THE INFLUENCE OF EMOTION, MATERIALISM, RISK PERCEPTION AND FINANCIAL LITERACY ON THE PROPENSITY TO INDEBTEDNESS (STUDY ON PAYLATER USER AMONG GENERATION Z IN KARAWANG)

Abstract

Karawang Generation Z had a strong desire to try Paylater and use it for non-urgent purposes. So, they take out a loan without knowing how they would repay it. This study seeks to identify the factors that determine a they propensity for debt. This study focuses on the influence of financial literacy, risk perception, emotions, and consumerism in driving debt behavior. This research aims to build a debt propensity model using behavioral factors from 250 Generation Z living in Karawang, Indonesia. A questionnaire consisting of 25 questions was administered using a purposive sampling technique. This research used electronic questionnaire to collect the data, and used statistical software to process the data. To analyze the data using Structural Equation Model. In this research found the emotion, materialism, risk perception, and financial literacy influence the propensity to indebtedness. The most dominant factors that influence on propensity to indebtedness are risk perception and financial literacy, this is because Generation Z in Karawang does not mind the risks they might experience from using Paylater. Accompanied by the high level of financial literacy they have, they are confident in using Paylater services. Generation Z in Karawang have a materialistic mindset. They have an imbalance between the desire to fulfill material needs and the emotional burden they have to bear due to debt. They may feel trapped by the need to maintain their self-image or conform to social norms that value materialism.