Consumer attitudes towards credit reference bureaus in Botswana: the effects of financial literacy, experience with credit reference bureaus and personal values

Abstract

The aim of this study is to investigate consumer attitudes towards Credit Reference Bureaus and how financial literacy, experience with credit reference bureaus and personal values shape those attitudes. Using a survey, 315 questionnaires were collected and analyzed using various statistical methods from Statistical Package for Social Sciences (SPSS) version 22. Dimensionality and reliability were measured using Cronbach’s alpha and it was found that existing tools which had been used and tested before had high reliability in comparison to newly formulated tools. Perceptions were examined using Pearson’s correlation test and results showed consumer attitudes towards Credit Reference Bureaus were marginal. Perceptions on financial literacy constructs were generally low as well indicating low knowledge levels in financial matters. Using linear regression to test the hypothesis, consumer attitudes towards Credit Reference Bureaus were found to be rather neutral. Various personal values had an effect on consumer attitudes towards these institutions while others did not show any significant effect on attitude formation. Some constructs of financial literacy (money management, keeping financial records, financial involvement and financial knowledge) were found to have an effect on consumer attitudes. Furthermore no significant differences were found on gender and experience with neither Credit Reference Bureaus nor personal values. Significant gender differences were observed in financial literacy constructs Differences were measured using the T-test. This study concludes that consumers in Botswana generally have limited knowledge and experience on Credit Reference Bureaus hence the marginal attitudes observed. This has implications on general credit behavior. Creditors and Credit Reference Bureaus have a mammoth task to educate consumers on the role of credit reference bureaus in a credit market. This move will see creditors improving their credit performances and subsequently profit bottom lines and credit reference bureaus seen as partners in the credit markets by both creditors and consumers. Regulators should formulate credit policies and monitor trends on consumer credit behavior to protect the players in the credit market as well as ensure stability in consumer credit levels.