Modeling Money Attitudes to Predict Loan Default

The primary objective of the study is to classify the defaulters and non-defaulters of auto loans based on their specific personality traits, viz., ‘money attitude' and ‘income dimensions'. However, the aim is not only to classify, but also to understand the root of the defaulter behavior. Therefore, the study probes deeper into the attitude and perception variables of the consumers who avail loan facilities. The study, based on the customers of an MNC bank1, using a survey in two metropolitan cities in India, suggests that the constructs of personality traits, such as money attitudes, power-prestige and anxiety, actually enhance the intention and actual usage of loan facility, and that the same can be the predictors of default behavior at a significant level. The results and the model developed can be used as the basis for decision making while processing loans