6
CHAPTER II REVIEW OF RELATED LITERATURE
AND HYPOTHESIS DEVELOPMENT
1.1. Personal Finance
Personal Finance refers to the financial management done by an individual or a family to obtain, allocate, save, and spend monetary
resources over time. Tyson 2010 noted that personal finance covers several key concepts: spending, taxes, saving and investing, insurance, and
planning for major goals like education, buying a home, and retirement. Based on the opinion above, personal finance is not simply about current
financial management of an individual or a family, but also includes their long term financial management. People who can manage their monetary
resources are the people with good personal finance. Specifically, CBB from this personal finance perspective can be
seen as a part of personal spending. It is closely related to how an individual manage his spending. Good spending management will not lead people to
do CBB, whereas with bad spending management there is a great chance for people to do CBB. In the other side, spending is done to make consumption
possible, which consumption itself according to Seddon 2012 is also a part
7 of personal finance. Thereby it is clear that CBB can be seen as a part of
personal finance, especially of individual personal finance.
1.2. CBB
Faber dan O‟Guinn 1988 defined CBB as a detrimental condition caused by an uncontrollable drive with the following definition:
“a response to an uncontrollable drive or desire to obtain, use or experience a feeling, substance or activity that leads an individual
to repetitively engage in a behavior that will ultimately cause harm to the individual andor to others.”
This definition implies that CBB will not only cause harm to compulsive buyers, but to others as well. In more detail, Faber
et al
. 1987 have identified three characteristics of CBB: 1 the presence of a drive, impulse,
or urge to engage in the behavior; 2 denial of the harmful consequences of engaging in the behavior, and c repeated failure in attempts to control or
modify the behavior. CBB has been variously defined in previous studies, some of them
were proposed by McElroy
et al
. 1994 and Solomon 2002. The definition of CBB according to McElroy
et al
. 1994 is a buying behavior that is uncontrollable and significantly distressing, time consuming, or
resulting in social or financial difficulties. Solomon 2002 defined CBB as an unplanned purchase and consumers engaged in this behavior because
they are very eager to obtain certain pleasures that done repetitively. The
8 definition used in this study is adopted from Black 2007 who defined CBB
as excessive shopping cognitions and buying behavior that leads to distress or impairment.
1.3. Borrowing Habit
