The Big Five Personality Traits and Borrowing Behavior

Abstract

The importance of the Big Five personality traits (openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism) has been acknowledged in studies on financial decision-making, including borrowing behavior. However, there has been limited discussion on this topic in the context of developing economies, which comprise a significant proportion of the world’s population and where financial exclusion is an issue. This study aims to examine the role of the Big Five personality traits on borrowing behavior, measured by intention to borrow and loan to annual income ratio, by using the data from the 2014 Indonesia Family Life Survey (IFLS). The results of probit and ordinary least squares (OLS) regression techniques show that, among the elements of the Big Five personality traits, openness to experience and extraversion seem to be the most important due to their significant effects on intention to borrow, and, therefore, financial inclusion efforts should incorporate these two personality factors.