15
1.7.4. The Effect of Pocket Money on Borrowing Habit
People who have small amount of money tend to be less confidence on borrowing money because they don‟t believe on their ability to pay back
the loan. Supporting this statement, Callender Jackson 2005 found that students from low-income family are more debt-averse. In case of using
loan to pay college expenses, Linenmeier, Rosen, Rouse 2006 concluded that the low-income students are less willing to use loan. Another
similiar finding comes from De La Rosa 2012 who found that those low- income students are more likely to commit themselves to minimal
borrowing. The same logical thinking can be used to analyze the effect of
pocket money on borrowing habit. Students with lower pocket money may have less willingness to borrow money or commit themselves to minimal
borrowing because they don‟t believe on their ability to pay the loan. In contrast, the high-pocket money students may show the opposite attitude:
higher borrowing habit.
H
4
: Pocket money has a positive significant effect on borrowing habit.
1.7.5. The Effect of Peer Acceptance on Borrowing Habit
There is a strong influence of peers on a person‟s attitude, intention, and behavior Hurlock, 1993. A real example of that influence is
16 found by Rindfleisch, Burroughs, Denton 1997, who stated that peers
can influence materialism. Moreover, according to Ponchio Aranha 2008, materialistic consumers are willing to carry heavier debt loads.
When people have credit cards, there is a positive relationship between materialism and credit overuse Richins, 2011. If credit card is seen as a
person to whom people borrow money, than the amount of money people borrow is too much when there is a credit overuse. These findings suggest
that it is possible that when peer acceptance is high, people tend to be more materialistic, and being materialistic increases their demand of money. To
cover this demand of money, some people gets credit overuse and some may increase their borrowing from family or friends.
H
5
: Peer acceptance has a positive significant effect on borrowing habit.
1.7.6. The Effect of Money Retention on Borrowing Habit
People with high retention time are capable on managing their money. These people have tendency to be careful financial planners Wong,
2010. They have control over their money, so that they can use money wisely, knowing exactly when to spend and when to save, even when to
borrow. Because of their capability on managing their money, according to Bhardwaj Bhattacharjee 2010, these people also have a very low need
or preference for loans.
17 The money that people usually borrow when they want to make
purchases are not needed by these people. The first reason is because they have their saving to cover it so instead of borrowing money, they will take
money from their saving. The second reason is that people with high retention time usually have their budget for everything so it‟s rarely happen
that they need extra money. These people with high retention time who are called budget-minded individuals by Engelberg Sjoberg 2006 also
found to have less favorable attitudes toward borrowing money on previous studies.
H
6
: Money retention has a negative significant effect on borrowing habit.
1.7.7. The Effect of CBB on Borrowing Habit
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