekly basis as a result of normal job activities; I now feel more confident in my abilities to

retrieve and analyse data, and I am convinced that the more work I do the more likely it is that I

will be able to streamline this process.

I was able to gain a better understanding of the usage of credit cards, the

acknowledgement of debt, and the willingness to utilize this payment option in other countries,

gaining a better understanding of how societal factors work to influence the manner in which

purchasing is viewed. The culture of a society appears to factor heavily into the manner in which

an individual determines how and what they will purchase, though it is possible that, as a result

of the fact that this is an emerging market i.e. credit card usage has not yet been established as

being wholly commonplace within these countries, that a portion of the reason that credit card

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usage has soared within the area is as a result of the newness and novelty of the option.

Additional research into this potential area of thought and understanding will need to be

undertaken in order to more thoroughly examine this potential component.

While there has been much research done into the usage of credit cards in the Middle

East, much of the research was completed prior to 2008, resulting in a disparity of information

due to the fact that the majority of the information was gathered prior to the rise in technological

availabilities within the area. This indicates to me that the research that has been completed

herein will serve as a means of providing beneficial insights that may be utilized by retailers,

marketers, and banks alike in order to better target their approach to these customers.

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