Understanding Household Debt Among Malaysians: A Review
Abstract
Household debt is a critical component of financial behavior that reflects both a household's financial stability and management efficiency. It includes various financial obligations such as housing, car, personal, and credit card loans. In Malaysia, household debt has become an increasingly pressing concern, where factors influencing household debt behavior continue to be widely debated at the national level among policymakers and scholars. A lack of clear understanding regarding the underlying causes and effective solutions may contribute to long-term economic risks for the country. This article reviews existing empirical studies, media narratives, and policy discussions related to household debt among Malaysians and the broader community. The review highlights financial literacy, income, and life necessities as key determinants that continually arise and are debated within the community and in institutional responses. Guided by the theory of planned behavior, this article offers deeper insights into the behavioral dimensions of household debt and proposes directions for strengthening financial decision-making among affected groups.
Downloads
References
Abdullah, A. H., Abidin, T. A. Z. T. Z., Nizam, N. N. A., Azizan, W. W., Misiran, M., Yusof, Z. M., & Supadi, S. S. (2022). Determining the correlation between behaviour, debt and money management among young adults. Journal of Computational Innovation and Analytics (JCIA), 1(2), 111-127. https://doi.org/10.32890/jcia2022.1.2.6
Abdullah, M., & Shukor, S. A. (2024). A Study on Propensity to Indebtedness among Young Working Malays in Malaysia. Global Business & Management Research, 16. https://gbmrjournal.com/pdf/v16n3s/V16N3s-32.pdf
Ajzen, I. (1991). The theory of planned behavior. Organizational behavior and human decision processes, 50(2), 179-211. https://doi.org/10.1016/0749-5978(91)90020-T
Asmaa, A., Norfaiezah, N., & Al Jaffri, R. (2023). Behavioral Factors In Determining Intention Towards Indebtedness Among Government Servants. Advanced International Journal of Business, Entrepreneurship and SMEs, 5 (18), 353-368. https://www.researchgate.net/profile/Ani-Asmaa/publication/379515736_BEHAVIORAL_FACTORS_IN_DETERMINING_INTENTION_TOWARDS_INDEBTEDNESS_AMONG_GOVERNMENT_SERVANTS/links/669551f102e9686cd1048c69/BEHAVIORAL-FACTORS-IN-DETERMINING-INTENTION-TOWARDS-INDEBTEDNESS-AMONG-GOVERNMENT-SERVANTS.pdf
Austin, P., & Arnott-Hill, E. (2014). Financial literacy interventions: Evaluating the impact and scope of financial literacy programs on savings, retirement, and investment. The Journal of Social, Political, and Economic Studies, 39(3), 290-314. https://link.gale.com/apps/doc/A383574128/AONE?u=anon~7a4423b&sid=googleScholar&xid=c86ea65b
Bank Negara Malaysia. (2021). Spotlight: Household Debt. Bank Negara Malaysia https://www.bnm.gov.my/documents/20124/6459002/fsr21h2_en_hhdebt.pdf
Barrot, J. N., Loualiche, E., Plosser, M., & Sauvagnat, J. (2022). Import competition and household debt. The Journal of Finance, 77(6), 3037-3091. https://doi.org/10.1111/jofi.13185
Brown, M., Grigsby, J., Van Der Klaauw, W., Wen, J., & Zafar, B. (2016). Financial education and the debt behavior of the young. The Review of Financial Studies, 29(9), 2490-2522. https://doi.org/10.1093/rfs/hhw006
Dharmadasa, C., & Gunatilake, M. M. (2023). Determinants of household credit behavior of low-income households in Sri Lanka. Asian Economic and Financial Review, 13(10), 715. https://doi.org/10.55493/5002.v13i10.4851
French, D., & McKillop, D. (2017). The impact of debt and financial stress on health in Northern Irish households. Journal of European Social Policy, 27(5), 458-473. https://doi.org/10.1177/0958928717717657
Gogola, E. (2023). The impact of financial literacy on debt behavior of households: evidence from micro data. In LÜLEYOVÁ, A. (ed.). EDAMBA 2022: Conference Proceedings, 128-139. https://journals.euba.sk/m/edamba/content/2022/the-impact-of-financial-literacy-on-debt-behavior-of-households-evidence-from-micro-data
Herispon, H. (2019). An empirical analysis of household debt behavior determinants. Economics and Finance in Indonesia, 65(2), 132-148. https://repository.stieriau-akbar.ac.id/id/eprint/32
Jabbari, J., Roll, S., Despard, M., & Hamilton, L. (2023). Student Debt Forgiveness and Economic Stability, Social Mobility, and Quality-of-Life Decisions: Results from a Survey Experiment. Socius, 9, 23780231231196778. https://doi.org/10.1177/23780231231196778
Jamilakhon, K., Singh, J. S. K., Subramaniam, A., & Suppramaniam, S. (2020). Determinants of debt behavior. A quantitative study among Generation Y individuals in Tashkent, Uzbekistan. TEST: Eng. Manag. J, 82(1-2), 891-904. https://www.researchgate.net/profile/Anusuiya-Subramaniam/publication/338524378_Determinants_of_Debt_Behavior_A_quantitative_study_amongGeneration_Y_individuals_in_Tashkent_Uzbekistan/links/5e1927af92851c8364c2e415/Determinants-of-Debt-Behavior-A-quantitative-study-amongGeneration-Y-individuals-in-Tashkent-Uzbekistan.pdf
Jestl, S. (2023). The impact of income inequality on household indebtedness in euro area countries. European Journal of Economics and Economic Policies, 20(2), 151-182. https://doi.org/10.4337/ejeep.2022.0083
Jumady, E., Alam, S., Hasbiyadi, H., Fajriah, Y., & Anggraini, Y. (2024). The effect of financial planning on consumer debt management: the role of financial literacy, self-efficacy, and financial motivation. Atestasi: Jurnal Ilmiah Akuntansi, 7(1), 340-368. https://doi.org/10.57178/atestasi.v7i1.793
Karambakuwa, R. T., & Ncwadi, R. (2021). Developing a framework for managing household debt The case of South Africa. The Business & Management Review, 12(1), 153-164. https://www.academia.edu/download/94973394/2021-07-25-12-27-38-PM.pdf
Khotimah, S. K., Prasetyo, K., & Prasetya, S. P. (2022). Housewives' lifestyle and behavior of debt dependency on bank thitil. Masyarakat, Kebudayaan & Politik, 35(1). https://doi.org/10.20473/mkp.V35I12022.69-77
Kimiyaghalam, F., & Yap, S. (2017). Level of financial literacy in Malaysia. International Journal of Research, 4(7), 1065-1074. https://d1wqtxts1xzle7.cloudfront.net/53567170/Level_of_Financial_Literacy_in_Malaysia_-_Full-libre.pdf?1497795537=&response-content-disposition=inline%3B+filename%3DLevel_of_Financial_Literacy_in_Malaysia.pdf&Expires=1781842294&Signature=MfzlVkfnxN8LA4HfvGqhxsGrOvl6k31cGZS4heJkXthmPaeNhcFJLO954SyYQKog58EG7-n4ZKvsFp0UzNZj6-HyE5hiV~B4Ecnepv3GQnyr-FLxKSx8RL0Rl-13S5wOsBfgyzpEAAxQcm9EEjuIaS0xvLhJr99fOWIwwKYyALvfBs65sVUDnYhgLj98AjsWNqpWi9lizWgSyaQT95kghHB6DT5d2GCkkvOAey4iPYKY2SIYxATkMlMLgKIzZ1kLukqT4q~~119QEfO0W5~H3A9CnMS4gkWy1Ac1l3FkLvYaBrSO1PoRU1SKWznRj2L3-cpa8KcpuQU4lKzRN7zDnQ__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA
Klapper, L., Lusardi, A., & Van Oudheusden, P. (2015). Financial literacy around the world. World Bank. Washington DC: World Bank, 2, 218-237. https://data.opendevelopmentmekong.net/dataset/df9a7bf9-72a3-4591-adb4-12eedd28f39c/resource/3322e885-f1fb-4450-a6c7-b8692cc7f057/download/finlitpaper16f2singles.pdf
Loke, Y. J. (2017). The influence of socio-demographic and financial knowledge factors on financial management practices of Malaysians. International Journal of Business and Society, 18(1). https://doi.org/10.33736/ijbs.488.2017
Lusardi, A., Michaud, P. C., & Mitchell, O. S. (2017). Optimal financial knowledge and wealth inequality. Journal of political Economy, 125(2), 431-477. https://doi.org/10.1086/690950
Lusardi, A., Almenberg, J., & Vestman, R. (2020). Attitudes Toward Debt and Debt Behavior (No. 14801). CEPR Discussion Papers. https://ideas.repec.org/p/cpr/ceprdp/14801.html
Lusardi, A. (2019). Financial literacy and the need for financial education: evidence and implications. Swiss journal of economics and statistics, 155(1), 1-8. https://doi.org/10.1186/s41937-019-0027-5
Lusardi, A., & Tufano, P. (2015). Debt literacy, financial experiences, and overindebtedness. Journal of pension economics & finance, 14(4), 332-368. https://doi.org/10.1017/S1474747215000232
Mahyudin, M. R. M., Kamarudin, N. N. A. N., Mohd, S. N., & Shaari, S. A. R. (2024). Salary Rises Lead to Rise in Debt: Perspective of Civil Servants. In CONFERENCE ON ACCOUNTING AND BUSINESS (ICAB2024) (p. 469). https://ir.uitm.edu.my/id/eprint/134271
Mayasari, I. & Chrisharyanto, H. (2018). Motivational factors of the collaborative consumption in the era of sharing economy. Gadjah Mada International Journal of Business, 20(3), pp.331-353. https://search.informit.org/doi/10.3316/informit.204316234662749
Miller, M., Reichelstein, J., Salas, C., & Zia, B. (2015). Can you help someone become financially capable? A meta-analysis of the literature. The World Bank Research Observer, 30(2), 220-246. https://doi.org/10.1093/wbro/lkv009
Mittigová, P. (2016). Household Debt in the Czech Republic: Focus on Mortgage Amount Determinants. http://hdl.handle.net/20.500.11956/78144
Musadad, A. (2019). Konsep Hutang-Piutang Dalam Al-Qur’an. Dinar: Jurnal Ekonomi dan Keuangan Islam, 6(1), 54-78. https://doi.org/10.21107/dinar.v6i1.6600
Musaddad, H. A., Maamor, S., & Zainol, Z. (2023). Affordability of affordable housing in northern region of Malaysia. Malaysian management journal, 27, 183-209. https://doi.org/10.32890/mmj2023.27.8
Mustika, M., Hasanah, N., & Irfany, M. I. (2023). Factors affecting household debt to moneylenders. Annals of Human Resource Management Research, 3(1), 1-16. https://doi.org/10.35912/ahrmr.v3i1.1578
Novida, I., & Dahlan, D. (2020). Faktor-Faktor Yang Mempengaruhi Masyarakat Berhubungan Dengan Rentenir. AGHNIYA: Jurnal Ekonomi Islam, 2(2), 181-202. https://doi.org/10.30596/aghniya.v2i2.4837
Poh, L. M., Sabri, M. F., Wahab, H. A. R. A., & Wijekoon, R. (2021). Determinants of financial vulnerability among civil servants in Peninsular Malaysia. Malaysian Journal of Consumer and Family Economics, 27(1), 113-143. https://majcafe.com/wp-content/uploads/2022/11/Vol-27-2021-Paper-6.pdf
Rahim, H. A., Yusoff, M., & Bahari, Z. (2020). M40 Muslim Households Indebtedness for Luxury from Islamic Perspective. International Journal of Academic Research in Business and Social Sciences. 10(10), 323-340. https://doi.org/10.6007/IJARBSS/v10-i10/7942
Ricaldi, L. C., Martin, T. K., & Huston, S. J. (2022). Financial literacy and its impact on the credit card debt puzzle. Financial Services Review, 30(2), 107-124. https://doi.org/10.61190/fsr.v30i2.3477
Sabri, M. F.., Abdullah, N.., Abdul Rahim, H.., Yusof, R.., Othman, M. A.., & Hashim, A. H. (2019). Predicting debt burden status among Malaysia civil servants. Journal of Emerging Economies and Islamic Research, 7(3), 1–11. https://www.researchgate.net/publication/337194646_Predicting_debt_burden_status_among_Malaysia_civil_servants
Shohib, M. (2015). Sikap terhadap uang dan perilaku berhutang. Jurnal Ilmiah Psikologi Terapan, 3(1), 132-143. https://www.academia.edu/107530083/Sikap_Terhadap_Uang_Dan_Perilaku_Berhutang
Song, J., Hu, M., Li, S., & Ye, X. (2023). The impact mechanism of household financial debt on physical health in China. International Journal of Environmental Research and Public Health, 20(5), 4643. https://doi.org/10.3390/ijerph20054643
Suasti, Y. (2019). Strategi Pemenuhan Kebutuhan Pokok Rumah Tangga di Padang Utara (Studi: Rumah Tangga Tukang Becak Dayung di Kecamatan Padang Utara). Jurnal Buana, 3(5), 1120-1128. https://scholar.archive.org/work/bhsv2khrwzfsjdv7vabchoudhq/access/wayback/http://geografi.ppj.unp.ac.id/index.php/student/article/download/422/361
Wajiha, H. (2018). Household Debt and Financial Wellbeing in Pakistan. PQDT-Global. https://www.proquest.com/openview/b7cdaf8d2ff084745eb65c9af4f36fb5/1?pq-origsite=gscholar&cbl=2026366&diss=y
Yue, P., Korkmaz, A. G., Yin, Z., & Zhou, H. (2022). The rise of digital finance: Financial inclusion or debt trap?. Finance Research Letters, 47, 102604. https://doi.org/10.1016/j.frl.2021.102604
Zakaria, R. H., Jaafar, N. I. M., & Ishak, N. A. (2017). Household debt decision: Poverty or psychology?. International Journal of Business and Society, 18(3), 515-532. https://www.ijbs.unimas.my/images/repository/pdf/Vol18-no3-paper8.pdf
