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A lot has been researched and written on the problems bring about by failure in debt management. Countries such as Greece and Iceland have fallen or on the verge of falling into bankruptcy, financial giants such as Lehman Brothers Holdings Inc. and Washington Mutual Inc. were also not spared being wiped out of business due to bankruptcy.
Debt is indeed a double edge sword. The concept of leverage in finance taught us that borrowings allow owners the potential to reap many folds of profit in the case of profitable ventures.
However should the results of the venture turned sour, borrowings will increase the loss of the owners. Or in other words, borrowing or debt increases risks of loss. The same goes for individual borrowings, where individual’s vulnerability in times of crisis is increased due to borrowings.
However, people do and still borrow. In Malaysia, the household (as opposed to business) debt to GDP ratio has been increasing at the rate of 11. 1% for the period of 2004 to 2009. As at 2010, the debt-to-GDP ratio in Malaysia stood at 75. % as compared to 64% in 2008.
The same situation is being reported elsewhere around the globe, for example the household debt-to-GDP ratio for UK and Switzerland were 101% and 118%, respectively (McKinsey, 2010). The number of bankruptcy filings among individuals has also risen in Malaysia and the age of the individuals declared as bankrupts are becoming younger, where a total of 1,046 cases of bankruptcies have been recorded among those under 25 years of age for the period from 2005 to July 2010 (Bernama, 2010).
To help address the issue of individual debt management problems in Malaysia, an agency, Agensi Kaunseling dan Pengurusan Kredit (AKPK) was set up in 2006 to provide free education on money management and credit management skills, financial management and advice and counselling, and credit management service to help indebted individuals to regain their financial freedom (AKPK, 2011). The counselling and credit management programs have so far been successful, though there are cases of relapse reported (BNM, 2010).
Why do Qualitative Research? What makes some individuals successful in pulling themselves from the roblems of debt? What are the emotion, and motivation of the individuals who managed to regain their financial freedom? This research aims to have a deeper understanding of the experience, values, beliefs, and assumptions of individuals faced with debt management problems and the influence of emotion on their financial decision making. Several researches have been conducted to study factors that contribute to individuals’ debt management effectiveness – why some individuals face problems in making debt repayments and ended up filing for bankruptcy.
The research methods adopted were mostly quantitative in nature where data are gathered from panel household surveys (Moorman & Garasky, 2008), (Del-Rio & Young, 2005), online surveys (Stone & Maury, 2005) conducted among various categories of individuals such as university students (Norvilitis, 2002), (Schwartz & Finnie, 2001), employees of an air force (Stone & Maury, 2005), and between the different ethnic groups (Yao, 2008). This research is, however more of humanistic and subjective in nature, thus the research approach proposed is of qualitative in nature.
The qualitative approach for doing research is proposed as the approach enables us to study social and cultural phenomenon (Myers, 1997), which in this study is the social phenomenon of the human experience of indebtedness and undergoing financial rehabilitation process. For example, why is it that some individuals get into debt more easily compared to others? What causes some debtors to default their payment while some others manage to do otherwise? How does an individual faced with debt problem perceive indebtedness, defaulting in payment, facing the risks of legal action by lenders, and what are the values associated with debt?
While going through debt management program, individuals may have to abide by the program prescribed by the debt management counsellors. What was the feeling, and emotional condition of the individuals undergoing credit rehabilitation p program? Was the experience of regaining financial freedom after successfully completing the debt management program a positive or a negative one? Do perception, values and attitude towards debt and financial management change after undergoing the program change among the same individuals?
The motivation for conducting a research which is qualitative in nature comes from the observation that what differentiate human from the rest of the natural world is the fact that the human has the ability to talk (ibid). As this study aims to seek answers to questions on the experience of individuals, the information gathered from expressions of the participants’ feelings, values and perceptions on the problem of debt that they faced. Qualitative data sources that can be applied include interviews and questionnaires, and the researchers’ impressions and reactions (Myers, 2009).
Another potential method will be a combination of both qualitative and quantitative approaches, which is called triangulation. Qualitative research methods are designed to help researchers understand people and the social and cultural context in which they live in (ibid), and the phenomenon from the perspective of participants (Kaplan & Maxwell, 1994). The data and information from the social and cultural context will largely be lost should the method adopted be a strictly quantitative in nature (ibid).
Another reason for choosing the qualitative research is that a qualitative study enables the in-depth examination of the impact of emotion on perceptions, behaviour and performance in financial decision making (Fenton-O’Creevy, Soane, & Nicholson, 2010). Whether emotions of individual influence their decision to get into debt and their debt management behaviour pursuance to getting themselves into debt problems, and their decision, behaviour and perceptions undergoing debt rehabilitation programs.
The qualitative research method is also considered to be more suitable as the study will involve analyzing and interpreting data, rather than computing; and attempting at discovering meaningful patterns to describe a particular phenomenon, rather than involving numbers. (Auerbach, 2007). In terms of the approach to seeking answers to the research questions, the qualitative research strives to seek the reasons (why) to explain a phenomenon being researched, rather than to describe how the phenomenon took place, as the case is in quantitative research.
In exploratory research, qualitative research approach has the advantages of the ability to evoke responses that are meaningful, unanticipated by the researcher, and also rich and explanatory due to use of open ended questions and probing for data gathering method (International Family Health). The method also has an added advantage of allowing the researcher the flexibility in probing for participant’s initial response.
As the researcher believes that not much has been researched on the emotions and influence of emotions on behaviour, perceptions, decision making and values of individuals, this is considered to some extend as an exploratory research. There does not seem to be much researched nor written on the micro aspects of the debt problem. The researcher feels that the answer to the above and many more in-depth questions regarding the experience of individuals in debt management problems are best discovered through qualitative research approach.
The proposed study is interested in understanding and making sense of the indebted situation to an individual or a few selected individuals faced with debt problems and underwent the debt management and counselling program organised by AKPK. The proposed data gathering method is via personal interviews with the selected participants from the database of AKPK, the researcher’s observation, impression and reactions based on the interview (Myers, 1997).
The qualitative research approach is considered suitable as the proposed study involves study of a social phenomenon (Myers, 1997). The qualitative approach is also considered as the aim of the proposed research is to investigate the nature of a person who is facing/has faced (personal) debt problem i. e. the values of the person, the person’s behaviour, and way of thinking, which may not be effectively captured using quantitative research methods.
Aside from that, the proposed qualitative approach is also considered suitable as the objective of the research is to explore and understand the unique individual subjective experience towards debt counselling program that they underwent/are undergoing. The information will be useful for AKPK and other financial education in charge of providing debt counselling services and dissemination of financial education, financial institutions, and to the society. (Auerbach, 2007).
Apart from that the qualitative research approach is also proposed as the researcher is interested in seeking the answers and learning the meanings and values of debt, indebtedness, the feelings attached to the experience from the perspective of the indebted person, including the effect on their lives, thus the proposed approach to seeking answers to the research questions would be more of seeking the reasons (why) to explain a phenomenon being researched, rather than to describe how the phenomenon took place, as the case is in quantitative research (Ereaut, 2011).
Qualitative research is used to gain insight into people’s attitudes, behaviours, value systems, concerns, motivations, aspirations, culture or lifestyles. It’s used to inform business decisions, policy formation, communication and research. Focus groups, in-depth interviews, content analysis, ethnography, evaluation and semiotics are among the many formal approaches that are used, but qualitative research also involves the analysis of any unstructured material, including customer feedback forms, reports or media clips. Ereaut, 2011). It is also proposed that among the research methods to be employed in trying to seek answers to the situation of indebtedness and debt management program experience, the narrative method be adopted in interpreting and giving meaning to participants response, verbal and non-verbal reactions, the language used in answering and imparting answers to interview questions.
In terms of analyzing the data, the proposed research will be more heavily involved in analyzing and interpreting data, rather than computing, and attempting at discovering meaningful patterns to describe the phenomenon of indebtedness and participating in a debt management program, rather than involving numbers. (Auerbach, 2007). The participants of the proposed research are individuals who undergo the credit counselling program provided by AKPK.
Thus the proposed research does have a fairly large number of potential participants and data sources to avoid the issues of over generalisation, and small sample size. The proposed research also propose to overcome the issue of personal bias of researcher’s personal attribute and research skills by implementing triangulation, i. e. ombination of both quantitative and qualitative research tools and methods, and the idea of separating the inner/insider’s voice of the participant (emic) from the outsider/researcher’s voice (etic) and using the emic voice as the predominant voice in the text. Based on the above discussion, the qualitative research is considered to be appropriate for this research. This is due to the fact that the approach enables the deeper examination of human emotion and its influence on perceptions, behaviour, values, and financial decision making for individuals in debt situations.