A STUDY ON BEHAVIOURAL FACTORS INFLUENCING CONSUMER DEBT IN THE SULTANATE OF OMAN

Gargi Chugh, Veena Tewari

Abstract


Consumer debt is borrowed money used to meet individual consumption rather than investments. The key words in this economic definition are "borrowed" and "consumption." Individuals who spend more than they earn from jobs will usually borrow the money in the form of credit cards or consumer loans. While easy to access, repayment of consumer debt can be difficult, time consuming, and expensive based on the assessed interest rate of the debt.

Consumer debt is the debt held by individuals, not by governments. Consumer debt can come in the form of credit card debt, home mortgages, student loans, auto loans and other loans. Consumer debt is also known as household debt. Analysts fear that this unprecedented level of debt poses a significant risk to the financial health of global economies and more particularly the developing economies of the East. Household debt behaviour has been understudied, especially empirically, despite the heightened debate on rising household debt, personal bankruptcy filings, and arrears. The aim of this paper is to analyze the link between behavior and over indebtedness and to shed light on the effectiveness of policy measures to tackle household financial fragility.  The paper will also explore  behavior leading to over indebtedness which  is often put down to social and psychological factors that reduce an individual’s capacity to evaluate the consequences of his/her consumption and borrowing decisions. In a developing economy like Oman, rising household debt and its impact on the individual, society at large and the country has not been given the due consideration.


Keywords


causes, Bank's lending, Consumer debt, Procedures

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