Financial Attitudes and Non-Performing Loans among Phuket’s Generation Y

Abstract

Aim/Purpose: This study investigated the attitudinal and behavioral determinants of non-performing loans (NPLs) among Generation Y individuals aged 30–35 in Phuket Province, Thailand. It explored how cognitive factors, social norms, and structural conditions collectively generate financial vulnerability within a tourism-dependent economy. Drawing upon the Theory of Planned Behavior (TPB) and the construct of financial attitude, the research examined how individual intentions interact with contextual constraints to shape both indebtedness and recovery trajectories. The overarching objective was to produce empirically grounded insights for developing sustainable financial-behavioral interventions aligned with regional economic dynamics.

Introduction/Background: Phuket’s tourism-oriented economy, characterized by extensive informal employment, engenders income instability and fosters social pressures that intensify debt accumulation among young adults. Generation Y, often defined by digital dependency, aspirational consumption, and short-term financial planning, exhibits heightened exposure to unsecured credit instruments. Whereas previous research has predominantly focused on macroeconomic determinants of NPLs, this study addressed the underexplored behavioral and emotional mechanisms underlying indebtedness. It integrated borrowers lived experiences with institutional perspectives from financial professionals to construct a behavioral–structural model of debt formation and recovery in a high-visibility service economy. By situating financial decision-making within Phuket’s unique socioeconomic context, the study illuminates the interplay between personal aspiration, social conformity, and structural vulnerability that collectively shape debt outcomes.

Methodology: A qualitative research design was employed using semi-structured, in-depth interviews with 15 participants: 11 borrowers aged 30–35 who had experienced NPLs, and four financial officers from local banks and credit institutions. Interview queries–validated by three subject-matter experts–investigated financial attitude, decision-making behavior, and post-default adaptation processes. Data were analyzed thematically through open, axial, and selective coding within the TPB framework. Triangulation across participant groups enhanced analytical validity, while ethical protocols ensured confidentiality and informed consent. Analysis emphasized interpretive depth rather than statistical generalization, positioning the findings within Phuket’s behavioral and institutional ecosystem.

Findings: Two interrelated perspectives emerged, those of borrowers and financial institution officers. (a) Borrowers: NPLs formation was primarily driven by attitudinal optimism, impulsive consumption, and conformity to social norms. Respondents exhibited a pronounced “optimism bias,” assuming that peak-season earnings would offset overspending, identified as Seasonal-Income Perceived Behavioral Control (S-PBC) Effect. Financial attitudes evolved dynamically across the debt cycle: initially guided by immediate gratification and social comparison, later transitioning toward reflection and adaptive learning after default. Phuket’s service culture further reinforced such tendencies through the Norm-Pressure Amplification (NPA) Effect, wherein social-image expectations normalized indebted lifestyles. Recovery was frequently catalyzed by emotional triggers, shame, familial accountability, and the pursuit of regained dignity, transforming psychological distress into renewed financial discipline.

(b) Financial Officers: Institutional respondents reframed NPLs not as moral failings, but as outcomes structurally induced by income volatility and unregulated digital-credit accessibility. Officers reconceptualized perceived behavioral control as structurally constrained rather than individually deficient. They identified a persistent attitude–behavior gap in which borrowers expressed repayment intentions without consistent follow-through. Successful recovery was correlated with empathetic engagement, counselling, early-warning systems, and seasonally adjusted repayment models, illustrating how institutional scaffolding can reinforce behavioral controls. Officers further observed that traditional financial-literacy initiatives often neglect context-specific competencies such as cash-flow planning, compound-interest awareness, and negotiation confidence.

Contribution/Impact on Society: This study extended the TPB by introducing two context-specific constructs, Seasonal-Income PBC Effect and Norm-Pressure Amplification Effect, that reinterpret behavioral control and social norms within seasonal and appearance-driven economies. It bridges micro-behavioral and macro-structural perspectives, demonstrating that financial vulnerability arises from the intersection of cognition, emotion, and institutional frameworks. Theoretically, the research contributes to behavioral finance and economic psychology by illustrating how emotional regulation and contextual adaptation mediate financial behavior. Practically, it provides a behavioral blueprint for policymakers and financial institutions to design credit education programs, debt-recovery strategies, and consumer protection policies tailored to tourism-based economies. These findings highlight that addressing NPLs effectively requires coordinated behavioral and institutional interventions rather than purely economic measures.

Recommendations: (1) Develop targeted digital financial-literacy initiatives that enhance risk perception, interest-rate comprehension, and emergency-savings capacity;

(2) Institutionalize early-warning systems capable of identifying behavioral indicators of debt stress; (3) Implement flexible repayment frameworks aligned with income seasonality;

(4) Integrate behavioral metrics into credit-risk assessment models; and

(5) Promote inter-agency collaboration to deliver gamified, community-based financial-education programs that cultivate responsible financial norms and resilience among young adults.

Research Limitation: The small, location-specific sample (Phuket) limits external generalizability. Self-reported narratives may contain recall or social-desirability bias. Nevertheless, the study offers rich qualitative insights into the behavioral foundations of indebtedness and contributes contextualized understanding of borrower–institution dynamics.

Future Research: Future studies should adopt mixed-method or longitudinal approaches across diverse regions to validate and refine the behavioral constructs proposed. Experimental research could further evaluate the efficacy of behavioral counseling, financial-coaching frameworks, and digital interventions in debt prevention. Expanding the analysis to encompass gender, occupational, and resilience dimensions would strengthen predictive models of NPL risk and inform the development of tailored financial-wellness programs.