See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/330425997

FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL

COLLEGE STUDENTS

Article · January 2018

CITATION READS

1 17,829

2 authors:

Zurina Kamarudin Jamalludin Helmi Hashim

Universiti Islam Sultan Azlan Shah Universiti Sultan Azlan Shah (USAS)
2 PUBLICATIONS   1 CITATION    10 PUBLICATIONS   14 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Gap Analysis among university's stakeholder toward the usefulness of SMA innovation in Malaysia View project

Activity Based Costing (ABC) in ASEAN Countries View project

All content following this page was uploaded by Jamalludin Helmi Hashim on 16 January 2019.

The user has requested enhancement of the downloaded file.

Al Qimah Al Mudhafah The Journal of Management and Science (ALQIMAH) Volume 4, Issue 1
(2018)

FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ

INTERNATIONAL COLLEGE STUDENTS
Zurina Bt Kamarudin1, Jamalludin Helmi Hashim2
1
(Faculty of Management and Information Technology, USAS Kuala Kangsar Perak MALAYSIA)
2
(Assoc. Prof. Dr., Head of Research & Consultancy Department, Universiti Sultan Azlan Shah (USAS) Kuala
Kangsar Perak MALAYSIA)

ABSTRACT: This paper seeks to examine the saving behaviour among TAJ International College students.
The study is used primary data by questionnaires. Convenience sampling method is used in collecting the data
and the results compiled by using SPSS software system. Accordingly, this study appears for the purpose of
investigating how three factors, namely financial literacy, parental socialization and peer influence affect saving
behaviour based on the Theory of Planned Behaviour (TPB).

KEYWORDS – Financial Literacy, International College, Peer Influence, Saving Behaviour

I. INTRODUCTION

The development of educational services in Malaysia resulted in the establishment of many universities as well
as private colleges. The number of students registered in the IPTA and IPTS has increase by 3.75% from year
2011 to 2012 (Quick Facts 2014 Malaysia Educational Statistics, Ministry of Education Malaysia). Increase in
tuition and cost of living expenses forces parents to save extra money to send their children to college. On the
other hand, the accessibility of educational loans makes it easier for students to continue their education to the
highest degrees. For the majority of students, admission to college means the first time they are financially
independent and free of parental supervision.

In Malaysia, the educational loan was introduced in 1996 to provide more opportunity to more students to afford
university education. University students are becoming one of the important segments of population since they
will be the future leader of the nation. Henry, Weber and Yarbrough (2001) concluded that university students
are vulnerable to financial crisis and this was further confirmed by So-Hyun Joo and associates (2003).
University student’s financial behaviour while studying can be a reflection of their behaviour when they enter
the job market. In addition, how they financially behave depend on how much money they received. The saving
behaviour of college students is the primary focus of this paper. With the growth of educational services in
Malaysia, university and college students become one of the most important market segments for two reasons.
First, this group has a high purchasing power especially with the accessibility of educational loans. The
convenience of educational loans is designed to address the financial limitations among students to facilitate
them to concentrate on their studies. Second, this is the segment of the population who has the prospective of
making a greater income than any other segment of the population. It is hypothesized that knowing students’
financial problems can help educators develop appropriate programs to formulate them to manage their money
while in college and provide them with basic financial management skills before entering the labour force.

1 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
In order to have understanding about the impacts of money on the TAJ International College students, it is
necessary to consider the concept of money among other communities. As stated in Ware (2012), money
psychology may be the topic which attracts the least attention as well as studies or researchers.

Nowadays, price of goods and services become more expensive and its difficulties to predict. Financial
management is important to face the phenomenon that occur in develop country like Malaysia. Moreover,
Malaysian Department of Insolvency had reported a total of 224943 individual bankruptcy cases from 1990 to
2010 and this number keeps increasing from year to year. Most worries are that the number is coming from
young adult which is below age 30. Statistic from Bank Negara Malaysia (BNM) show that, bankruptcy cases
keep increasing year to year. In year 2005, 15868 bankruptcy cases were recorded, 13590 cases (2006), 13238
cases (2007), 13855 cases (2008), 16228 cases (2009) and 18119 cases (2010) and 17650 cases (2011). By
referring the ethnic group in Malaysia, Malay citizen has highest percentage of bankruptcy cases for year 2012
follow by Chinese, Indian and Others. This situation is not good sign for a developing country like Malaysia,
since it might affects the economic performance of the country in the long term.

The “Asian Survey Monitor” conducted by HSBC Bank in 2010 also reported a lower personal saving rate
among Malaysians as they found that average Malaysians only save 25% of their disposable income and 79% of
them save merely for rainy day rather than other purposes such as health care, retirements or investment. From
the past research, 60% of the respondents reported they are not saving enough and worse is 15% of the
respondents do not practise saving. According to Ulkumen, Thomas & Morwitz (2008) wrong prediction is
spending may cause lacking saving, lapses in self-control (Baumeister, 2002), over emphasis on the present
rather than the future (Lynch & Zauberman, 2006), or culture effects (Briley & Aaker, 2006).

Poor financial planning has been identified as the main contributor to this problem. Early exposure to financial
planning is important for the younger generation because they have various obligations such a paying back the
loans used to finance their university education even before they graduated. Financial planning is an important
aspect of our daily life involving cash flow and liability management. The learning process is actually generated
through daily exposure and proper communication and discussion between family members followed by trial and
error. Parents believe that the training should start as early as nine years old by giving those allowances. Students
that come from families which discuss financial issues and providing more financial advices have better money
management skills. They only discuss the financial matters with families and not with close friends. Study on
Malaysian students’ supports that parents and family have greatest impact on students’ financial management
and savings attitude.

2 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
II. LITERATURE REVIEW

This chapter explains the theory applied for the research and discover how each independent variable affects the
dependent variable by reviewing past literatures related to the topic. This chapter also includes a proposed
conceptual framework developed for the research and hypotheses to be tested.

The word “saving” contained broad-based meaning and numerous explanations. In economic contexts, saving is
defined as the residual income after deducting current consumption over a certain period of time (Browning &
Lusardi, 1996; Warneryd, 1999). Conversely, saving in psychological context is referred to the process of not
spending money for current period in order to be used in future (Warneryd, 1999). In other word, saving
behaviour is the combination of perceptions of future needs, a saving decision and a saving action. On the other
hand, people are likely to define saving as investing, putting money in a bank account, speculating and paying
off mortgages (Warneryd, 1999).

Financial literacy is defined as sufficient knowledge of personal finance facts and terms for successful personal
financial management (Garman & Forgue, 1997). Meanwhile, Anthes (2004) defines financial literacy as the
ability to read, analyse, manage and communicate about the personal financial conditions that affect the material
well-being. Delafrooz and Laily (2011) have conducted a study in Malaysia to examine the degree to which
financial literacy influenced the saving behaviour. This research had been conducted via quantitative
methodology by distributing self-administered questionnaires to 200 students of TAJ International College. The
finding shows that saving behaviour is significantly influenced by the financial literacy whereby individuals with
low level of financial literacy are not intended to save and eventually encounter financial problems in future. The
study of Hilgert, Hogarth and Beverly (2003) is found to be consistent with the above study.

The researchers found that the correlation between financial knowledge and saving behaviour was significant.
Result shows that students obtain higher financial scores (answered the quiz correctly) tend to have higher scores
on saving index (achieved more saving practices). Thus, the researchers concluded that increase in financial
knowledge can lead to better saving behaviour. In addition, the research of Sabri and MacDonald (2010) also
demonstrates that financial literacy had a positive and significant effect on college students’ savings behaviour.
The result of this research suggests that participants who have greater knowledge on personal finance tend to
engage in effective saving behaviour.

In previous study, Webley and Nyhus (2005) have investigated the concept in respect of parents’ behaviour in
influencing the economic behaviour of their children. The results show that parental behaviour and parental
orientation have a weak but clear impact on the economic behaviour of their children and in adulthood. The
research was conducted in Netherlands with 690 Dutch participants who are 191 husbands, 191 wives, and 308
children aged from 16 to 21. DNB Household Survey (DHS) was used in this research which includes detailed
information on financial behaviour and various psychological concepts of the parents and children.

3 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
According to Otto (2009), there is empirical evidence that parents can promote the development of skills to their
children that are important for saving. The purpose of the research is to investigate the role of parents in
developing their children’s saving ability and competence in adolescence. A total number of 446 students aged
13 to 14 from Devon, England were included in this research. A questionnaire on money management was given
to the students during their normal school lesson. A research was carried out by Furnham (1999) to investigate
the saving and spending habits of young people. A total amount of 158 males and 122 females British children
and adolescent from South East of England participated in the research. The participants were requested to
answer a set of questionnaire and the results showed that most of the children and adolescents’ saving behaviour
was caused by parental requests and requirements.

A study was done by Erskine, Kier, Leung, and Sproule (2005) to examine further predictors for the saving
behaviour of young people. The study was conducted in Toronto, Canada and a total number of 1806 young
Canadians aged 12 to 24 participated in this research. According to the economic theory of time preference and
psychological theories about adolescent crowds, they predicted that the groups would be more patient and more
likely to save money if they are placed high on the adult or academic-oriented dimension while the groups that
are placed high on the peer-oriented dimension were expected to be less patient and less likely to save money.
Thus, the result indicates that peer influence has an impact on individuals’ saving behaviour.

In the study of Duflo and Saez (2001), the researchers found that peer effects play an important role in retirement
savings decisions. The survey was conducted in United Stated by using individual data from employees of a
large university with 12,172 employees which divided into 358 departments. The purpose of the study was to
examine the relationship between role of information and social interaction in retirement plan decision. These
findings suggested that members of the same group share a common environment, which may influence their
behaviour. The reason is people with similar preferences tend to belong to the same group. Both of these factors
generate a correlation between group behaviour and individual behaviour which consequently affect their saving
behaviour.

Besides, Beshears, Choi, Laibson, Madrian and Milkman (2010) have conducted a field experiment involving
15000 employees from 500 manufacturing firms in USA about retirement saving behaviour. The population is
divided into two major groups which are employees who contributed to company retirement saving plan and
employees who had no contribution to the plan. They found that there is a weak correlation between peer
influence and retirement saving behaviour as the peer influence only encourages a small amount of co-workers
to participate in the retirement saving plan.

4 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
III. METHODOLOGY

This is an explanatory study on the determinants of saving behaviour among TAJ International College’s
students. Quantitative method is employed by the researchers as the empirical assessments consist of numerical
measurement and analysis. The researchers has followed a deductive approach by conducting the research based
on existing theories and researches (Saunders, Lewis & Thornhill, 2009) to test the relationship between
students’ saving behaviour and the three factors (financial literacy, parental socialization and peer influence).

According to Burns and Bush (2003), the method of data collection used is determined by the type of data
needed and pre-set research design. The two types of data are primary data and secondary data. In this research,
primary data collection method is used to obtain information and opinions directly and specifically from the
university students in Malaysia (Saunders et al., 2009). Primary data ensures the most up-to-date information and
realistic view to answer the hypotheses and research questions (Saunders et al., 2009). In the research, the
primary data is collected via survey questionnaire technique which required less skill and sensitivity (Jankowicz,
2005). To increase the response rate, the researchers distribute and collect the self-administered questionnaires to
and from the target respondents after they answered the questionnaires.

Sampling design is a process to select an appropriate amount of units from the population of interest to provide
accurate information about the entire population (Hair, Babin, Money, & Samouel, 2003). The target population
is defined as the entire group of people the researcher is interested in (Easton & McColl, 1997). The target
population for the research is degree and diploma students of TAJ International College in Ipoh. A sampling
frame is irrelevant for the study as it employs a nonprobability sampling method (Saunders et al., 2009).
Meanwhile, about 200 students has been chosen as the respondent in this study as sampling locations.

The target respondents are students who enrolled in different qualifications and courses of study at the selected
universities. Since they are varied in personality and views, a more accurate and generalize results can be
obtained. Non-probability sampling technique is employed in the research as it ensures good estimates of the
population characteristics (Malhotra, 2010). The researchers adopt convenience sampling method to obtain data.
This is the easiest non-probability sampling technique as the sample is selected randomly until the required
sample size has been met (Saunders et al., 2009). Therefore, the questionnaires will be distributed to the
university students haphazardly to the amount equal to the sample size. 200 sets of questionnaire distributed are
returned from the respondents and the data is processed via SPSS. The purpose is to ensure the data are in the
standard of quality. The process includes checking, editing, coding and transcribing. Initially, the researchers
check and review each questionnaire to verify its completeness and incomplete questionnaire will be discarded.
No amendment is required as there is no missing data. Thus, the researchers further proceed to coding process by
identifying and assigning a numerical score or other character symbols to the data. For instance, for the gender of
respondents in Section A, male has been coded as “1” while female as “2”. Lastly, the data are entered and
transformed into a more suitable format for data analysis.

5 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
Data analysis enables describing and comparing variables numerically which enhances the statistical analysis
and data interpretation (Saunders et al., 2009). Mean, median and mode are used to measure the central tendency
while standard deviation, variance and skewness are used to measure variability of the data. Additionally, pie
charts are inserted to make the data more understandable and effectively communicate with the readers in
visually appealing way (Hair, et al., 2003). All the data obtained from the questionnaires collected are interpreted
and summarized in average, frequency distribution and percentage distribution (Zikmund, 2003).

Reliability analysis is a test of Cronbach’s alpha to ensure the measurements are free from bias in order to obtain
consistent results (Sekaran, 2003). The test of Cronbach’s alpha value is appropriate for multi- scaled items and
is a perfectly adequate index of the inter-item consistency reliability (Cavana, Delahaye, & Sekaran, 2001). The
coefficient alpha value is range from zero (0) to one (1) whereby value less than 0.60 indicate unsatisfactory
internal consistency reliability (Hair et al.,2006; Malhotra, 2010).

The assumption of normality is a perquisite for inferential analysis such as Multiple Regression Analysis
(Coakes, Steed, & Ong, 2010). Skewness and kurtosis are used for normality test in this research. According to
Coakes et al. (2010), skewness and kurtosis refer to the shape of the distribution. If the observed distribution is
exactly normal, there will be a zero value for skewness and kurtosis. Positive value for skewness and kurtosis
represent a distribution is positively skewed and is more peaked than a normal distribution. In contrast, negative
value for skewness and kurtosis indicate the distribution is negatively skewed and is flatter. Skewness and
kurtosis of all variables must not exceed the absolute value of ± 1 in order to satisfy the assumptions of
multivariate model (Sit, Ooi, Lin, & Chong, 2009). Inferential analysis is used to test the hypotheses developed
for the research by investigating the relationships between the four independent variables (financial literacy,
parental socialization and peer influence) and dependent variable (saving behaviour). The inferential analyses
included are Pearson Correlation, Multicollinearity and Multiple Linear Regression.

Pearson correlation is a statistical test that assesses the strength of the relationship between two numerical data
variables (Saunders et al., 2009). Therefore, the relationship of independent variables and dependent variable is
measured via Pearson Correlation. The significance level is 0.05 in the Pearson Correlation test, which means
there is 95% of confidence level. Therefore, the hypotheses only can be accepted if the significant p-value is less
than 0.05 (Malhorta, 2010). Multicollinearity test is applied to measure the extent to which two or more
independent variables are correlated with each other (Saunders et al., 2009). (Hair, Anderson, Tatham, & Blank,
1998) proposed that the inter correlations among the independent variables should not exceed 0.90, otherwise,
the multicollinearity is exists and one of the highly correlated variables have to be removed.

Multiple regression analysis is conducted to determine the relationship between two or more independent
variables and one dependent variable by calculating the coefficient of multiple determination and regression
equation (Saunders et al., 2009). Practically, multiple regression analysis provides an understanding on whether
there is a relationship exists between the independent variables and dependent variable, how strong the
relationship is, whether the relationship is positively or negatively skewed and the proper way to describe the
relationship (Hair et al., 2006). The strength of the relationship between independent variables and dependents is
6 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
determined by the coefficient of determination (r2) as it measures the proportion of the variation in a dependent
variable that can be explained by the independent variables. In other word, how well the saving behaviour of
university students in Malaysia (dependent variable) can be explained by the financial literacy, parental
socialization and peer influence.

ANOVA is a hypothesis-technique that used by the researchers to test whether there is significant variance in
means occurs between three or more groups. In other words, it evaluates if there is a difference among the means
of the groups. This test must have dependent variable in metric which is saving behaviour in this case. The
following formula is known as F-test which is used to determine the degree of variability in the scores of one
sample to the scores of another sample.
F = Variance-between-group (SSB)
Variance-within-groups (SSE)

The following equation is formed to determine the statistical significance of each independent variable on the
dependent variable.

Equation: Y= a + b1X1 + b2X2 + b3X3 + b4X4

IV. FINDING

Frequency analysis
Frequencies simply refer to the number of times various subcategories of a certain phenomenon occur, from
which the percentage and the cumulative percentage of their occurrence can be easily calculated, (Sekaran &
Bougie, 2013). For this part, the frequency distribution that is represent is based on Section A in the
questionnaire where it includes demographic profile such as gender, age, marital status, course of study and
engagement in part-time job.

Respondent Demographic Profile

The research shows that majority of the respondents are female (53%) while male (47%) represents the minority
and the respondents fall into the age group of 19 to 20 years old (43%). Followed by the age group of 21 to 22
years old (24.5%) and 18 and below (20%) and 23 years old and above (12%). The result also demonstrates that
almost all the respondents (98%) are single whereas only 2% of respondents are married. The percentage of
respondents based on Engagement in part-time job shows that 81% of the respondents did not engage in part-
time whereas 19% reported that they engaged in part-time.

Normality and Reliability Analysis

The skewness and kurtosis statistics show the data distribution pattern. A 100% normal distribution has
skweness and kurtosis values of zero (0). Skewness indicates a skewed distribution. A position value shows a
positively skewed graph, whereas a negative value shows a negative skew. Kurtosis shows the height of the
distribution (high or low). A positive kurtosis shows a high distribution curve (leptokurtic) and a negative

7 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
kurtosis value shows a low distribution curve (platykurtic). For the data to be normally distributed, the skweness
and kurtosis values should be in the range of -1.96 to +1.96. In this case, the distribution of data is normal
because both skewness (0.295) and kurtosis (-0.618) values are within the normal distribution.

Descriptive statistical analysis

Data analysis enables describing and comparing variables numerically which enhances the statistical analysis
and data interpretation (Saunders et al., 2009). Mean, median and mode are used to measure the central tendency
while standard deviation, variance and skewness are used to measure variability of the data. Additionally, pie
charts are inserted to make the data more understandable and effectively communicate with the readers in
visually appealing way (Hair, et al., 2003).
Table: Descriptive statistic

Mean Std. Deviation Variance Skewness Kurtosis

Statistic Statistic Statistic Statistic Std. Error Statistic Std. Error

FinancialLiteracy 3.4786 .60368 .364 .272 .172 .305 .342
SavingBehaviour 3.7725 .60043 .361 .295 .172 -.618 .342
PeerInfluence 3.8510 .55165 .304 -.160 .172 -.551 .342
ParentalSocialization 3.9800 .61166 .374 -.332 .172 -.486 .342
Valid N (listwise)

The above table shows descriptive analysis of financial literacy, parent socialization and peer influence
(independent variables) and saving behaviour (dependent variable). The descriptive analysis, parental
socialization has a highest mean which is 3.9800. It indicates that parent socialization have strongest influence
towards saving behaviour among student of TAJ International College. Moreover, peer influence has second
higher which is 3.8510. It indicates that peer influence has strong influence toward saving behaviour among
student of TAJ International College. Lastly, financial literacy had meant which are 3.4786.

Reliability Analysis
Cronbach’s alpha is reliability coefficient and indicates how well the items in a set are positively correlated to
one another. Also it computed in the term of average intercorrelations among items measuring concept where the
closer cronbach’s alpha is to 1, the higher the internal consistency reliability (Sekaran & Bougie, 2013). Below
stated the thumbs of rules for reliability which taken from. (Zikmund, 2003).

Table: Summary of Reliability Statistics

Construct Cronbach’s Alpha Number of Items Relationship
Financial Literacy (IV1) 0.784 7 Acceptable
Parental Socialization (IV2) 0.802 8 Good
Peer Influence (IV3) 0.671 5 Acceptable
Saving Behaviour (DV) 0.845 8 Good

8 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
The research instrument was tested for reliability using the Cronbach’s coefficient as reported in the above table.
The Cronbach’s alpha for all dimensions are exceeding the minimum alpha value of 0.60 (Hair et al., 1998), thus
the construct measures are deemed reliable and all items in the construct measures are retained. In order to gather
the information regarding financial literacy that influence saving behaviour among students TAJ International
College, 7 questions are used using Likert Scale Model. Cronbach’s alpha found in this section is 0.784 which
fall into acceptable range. Therefore, coefficient obtained from this section is reliable and acceptable.

Secondly, to examine parental socialization may influence saving behaviour among students TAJ International
College, 8 questions are used Likert Scale Model. Cronbach’s alpha found in this section is 0.802 which fall into
good range. Therefore, coefficient obtained from this section is reliable and acceptable. Thirdly, to examine peer
influence may influence saving behaviour among students TAJ International College, 5 questions are used Likert
Scale Model. Cronbach’s alpha found in this section is 0.671 which fall into acceptable range. Therefore,
coefficient obtained from this section is reliable and acceptable.

Lastly, to examine the dependent variable, 8 questions are used Likert Scale Model. Cronbach’s alpha found in
this section is 0.845 which fall into good range. Therefore, coefficient obtained from this section is reliable and
acceptable. Pearson correlation coefficient (r) is a technique for investigating the relationship between two
variables. Also it measures the strength of the association between dependent variable and independent variable
(Sekaran & Bougie, 2013). According to Burn & Bush (2006), the range Pearson coefficient for positive
relationship between +0 and +1 and for negative relationship between -0 and -1.

Table: Summary of Pearson Correlation Analysis

Correlations
Saving Peer Parental Financial
Behaviour Influence Socialization Literacy
**
Saving Behaviour Pearson Correlation 1 .096 .430 .529**
Sig. (2-tailed) .177 .000 .000
N 200 200 200 200
Peer Influence Pearson Correlation .096 1 .069 .023
Sig. (2-tailed) .177 .329 .747
N 200 200 200 200
**
Parental Socialization Pearson Correlation .430 .069 1 .412**
Sig. (2-tailed) .000 .329 .000
N 200 200 200 200
** **
Financial Literacy Pearson Correlation .529 .023 .412 1
Sig. (2-tailed) .000 .747 .000
N 200 200 200 200
**. Correlation is significant at the 0.01 level (2-tailed).

9 | Page
 FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS

According to above table, Financial Literacy, Parental Socialization and Peer Influence (independent variables)
have a positive relationship with saving behaviour (dependent variable). Financial literacy has the strongest
relationship with saving behaviour (r = 0.529) and have a significant value (p-value = 0.000). It show that the
Pearson correlation has a strong positive linear correlation because the value indicates 0.529 near to 1, where
coefficient correlation are in range 0.5 < r < 1. Followed by the parental socialization (r = 0.430) and have a
significant value (p-value = 0.000). It show that the Pearson correlation has a strong positive linear correlation
because the value indicates 0.430 near to 1, where coefficient correlation are in range 0.5 < r < 1.

Then followed by peer influence (r = 0.096) and is not significant (p-value = 0.177). It show that the Pearson
correlation has a positive linear correlation because the value indicates 0.096 near to 1, where coefficient
correlation are in range 0.5 < r < 1. On the other hand, the hypothesis for Financial Literacy, Parental
Socialization and Peer Influence (independent variables) of this study are accepted as the p-values are less than
0.05 (Malhorta, 2010). Multicollinearity occurs when the model includes multiple factors that are correlated not
just to the response variable, but also to each other. Multicollinearity increases the standard errors of the
coefficients. Increased standard errors in turn means that coefficients for some independent variables may be
found not to be significantly different from 0.

Table: Multicollinearity statistics

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients Collinearity Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 1.037 .345 3.006 .003
FinancialLiteracy .422 .063 .424 6.655 .000 .830 1.205
ParentalSocialization .246 .063 .251 3.924 .000 .826 1.210
PeerInfluence .075 .063 .069 1.182 .239 .995 1.005
a. Dependent Variable: SavingBehaviour

The above table shows that the VIF for the financial literacy, parental socialization and peer influence are about
1.205, 1.210 and 1.005 respectively, which indicates some correlation but not enough to be overly concerned
about. A VIF between 5 to 10 indicates high correlation that may be problematic.
Multiple Regression Analysis

Table: Model Summary

Std. Error of the

Model R R Square Adjusted R Square Estimate
1 .582a .339 .329 .49190

10 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS

The above table shows the R2 for this model is 0.339 which indicates 33.90% of the variation in the saving
behaviour (dependent variable) can be explained by financial literacy, parental socialization and peer influence
(independent variable).
Table: Analysis of Variance (ANOVA)

Model Sum of Squares df Mean Square F Sig.

1 Regression 24.317 3 8.106 33.500 .000b
Residual 47.425 196 .242
Total 71.742 199
a. Dependent Variable: SavingBehaviour
b. Predictors: (Constant), PeerInfluence, FinancialLiteracy, ParentalSocialization

According to table above, the F-value of 33.500 is significant at the 0.05 level. This indicates that the overall
regression model with these three independent variables (financial literacy, parental socialization and peer
influence) can well explain the variation of the dependent variable (saving behaviour) (Coakes et al., 2010)

Table: Summary of Regression Coefficients

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 1.037 .345 3.006 .003
FinancialLiteracy .422 .063 .424 6.655 .000
ParentalSocialization .246 .063 .251 3.924 .000
PeerInfluence .075 .063 .069 1.182 .239

a. Dependent Variable: Saving Behaviour

An equation is formed based on the above table to determine the statistical significant of each independent
variable on the dependent variable.

Equation: SB = 1.037 + 0.422FL + 0.246PS + 0.075PI

According to the results, financial literacy (β = 0.422) has the greatest impact on saving behaviour. This can be
explained as every unit increase in financial literacy will increase of 0.422 units in saving behaviour, holding
other variables constant. Subsequently, parental socialization (β = 0.246) has the second strongest impact. In

11 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
contrast, peer influence (β = 0.075) has the most insignificant impact on saving behaviour whereby saving
behaviour only increase 0.075 units for every unit increase in peer influence.

V. CONCLUSION AND RECOMMENDATION

In this research, it studies on the relationship between all the three factors or independent variables which are
financial literacy, parental socialization and peer influence with saving behaviour. From the finding, all the
independent variables which are financial literacy, parental socialization and peer influence have a positive and
significant relationship with saving behaviour. Moreover, in descriptive analysis, parental socialization has
highest mean which is 3.9800. It indicates that parental socialization has the strongest influence towards saving
behaviour among student of TAJ International College. Thus, financial literacy has the strongest relationship
with saving behaviour (r = 0.529) and have a significant value (p-value = 0.000). It shows that the Pearson
correlation has a strong positive linear correlation because the value indicates 0.529 near to the 1, where
coefficient correlation are in rang 0.5 < r < 1.

Based on the result in previous chapter, there is sufficient evidence to conclude that the financial literacy has a
significant relationship with saving behaviour among student of TAJ International College (p < 0.05). This
finding indicates that the students with higher level of financial literacy are more likely to save. It is found
consistent with the research of Sabri et al. (2010) which revealed that financial literacy is significantly related to
college students’ saving behaviour in a positive magnitude. Other researchers such as Delafrooz et al. (2011) and
Hilgert et al. (2003) also proved that individual’s saving behaviour is significantly influenced by the financial
literacy. Therefore, students who have higher level of financial literacy are more likely to save as they have the
ability identify the importance and knowledge of savings.

Furthermore, the finding shows that parental socialization and saving behaviour are positively related (p<0.05).
The result obtained is agreed with the studies of Webley et al.(2005) which concluded that parental orientation
have a clear impact on the saving behaviour of children. In addition, both studies of Otto (2009) and Furnham
(1999) also supported the above hypothesis as they also found that parents have significant influence over the
saving behaviour of their children. Hence, parental socialization is inevitable in guiding and encouraging their
children to save.

Meanwhile, the finding also proves that there is a positive relationship between peer influence and saving
behaviour (p<0.05) and this is corroborated by the results from the past study conducted by Erskine et al. (2005)
which focused on the predictors of young people’s saving behaviour in Canada. However, the results do not
consent with the studies of peer influence by Duflo et al. (2001) and Beshears et al. (2010) which proved that
individuals’ behaviour is likely to be influenced by peer because peer is the salient referent to an individual and
one can be easily influenced by peer’s behaviour.

12 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
Recommendations
According to the law of large numbers, larger sample size is more likely to be representative and the sample
mean is more likely to equal the population mean (Saunders et al., 2009). Therefore, future research are
recommended to draw a larger sample size to generate a more accurate and representative manners (Lim et al.,
2011). Meanwhile, the samples should be drawn from multiple geographical locations in Malaysia including
East Malaysia, possibly from other countries in the Asia-pacific region given that the students’ perceptions and
attitudes towards savings are likely to vary across countries or cultures throughout the world.

The future research is suggested to conduct a longitudinal research to observe the saving behaviour of university
students over time. This would facilitate the researchers to gain valuable data which would provide a robust
finding on how each factor affecting the students saving behaviour. Given the study is insufficient to explain all
the systematic variance, future studies are recommended to comprise mediating factors to better explain the
relationship between independent variables and dependent variable.

Hence, behavioural intention is suggested to be included as a mediating variable in future study as it can explain
a person's readiness to perform a given behaviour (Ajzen, 1991). For instance, perhaps a student with high level
of financial literacy and self-control is not likely to foster a saving behaviour because he or she does not have the
intention to save. In other words, the saving behaviour is established only if the intention to save is formed, and
the intention to save is typically affected by other independent variables such as financial literacy and self-
control. Therefore, mediating variable can ensure the future researchers to certainly conclude upon the
relationship between independent and dependent variables.

REFERENCES

[1] Ali, S. (2013). Financial literacy in Malaysia: Issues and status update

[2] Baumeister, Roy F. (2002), “Yielding to Temptation: Self-Control Failure, Impulsive Purchasing, and Consumer Behavior,” Journal of
Consumer Research, 28 (March), 670–76

[3] Beal, D. J., & Delpachitra, S. B. (2003). Financial literacy among Australian university students. Economic Papers, 22(1), 15. Retrieved
from http://ezproxy.upm.edu.my:2063/ehost/pdfviewer/pdfviewer?hid=8&sid=f74751f1-38ce-4d93-b42d
e7e2b4fc2c12%40sessionmgr12&vid=4

[4] Beshears, J., Choi, J. J., Laibson, D., Madrian, B. C. & Milkman, K. L. (2010). The effect of providing peer information on retirement
savings decisions. California: Stanford University.

[5] Briley, Donnel A. and Jennifer L. Aaker (2006), “Bridging the Culture Chasm: Ensuring That Consumers Are Healthy, Wealthy, and Wise,”
Journal of Public Policy & Marketing, 25 (Spring), 53–66.

[6] Chen, H., & Volpe, R. P. (1998). An analysis of personal financial literacy among college students. Financial Services Review, 7(2), 107–
128. doi:10.1016/S1057-0810(99)80006-7

[7] Danes, S.M . (1994). Parental Perceptions of Children’s Financial Socialization. AFCPE: p.127).
Retrieved from www.afcpe.org/doc/Vol 58.pdf

[8] Davidson, I. B. (2006). Financial Literacy Important to Future. Montana Business Quarterly: 44(3), p.22. Retrieved from
http://www.accessmylibrary.com/coms2/summary_0286-33521732_ITM

13 | Page
FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
[9] Delafrooz, N. & Laily (2011). Determinants of saving behavior and financial problem among employees in Malaysia. Australian Journal of
Basic and Applied Sciences, 5(7), 222-228, 2011 ISSN 1991-8178.

[10] De Clercq, B., et al., 2009. Factors influencing a prospective chartered accountant’s level of financial literacy: an exploratory study.
Meditari Accountancy Research. 17(2), pp.47-60

[11] Duflo, E. & Seaz, E. (2002). The role of information and social interactions in retirement plan decision: Evidence from a randomized
experiment. Quarterly Journal of Economics, 118, 815-842.

[12] Educational Planning and Research Division, Quick Fast 2014. Retrieved form www.http://emisportal.moe.gov.my

[13] Fox, J., Bartholomae, S. & Lee, J. (2005). Building the case for financial education. The Journal of Consumer Affairs, 39(1), 195-214

[14] Furnham, A. (1985). Why do people save? Attitudes to, and habits of, saving money in Britain. Journal of Applied Social Psychology, 15,
354-373.

[15] Furnham, A. (1999). The saving and spending habits of young people. Journal of Economic Psychology, 20(6), 677-697.
doi:10.1016/S0167- 4870(99)00030-6.

[16] Garman, E. T., & Forgue, R. E. (2006). Personal finance (7th ed.). Boston: Houghton Mifflin Co.

[17] Hilgert, M.A., Hogarth, J.M., & Beverly S.B. (2003). Household Financial Management: The Connection between Knowledge and
Behaviour. Federal Reserve Bulletin, pp. 309–322

[18] Ibrahim, D., Harun, R., & Isa, Z. M. (2009). A study on financial literacy of Malaysian degree students Cross-cultural Communication,
5(4), 9. Retrieved from http://cscanada.net/index.php/ccc/article/view/1142/1235

[19] KELLY, C., 2002. Financial Literacy in Schools. CUNA’s Commitment to Providing Financial Education to America’s Youth. Available from:
Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1.
Retrieved from http://www.cuna.org/download/stgovpub_finlit.pdf [Accessed 3 May 2012]

[20] Erskine, M., Kier, C., Leung, A., & Sproule, R. (2005). Peer crowd, work experience, and financial saving behaviour of young Canadians.
Journal of Economic Psychology, 27(2), 262-284. doi: 10.1016/j.joep.2005.05.005

[21] Lusardi, A., & Mitchell, O. S. (2011a). Financial literacy around the world: An overview. Journal of Pension Economics and Finance.
Turin, Italy. Retrieved from http://cerp.unito.it/images/stories/wp_106.pdf

[22] Lusardi, A., & Mitchell, O. S. (2006). Financial literacy and retirement preparedness: evidence and implications for financial education
Business Economics, 42(1), 10. Retrieved from http://www.dartmouth.edu/~alusardi/Papers/Preparedness.pdf

[23] Lusardi, A., Mitchell, O. S., & Curto, V. (2009). Financial literacy among the young: evidence and implication for consumer policy.
National Bureau of Economic Research, 34. Retrieved from http://www.dartmouth.edu/~alusardi/Papers/Financial_literacy_young.pdf

[24] Lynch, John G., Jr. and Gal Zauberman (2006), “When Do You Want It? Time, Decisions, and Public Policy,” Journal of Public Policy &
Marketing, 25 (Spring), 67–78.

[25] Mahdzan, N. S., & Tabiani, S. (2013). The impact of financial literacy on individual saving: An exploratory study in the Malaysian
context. Transformations in Business & Economics, 12(1), 41–55.

[26] Manton, E. J., English, D. E., Avard, S., & Walker, J. (2006). What college freshmen admit to not knowing about personal finance.
Journal of College Teaching and Learning, 3(1), 12. Retrieved from http://www.cluteinstitute-onlinejournals.com/PDFs/200644.pdf

[27] Mason, C. L. J. & Wilson, R. M. S. (2000). Conceptualizing Financial Literacy (Business School Research Series. Paper 2000: 7). UK:
Loughborough University.

[28] Otto, A. M. C. (2009). The economic psychology of adolescent saving. Exeter: University of Exeter.

[29] Palys, T. (2008). Purposive Sampling. In Given, L. M. (Ed.), The SAGE Encyclopedia of Qualitative

[30] Research Methods (Vol 2) (pp. 697-698). Thousand Oaks, CA: SAGE.

[31] Rooij, M. v., Lusardi, A., & Alessie, R. (2007). Financial literacy and stock market participation. National Bureau of Economic Research,
48. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1024979

[32] Sabri, M.F., MacDonald, M., Masud, Jariah, Paim, L. Hira, T.K., & Othman M.A. (2008). Financial behavior and problems among college
students in Malaysia: Research and education implication. Consumer Interests Annual,54.

[33] Sharma, G. (2004). Financial Literacy: A Student and Young Adult Perspective. Retrieved from

14 | Page
 FACTORS AFFECTING THE SAVING BEHAVIOUR OF TAJ INTERNATIONAL COLLEGE
STUDENTS
cfltaskforce.treasury.gov.au/.../_download/submissions/sharma_g.pdf

[34] Statistics of Higher Education of Malaysia (2010). Retrieved from http://www.mohe.gov.my/web_statistik/perangkaan_2010.pdf

[35] Tennyson. S & Nguyen, C. (2001). State Curriculum Mandates and Students Knowledge of Personal Finance. Journal of Consumer
Affairs, 35 (2), 241-262.

[36] Thaden, L. L. & Rookey, B. D. (2005, November). Financial decision-making and economic inequality: Sources of influence on college
students’ financial literacy. Paper presented at AFCPE Annual Conference, Inequalities Seminar, Scottsdale, AZ

[37] Ulkumen, Gülden, Manoj Thomas, and Vicki G. Morwitz (2008), “Will I Spend More in 12 Months or a Year? The Effect of Ease of
Estimation and Confidence on Budget Estimates,” Journal of Consumer Research, 35(August), 245–56.

[38] Vitt, L. A. & Anderson, C. (2001). Personal finance and the rush to competence: Financial literacy in the U.S. Middleburg, VA: Fannie
Mae Foundation.

[39] Warneryd, K. E. (1999). The psychology of saving: A study on economic psychology. Cheltenham, UK: Edward Elgar

[40] Ware, J. (2012). The Psychology of Money: An Investment Manager’s Guide to Beating the Market. John Wiley & Sons.

[41] Webley, P. & Nyhus, E. K. (2005). Parents’ influence on children’s future orientation and saving. Journal of Economic Psychology, 27(1),
140-164. doi:10.1016/j.joep.2005.06.016.

15 | Page

View publication stats