2013 Conference

Financial Services

Financial Services

This study investigated the associations of cognitive bias factors (i.e., time preference, goal expectation, unrealistic optimism, and overconfidence) and negative mood (i.e., anxiety) with credit card borrowing behavior of college students. Data were collected from a panel of students (N=1,146) during their fourth year of college. Results showed a positive association between three cognitive bias factors (i.e., goal expectation, unrealistic optimism, and overconfidence) and risky credit card borrowing behavior.  The findings also show that negative mood was positively related to risky credit card borrowing behavior. In addition, anxiety interacted with time preference and future income such that present oriented time preference was negatively related to credit borrowing behavior while future income was positively related to credit borrowing behavior but only for those students with high anxiety levels. The findings of this study for understanding and preventing risky financial behavior are discussed.