Credit behavior of students in Saint-Petersburg

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FEDERAL STATE AUTONOMOUS EDUCATIONAL INSTITUTION

FOR HIGHER PROFESSIONAL EDUCATION

NATIONAL RESEARCH UNIVERSITY HIGHER SCHOOL OF ECONOMICS

Faculty St. Petersburg School of Social Sciences and Area Studies

BACHELOR'S PROJECT

Field of study: 39.03.01 Sociology

Credit behavior of students in Saint-Petersburg

Morozova Iuliia Sergeevna

Supervisor: Candidate of Science in Sociology,

Associate Professor,

A.V. Nemirovskaya

Saint Petersburg 2020



Content

credit behavior student petersburg

Introduction

1. Theoretical review of approaches to the study of credit behavior

Basic terms of credit, debt, lender and borrower, credit behavior

The specifics of credit behavior in Russia

The concept of «advanced consumption»

Educational loans for students in Russia

Studies by foreign authors on factors affecting student's credit behavior

2. Empirical part of the research of student's credit behavior in St-Petersburg

Student's credit statistics

Methodology of research

Empirical base collection

The results of the analysis of student's credit behavior in St-Petersburg

Conclusion

References

Appendix

Empirical base table

Guide interview

Example interview



Introduction

Borrowing any funds or on bail is not a new practice at all. Now the credit system is different from what it is used to be. A loan is an attractive and easy way to finance consumption without time delays, such as accumulation. In many Western countries, credit is a common part of consumer culture, if you do not have a loan you cannot be trusted. To date, the debt load of the population is an urgent topic for analysis. In Russia there is a specific situation with loans. According to statistics, the debt level of the population is growing, and the average resident of the Russian Federation has two loans. Especially recently, credit has become popular among young people and specifically students. Over the past 3 years, the number of debtors under the age of 24 has doubled, if in 2017 they accounted for only 3%, in 2018 - about 5%, then according to March 2020, almost 8% (Picture 1) This is due to the fact that after the crisis, banks began to look for new customers and audiences - young people became the most promising. However, it is important to understand that at this age, not everyone has a regular income. In addition, the banks' rate on parents, in the event of delay, it was they who should have repaid the obligations, in some cases did not materialize (http://www.napca.ru)

Picture 1 Percentage distribution of debtors by age and gender Data by NAPKA

As the results of the NAPKA (http://www.napca.ru) study also showed, the maximum number of debtors with a delay period of 90+ are between the ages of 25-30 years - almost a quarter of the total number (24.3%), in second place are borrowers aged 35-40 years (17.9 %), the category of 31-34 years (16.4%) closes the top three. The minimum amount is from 51 years of age and older (51-60 - 8%, 61+ - 4%) ( Picture 2). As can be seen from the statistics, more than 72% of debtors account for the economically active population aged 25 to 40 years. The prevalence of these ages among MFI debtors is explained by their greatest activity in the consumer plan and the intensive development of the online segment of the microfinance market - in 2018, about 45% of loan agreements with MFIs were concluded online. This category is considered to be more progressive in the use of technologies, including financial. For example, Internet penetration among those under the age of 40 at the moment in Russia reaches 98%, among the older category this figure does not exceed 36%. Through the use of mobile applications, they take microloans in general much more often than the older generation, but in smaller sizes. So, for example, in 25-40 years, borrowers on average ask to give them 6.7-8 thousand rubles, and citizens older than 50 ask for amounts of more than 12 thousand.

Picture 2 Percentage distribution of MFI debtors by age Data by NAPKA

It is interesting to note that payment discipline also has a certain relationship with age - for young people at the stage of collecting overdue debts with a term of 90+ it is higher than for citizens of mature ages. Recall that in the microloan segment, overdue loans with a term of more than 90 days are in fact hopeless and difficult to recover due to the peculiarities of customers. Of all the `hopeless` debtors of MFIs who paid off the debt during the first half of 2019, the age group of 18-24 years was more active than the others - in 11.6% of cases, the recovery ended with a refund (Picture 3). Elderly people over 60 worked a little less actively with their debts: they returned the debt in 10.2% of cases. And worst of all, debt obligations to MFIs are fulfilled by clients aged 31-50 years old - despite stable earnings and already existing fundamentals of material well-being.

Picture 3 Percentage distribution of debt repayers Data by NAPKA

It is also interesting and important to say about educational loans in Russia, since it is they who are interested in a large proportion of students. Education loan is a new loan product in the Russian financial market. This system is underdeveloped and fully debugged. It should be noted that the state does not sufficiently support this type of lending. The provision on state assistance in lending to higher education in Russia was first introduced in 1996, but since there was no national lending practice, this provision was roughly useless. But in 2013, another law on education in the Russian Federation came into force, in which one article reflected the provisions relating to lending to education, here people were already ready for this. But there is no advertising of this target program and therefore, despite the convenience of such loans, a small number of students and their parents apply for them. While in European and American countries, educational loans are very common, since the share of state financing in the costs of higher education ranges from 50 to 90. It should also be noted that in the West the interest rate of such loans is very, very small, and in Russia just crazy. Making an educational loan - in our country is still perceived as something exotic. (Prokofieva, 2015)

Thus, one can observe that the topic of loans and credit behavior of youth is “urgent” and relevant today. My research in the framework of the thesis affects a certain geographical field - St. Petersburg. It seems important to find out what social relations and problems, phenomena and processes can be observed in the framework of student credit behavior. Also interesting is not only the definition of credit strategies of debtors, but also an explanation of why young people resort to certain actions, and how to solve a situation where it is not possible to repay a loan, and in the case of successful borrowers, determine what is behind the positive credit history. The subject of this study is the credit behavior of students of St. Petersburg. The object is students of St. Petersburg. The main goal of the study is to describe the credit behavior of students of St. Petersburg borrowers with different experience in repaying loans. To answer this question, a number of research tasks were formed:

· To identify the styles of credit behavior of students of St. Petersburg: make a classification of types of borrowers

· Determine the goals and motives for taking a loan.

· Describe the choice of type of loan, credit organization; determine how the search and collection of information about loans and credit organizations; describe selection and selection criteria.

· Describe interactions with credit organizations; identify problems; describe how to resolve problems.

· To clarify the student's idea of ??fulfilling loan obligations; identify ways to fulfill obligations and manage credit everyday

· Determine what role family and friends play in student credit behavior

· To determine the student's personal attitude to loans in general: to learn how credit experience transforms the attitude to loans and how it affects a person's financial behavior

The empirical base of the study was eighteen interviews. The sample included students of St. Petersburg from 5 different universities with different experience in taking a loan (14 girls and 6 guys). The age of informants is from 19 to 23 years. General information about informants is presented in the Appendix. The study was implemented as part of a qualitative methodology. A semi-structured individual interview was used as a data collection method. Interviews with informants took place on a previously prepared guide, however, the wording and sequence of questions during a conversation with informants could change to maintain live communication. The full guide is presented in the Appendix. All interviews were subsequently transcribed. The method of data analysis is a thematic analysis, since the thematic analysis refers to the process of identifying topics in the data that are significant for the entire study, and possibly also establishing relationships between such topics. This work consists of two main parts, the first of which is theoretical, where approaches to credit behavior are examined, and the second - methodological, is devoted to the research methodology, methods and description of the empirical basis of the study. Further in the conclusion, the main results of the study are stated.



1. Theoretical review of approaches to the study of credit behavior

Basic terms of credit, debt, lender and borrower, credit behavior

This section describes the basic terms that are used in this paper. For further conceptualization of the term credit behavior, it is necessary to understand what the term credit means and how it will be used in this work. According to the Oxford Dictionary (https://en.oxforddictionaries.com/), credit means "the ability of a customer to receive goods or services before full payment, based on the belief that payment will be made in the future." A more detailed definition of credit is offered by the financial credit encyclopedic dictionary under the general editorship of G. A. Gryaznova (2002) is understood as “an economic bargain where one person provides another with money or property on terms of urgency, repayment and remuneration”. In turn, S. Leah and co-authors understood credit as an agreement on borrowing money for a certain period, provided that the repayment is always within the borrower's funds (S. Lea et al, 1993, p. 86). Thus, a loan can be understood as a certain type of economic and social relations, when one of the parties immediately takes money or other property from the other side, and undertakes to provide a refund or return resources in the future on special conditions. It is important to note that credit, representing, on the one hand, economic and legal relations, on the other, acts as a social agreement, the meanings of which, in particular, will be interpreted in the empirical part of this work.

A term such as debt should also be taken into account in this paper. According to S. Leah et al., Debt means that the borrower has an obligation to repay the loan, and he (the borrower) is either not able to fulfill it (obligation), or tries to avoid repaying the loan, at least at the time when the time comes next payout. The authors also mention the concept of "crisis debt." Such a situation arises when there is no prospect of repayment or even reduction of accumulated debts, which often grow steadily, thereby not making credit payments (S. Lea et al, 1993, p. 86). So, in general, debt is a “fortune to owe money” (https://en.oxforddictionaries.com).

It is also necessary to consider the concepts of lender and borrower. The lender is “the subject of credit relations, providing money, property for temporary use” (Gryaznova, 2002). Creditors may be banks and financial commercial organizations. Borrower - a person receiving money or property, which he undertakes to return on the terms and conditions, according to the loan agreement (https://www.banki.ru/wikibank/). In general, the lender is the one who gives out the loan, and the borrower is the one who gives out the loan.

Now it is necessary to determine how the concept of credit behavior will be used in this work. D.O. Strebkov in one of his studies conceptualized this concept. He understood credit behavior as “the activity of an individual or a household, in the process of which there is a borrowing of funds, suggesting their further return” (Strebkov, 2004a, p. 110). Credit behavior can also be understood as “the totality of the actions of an individual or a household to dispose of borrowed money outside the framework of current consumption in order to ensure expanded consumption” (Yarasheva et al., 2017, p. 140). Thus, credit behavior will be understood as an activity when an individual borrows funds, provided that they are repayable on time. And also such a person's action in which he puts subjective meaning, and, moreover, which correlates and focuses on the actions of others. The action includes the process of forming attitudes towards credit behavior, and after that the action itself takes place - taking or not taking a loan and returning or not returning the borrowed funds to the creditor.

The specifics of credit behavior in Russia

The Russian person has many proverbs that clearly demonstrate their attitude to debt: “To recover the old debt - what treasure to find”, “To the ruble debt - three half growth”, “Take someone else's and not for long, but give yours and forever“, etc. Both of these words “debt and credit” have a common meaning, however the term “credit” appeared relatively recently in contrast to the term “debt”. That is, we can say that the term "debt" is a kind of progenitor of the term "credit". And analyzing these proverbs, we can clearly observe the negative attitude of Russians towards debt and loans. If we talk about the credit behavior of citizens in the Soviet Union for many decades, it was quite obvious and easily predictable. Since about the 70s, our large country was in a situation of shortage of goods, it exceeded the planned economy, because of all these reasons, the credit system was very poorly developed. (Strebkov, Gribanova, 2003). But with the advent of the 90s, the situation changed dramatically: now a liberal economy reigns in the state. The need for credit is growing among Russians: low-income citizens were forced to borrow money because of the crisis also there is no work for them, and from another side the rich part of the population is taking credits. After the financial crisis many vital changes took place in Russia due to what social and cultural prerequisites were formed for crediting citizens. People not only want to take loans but also can afford it. (Strebkov, 2001). With the beginning of the 2000s, loans simply get into the lives of Russian citizens. At the same time, the first studies of credit behavior in Russia are appearing.

The concept of «advanced consumption»

As mentioned earlier with the beginning of the new 21st century, the practice of lending to individuals is increasingly being introduced into our lives. The most important advantage of a loan is obvious to every person: it is money here and now that allows a person to improve their standard of living immediately, without waiting for old age. If we take into account that the material well-being of the majority of Russian citizens currently much to be desired, and they do not reach even the middle class, credit could be a measure that would save them from this situation. As a theoretical framework for my further research, I would like to take the concept of advanced consumption introduced by D.O. Strebkov. He writes especially in highly developed countries, there is a tendency to move from credit as necessary measure to a mean of special lifestyle that shapes the needs of consumers. The emergence of credit culture contributes to the emergence of a new ethics - the ethics of advanced consumption (Strebkov, 2007). In his article, Strebkov refers to the famous French sociologist J. Baudrillard: “Now a new morality has been born: the moral of outstripping consumption in relation to accumulation, the moral of running ahead, forced investment, accelerated consumption and chronic inflation (it makes no sense to save money); from here comes the whole modern a system where a thing is first bought, and then redeemed by its own labor". The scientist makes an interesting comparison of how the attitude towards loans among Russians has changed like the attitude of Americans towards life insurance. Initially, life insurance was considered simply something out of the ordinary, people did not understand why this was necessary and how you can insure your own life in general, how you can generally evaluate it in some kind of monetary equivalent, because every person is unique and every life is priceless. People reacted to this phenomenon extremely negatively. But life is such a thing, there is nothing permanent, and soon global changes took place in the value system of American society and today not a single person imagines himself without life insurance. Therefore, the sharp increase in recent years in the provision of credit services to the population of Russia is caused not only by changes in the economy, but also, of course, changes in the value attitudes of Russians.

Educational loans for students in Russia

An educational loan is a type of long-term loan that only a small part of applicants and their parents have heard about. Therefore, many still believe that it is much more profitable to take an ordinary consumer loan for educational purposes, but this is not the right choice. The main difference between an educational loan is that it has its own characteristics of repayment. We are talking about the existence of a grace period for the entire period of study, during which the student pays only the interest on the loan, but after graduation he begins to pay the main amount of the debt. This method of repaying the loan is fully consistent with the purpose of lending - because only after graduation the borrower will pay off the debt, as he will be able to earn enough. In our country, every high school graduate is at a crossroads: where to go to study further in order to secure his future. In the modern world, almost everyone wants to get a quality education, but not everyone can go to budget training, and the number of budget places is getting smaller every year, especially in the humanitarian field. and almost 60% of students admitted to universities pay for their education. But many have financial difficulties, according to sociologists, the willingness of families to pay for education in recent years has increased: from 45% in 1998 to 70% in 2007. But in 2013-2014 no more than 1/3 of families can pay for education their children. Parents cannot allow their children to get a quality education, because it costs not a lot of money, and in a crisis, everyone thinks how easy it is to provide their family with food, without taking into account any education. In this regard, there have become more frequent cases when a student leaves the university because he cannot pay for his studies. And here, as in all developed countries, a system of educational loans should come to the rescue. Education loan is a new loan product in the Russian financial market. This system is underdeveloped and fully debugged. It should be noted that the state does not sufficiently support this type of lending. The provision on state assistance in lending to higher education in Russia was first introduced in 1996, but since there was no national lending practice, this provision was roughly useless. But in 2013, another law on education in the Russian Federation came into force, in which one article reflected the provisions relating to lending to education, here people were already ready for this. But there is no advertising of this target program and therefore, despite the convenience of such loans, a small number of students and their parents apply for them. While in European and American countries, educational loans are very common, since the share of state financing in the costs of higher education ranges from 50 to 90. It should also be noted that in the West the interest rate of such loans is very, very small, and in Russia just crazy. Making an educational loan - in our country is still perceived as something exotic. According to experts, no more than 10 commercial organizations operate in this market segment. This is primarily due to the fact that obtaining a loan for training is associated with increased risk for the bank (Prokofieva, 2015)

Based on the foregoing, banks set high interest rates on this loan. In addition, almost every bank required a certificate of high official salary or the student had to have a financial pillow in the form of property. Also, the decisive factor of parents and students in favor of consumer loans, rather than educational ones, was that, as a rule, the latter were not issued for the entire cost of training. However, after the economic crisis, interest rates on consumer and educational loans did not differ significantly, vice versa today borrowers' expenses for ordinary consumer loans are 1.5-2 times higher than for educational ones. An educational loan is a targeted loan, therefore, according to the agreement, the money will go to the account of the chosen educational institution, and not to the cash desk. Some banks offer even floating rate programs. Another feature of this loan is the periodic provision of additional documents to the bank (certificate of training, training agreement). All this, in turn, is a confirmation of the learning process at the university. When applying for an educational loan, guarantors are usually required, usually their role is played by the parents of the promised person. Since the term of study is at least 4-5 years, and there is no certainty that the student will study until the end. But today, Russia has already gained some experience in the development of educational lending. There is an “Educational loan with state support”, which is carried out in the presence of a tripartite Agreement on information cooperation (in the form approved by the Ministry of Education and Science of the Russian Federation and the Bank) between the Organization carrying out educational activities, the Ministry of Education and Science of the Russian Federation and the Bank. Educational loans are no doubt economically it is forested and, according to analysts, has a great future in our country, where the level of education has long been considered quite high.



Studies by foreign authors on factors affecting student's credit behavior

After a literature analysis of the sources telling us about the factors affecting the credit behavior of students, several main factors can be distinguished.

Financial literacy and awareness

Robb Cliff and also Limbu Y. in their articles examined the relationship between financial awareness and the credit behavior of college students. The widespread availability of credit cards has raised the question of how students can use these cards, given the negative consequences of credit abuse and mismanagement. Using a sample of 1,354 students from a major southeastern university, the results show that financial knowledge is an essential factor in student credit card decisions (Cliff A. Robb, 2011, Limbu Y. B.,2017) Also Montalto C. P., Phillips E. L., McDaniel A. and Baker A. R. were trying to identify how the financial behavior of college students, including the use of credit cards and student loans, and financial literacy, financial stress, and financial self-efficacy of students correlate. Their research also includes information from a multi-institutional study on university financial well-being, which adds a unique understanding of the depths of students' financial well-being (Montalto, C. P., Phillips, E. L., McDaniel, A., & Baker, A. R., 2019). Santos D. B and his colleagues describe the impact of using credit cards on the financial well-being of people, including a particular interest in the behavior of women regarding credit cards. The study examines predictors of financial well-being for students in Brazil and New York. The results show that financial self-confidence has a greater effect on financial well-being (Santos, D. B., Mendes-Da-Silva, W., Norvilitis, J. M., & Flores, E. S., 2018).Urban, C and other his friends in their article assessed the impact of financial education at the school on the results of the credit report of students from 18 to 21 years old is estimated - young people who only claim their financial independence. Scientists believe financial education requirements are associated with fewer defaults and higher credit ratings among young people (Urban, C., Schmeiser, M., Michael Collins, J., & Brown, A., 2018) Yanying Z. and Qian Y found out that the rapid development of online credits for college students has problems such as insecure information, an imperfect social credit system, inadequate laws and regulations, as well as confusion and crisis in the market. The reason these problems exist is college students themselves, because they do not understand how to use the loan properly (Yanying, Z., & Qian, Y., 2018)

Parents socio-economic status

J. Xiao and J. Wang in their article collected data from a sample of first-year students at a large public university. Their results show that both the parents norm and the parents socio-economic status are important factors influencing risky credit behavior. In addition, financial knowledge prevents risky lending behavior (Wang, J., & Xiao, J. J.,2009) Yao R., Meng X. and Gao, S conducted that financial dependence on parents is negatively related to the ability of Chinese students to pay credit card bills. The study also found that students with a high level of financial knowledge are less likely to receive cash advances on their credit cards (Yao, R., & Meng, X.,2018, Gao, S., Jing, J., & Guo, H.,2016)

Psychological factors of students

Armstrong S. and Nagase, N. write that debt among university students is a constant problem that needs to be solved. Previous studies have illustrated the situation with credit cards and college students. However, graduate students and undergraduates have not been studied, although they are also subject to debt. The purpose of their article was to study the psychological and social factors that contribute to the adoption of responsible credit decisions among undergraduate students as well as undergraduates and graduate students. Data taken from an electronic survey sent to students at two major Canadian universities. The results show that university students with a high level of self-efficacy in consumer lending are more likely to avoid risky lending behavior. For comparison, the intention of undergraduate students to adopt responsible behavior in the field of consumer loans is more influenced by parents than by students (graduate students) (Armstrong, S., Dearden, L., Kobayashi, M., & Nagase, N., 2019) Barboza G. examines on students the role that prejudice and impatience play in consumer behavior when paying off credit card debt. The results show that students suffering from self-control problems and using credit cards to overcome an unexpected lack of income are more likely to be unable to fully repay credit cards during the period after the purchase, therefore, postponing the payment of the debt (Barboza, G., 2018)



2. Empirical part of the research of student's credit behavior in St-Petersburg

Student's credit statistics

To understand how many students in Russia generally take loans, what loans they take and for what, we will conduct a secondary analysis of the data and turn to statistics. As we can see from the graph, 31% of credit consumers in Russia in 2020 are students who work, 20% are non-working students (Picture 1) (https://www.statista.com)

Picture 1 Data by Statista

Further, it is important to understand what students take loans on. Since data on banks is not publicly available, it is difficult to say, but there are studies of small companies. Referring to the data of the credit bureau, the LS company revealed for what purposes Kazakhstan youth in 2020 takes loans from the age of 18-25. 73% of all youth loans are loans for smartphones (Picture 2) ( https://www.lsm.kz/)

Picture 2 Data by LS

A RosIndex study by Ipsos Comcon in 2018 showed that modern Russian youth is more than an economically active segment. Almost half of it works, while every fifth representative of youth combines work with study. And 33% of young people take their first loans on smartphones (Picture 3) (https://www.mamcompany.ru/)

Picture 3 Data by Mamcompany

Since the trend for educational loans has been growing lately, consider this type of loan. According to Rosstat in 2013, 55 thousand students studied on credit (Picture 4) (https://www.gks.ru/folder/10705)



Picture 4 Data by Rosstat

Another interesting fact about installments. Affirm is one of the main companies forming the new fast-growing installment market in the USA. For example, with the help of such services you can buy branded clothes, shoes, jewelry, spare parts for expensive cars or a tour. In general, those goods that are difficult or risky to pay once. The essence of the business is simple: instead of taking a consumer loan or spending money with a credit card, the buyer receives a six-month installment plan for a particular product. Instead of interest on the loan, a person pays a small one-time commission to the service: for example, for sneakers priced at $ 140, you will have to pay about $ 5. Hire purchase is a trend that has not yet reached Russia. However, soon he will reach us. In the US, he has already gained some popularity. Buyers are increasingly choosing installments instead of paying with credit cards. “If I pay for purchases on the Internet with a credit card, I will start to lose my mind,” one Affirm user explains to The Wall Street Journal. Credit cards are needed for emergencies, he argues, but installments can be just a convenient tool for sharing costs, and the price for using it in a few dollars is not so high, given the flexibility received. Affirm is only one of a number of companies that are shaping a new trend in 2020 in the US online retail market. If earlier, by installments, expensive TVs, refrigerators and laptops were bought, now people are ready to pay half a year after purchase for clothes with cosmetics.( https://vc.ru/trade/108212)

Methodology

The methodology in my study of student credit behavior is supposed to be mixed, namely secondary data analysis plus a quality block in the form of semi-formalized interviews. Since students are a very heterogeneous group, and polls often do not cover all the details and predictors of the behavior of people from different social groups, a qualitative part is needed. For example, many students are newcomers and are financially unstable. Moreover, this study involves understanding and studying practices, motives, subjective meanings, feelings, experiences of people, which is what the qualitative methodology is aimed at. Using this qualitative method, the interviewer has the opportunity to retreat from the originally set plan of questions in order to maintain a lively conversation. This makes it possible in the course of the conversation to come up to new topics that are not foreseen in advance, but which may be significant for the informant, and, therefore, may be useful in the study. Also, an important feature of the interview is a personal approach to each informant. The topic of loans, debts and finances can be sensitive for many people, so it was decided to choose a method of data collection that could provide a lively and friendly dialogue with an informant. The sample is a quota, and so to do it representative, I took undergraduate students from 5 different St-Petersburg universities (HSE, RANEPA, SPbPU, The Herzen State Pedagogical University of Russia, SPSUACE), dividing them by direction or specialization, gender. Why these universities? I was based on the ranking of universities for tuition fee, taking universities in the top, middle and end of the rating, thereby dividing the students economically by their family income. It so happed that in each university 3-4 people were interviewed. I guided a 2-4 year course students because first grade students have not yet become accustomed to student life. In total, I took 20 interviews. The object is Bachelor students of Russian universities and the subject - credit behavior of students. In my study I have some research questions:

· What are the special features of the credit behavior of students? (in terms of practices, financial culture, aims of taking loans)

· What socio-psychological, socio-economic and socio-cultural factors may affect student credit behavior?

· What are the differences between different socio-economic strata in the credit behavior of students?

To answer these questions, a number of research tasks were formed:

* To identify styles of credit behavior of students of St. Petersburg: to make a classification by type of loan, in relation to the loan, the reasons for taking a loan

* Determine the goals and motives for taking a loan

* Describe the choice of type of loan, credit organization

* Describe interactions with credit organizations; identify problems, describe how to resolve problems

* To clarify the student's idea of ??fulfilling loan obligations; identify ways to fulfill obligations and manage credit behavior routine

* Determine what role family and friends play in a person's credit behavior

* Determine the personal attitude of students to loans in general; learn how credit experience transforms the attitude towards loans and how it affects the student's financial behavior

Interviews with informants took place on a pre-prepared guide, however, the wording and sequence of questions during a conversation with respondents could change to maintain live communication. The guide includes the following sections (full guide is presented in the appendix):

1. The “Story about yourself and financial behavior” section is an introductory part that helps the interviewer and informant to tune in to a conversation

2. Section about “Personal credit experience”

3. The section on “Family and Friends” is dedicated to the respondent's environment - social relations with friends and relatives, how they relate to loans, whether they practice taking a loan, and what role they play in the respondent's credit biography.4. The section on “Loans in general” is general and final, which reveals the respondent's attitude to loans, banks and the lending system as a whole, plans, as well as opinions on personal credit experience.

For further analysis, all interviews were transcribed. An example of a transcribed interview is presented in the appendix. The analysis was carried out by a thematic analysis that helps to identify topics relevant to the research question and it is even possible to identify some kind of connection between the topics. Of course, this method has its limitations since having extracted themes me (researcher) still needs to decide what this themes represent, for example, does the theme represent a discursive construction, a feeling or a psychological mechanism. Does the researcher take the theme at face value, as something that directly reflects the research participant's experience, or does the researcher approach the theme as something which needs to be explained in its own right? Answers to these types of questions will reveal the epistemological and theoretical positions adopted by the researcher, and it is those positions that have implications for the approach to interpretation which is adopted in the study. Thematic analysis can, therefore, underpin both `empathic' and `suspicious' interpretations (Flick, 2014).

Empirical base collection

In view of the difficult epidemiological situation in the country and there is no possibility of conducting face-to-face interviews, it was decided to conduct them on Skype. Using the function of recording a conversation, it was possible not to use additional devices for recording interviews. Recruiting was carried out through Vkontakte university groups. Based on the interviews, the following empirical research base was compiled. The empirical base of the study is 20 interviews. The sample included students from St. Petersburg (14 girls and 6 guys). The age of informants is from 19 to 23 years. The general table of respondent information is presented in the appendix.



The results of the analysis of student's credit behavior in St. Petersburg

First it will be better to figure out what, why and why young people decide to take a loan, and for what purpose they need this financial instrument. First of all, let's determine what students take loans for and then consider how they argue their need. When classifying borrowers by type of loan product, for a start it should be said that the loan is taken for all kinds of things and needs, for example, an apartment, electronic equipment or education. Within the sample, the most popular products purchased on credit were telephones; second and third places should be equally allocated to loans for apartments and education.

Further, it seems logical to make a classification by type of loan. So, the most popular loans among our informants were installments, then credit cards, and after a mortgage.

Reason to take a credit

The most common reason for taking a loan, which is noted by all informants, is a shortage, insufficient amount of money to satisfy some “urgent” need (for a particular desired thing, event, or resolution of any situation that the loan was taken for). Such an argument is very consistent with the logic of a consumer society and boils down to the fact that informants strive for instant consumption, or “here and now” consumption. In addition, more often than not, satisfaction of emerging needs is presented as a necessity, and credit seems a forced measure. Strebkov also speaks about needs, arguing that from a psychological and social point of view, people have many consumer temptations, and as a result, the goal is to achieve a high standard of living.

"You can save up for a good laptop for a very long time, and a cheap one will break in a year, so it doesn't make sense to buy a cheap one, I'd better take a quality product on credit and will work on it for a long time"( Dasha 21) [«На хороший компьютер копить можно очень долго, а дешевый сломается через год, поэтому смысл покупать дешевый, я лучше возьму в кредит качественный продукт и буду долго на нем работать»]

Also, two informants emphasized that they took a loan specifically to create a good credit history for themselves.

"Initially, what I think of is that I want to make a credit history, in principle, I didn't need money or a loan, but I thought that for the future it would suddenly be something that would protect me somehow, and if something happens suddenly, I can take a loan because I have a good credit history "( Katya 21) [«Первоначально к чему я пришла, это к тому что хочу сделать кредитную историю, мне в принципе не нужны были деньги, или кредит, но я подумала что на будущее вдруг что, она будет как то предохранять меня, и если вдруг что-то случится, я смогу взять кредит ведь у меня хорошая кредитная история»]

Some informants highlight their lack of knowledge about loan options.

"It so happened that if I say Tinkoff it becomes more clear? How do they impose? My brother had a Tinkoff card and, probably, he left them my phone, they called me and offered their card together with the Perekrestok store. That is, there were some additional bonuses that could be used in the supermarket, and since I constantly buy food at the Crossroads, I thought it was profitable. It turned out that this card with the ability to take credit, I have never dealt with this business, I do not need it"( Lika 20)[ «Случилось так, что если я скажу Тинькоффу, станет понятнее? Как они навязывают? У моего брата была карточка Тинькоффа и, возможно, он оставил им мой телефон, они позвонили мне и предложили свою карточку вместе с магазином« Перекресток ». Были некоторые дополнительные бонусы, которые можно было использовать в супермаркете, и, поскольку я постоянно покупаю продукты на Перекрестке, я подумал, что это выгодно. Оказалось, что эта карта с возможностью брать кредит, я никогда не занимался этим, я не нуждаюсь в этом"]

So, on the one hand, credit, to some extent, forms advanced consumption. A loan allows you to purchase a thing without initially having the money to buy, that is, consumption is ahead of production (Baudrillard, 2001, p. 172). The concept of a thing is changing, among other things: preference is given to buying a new one rather than fixing an old one. Most often, informants use loans to buy something, to possess certain benefits, so the need for a loan is associated with the need to satisfy the needs of the “here and now”.

“Well, my computer just went out and what should I do next? For study, I just need it, as without hands without it, I certainly had to take a new one” ( Andrey 22) [«Ну вот у меня просто погас компьютер и что делать дальше? Для учебы он мне просто необходим, как без рук без него, пришлось конечно брать новый»]

According to Baudrillard, modern man is in a continuous renewal of his needs and well-being. He is required to constantly mobilize his capabilities and consumer abilities, otherwise he risks becoming asocial. Things (and any other items) are consumed as a “sign of the status hierarchy”, and on the part of the consumer society, a person is forced to “differentiate”. Credit, in turn, stimulates a person to consume, creating consumer demand (Baudrillard, 2006). The phenomenon of “conspicuous consumption,” described by Thorstein Veblen, may also be relevant here today. People resort to conspicuous consumption to “prove the possession of wealth” (Veblen, 1984, p. 108).

"I had no fears at first, I had a wild desire, it was curious, no matter good or bad, it's interesting"(Denis 23) ["У меня не было никаких опасений по началу, было дикое желание, это было любопытно, неважно хорошо или плохо, это интересно"]

On the other hand, “compulsion” in credit appears not only because of following the logic of consumption. Credit for some informants seems a vital measure.

"For example, a loan for a wedding or a vacation is complete nonsense, I don't understand how people go for it, the vacation will go away, the wedding will be forgotten, all this would be completely unnecessary!" (Julia 21) ["Кредит например на свадьбу или отдых это же полный бред, вообще не понимаю как люди идут на это, отдых пройдет, свадьба тоже, все это забудется, это совсем не необходимые меры!"]

Thus, the “necessity” of a loan is presented differently in an interview. The main reason for applying for a loan, according to informants, is the insufficient amount of funds for some actualized need or unwillingness to spend the available funds to pay for the purchase immediately. So, thanks to credit, consumption is simplified and becomes convenient, it becomes possible to consume "here and now", the logic of the consumer society is followed. In addition to the logic of “necessity” in our array of interviews, we found the logic of “research” - taking a loan is not dictated by “necessity”, but by curiosity about the functioning of this tool. It should be noted that almost all informants said that their main incentive to take a loan was the idea of ??convenience of consumption, since credit provides financial opportunities that informants do not have at the moment. The goals that informants pursue by resorting to loans are various, but almost all of them are associated with improving the quality of life.

Firstly, this is the desire to improve living conditions, from the purchase of your own housing in a mortgage, ending with the repair and arrangement of housing with various household appliances.

"Oh my family is one of those who steadily supports banks and takes loans, we had a loan for a house, a car, and my parents really like to take phones on credit for their children"(Dasha 22)[ Ой моя семья из тех, кто стабильно поддерживает банки и берет кредиты, у нас был кредит на дом, автомобиль, еще мои родители очень любят брать своим детям телефоны в кредит"]

Secondly, to improve the financial situation can be attributed the desire to purchase electronic equipment and luxury goods, however, due to a lack of the necessary amount of money or unwillingness to give the full amount at once, things are purchased on credit or by installments. Most of our informants borrowed phones and laptops.

"The first one was a loan on the phone, and now I have already paid it. Now I have a loan for a second phone" (Masha 22)[ "Самый первый это был кредит на телефон, а теперь я уже выплатила его. Сейчас у меня кредит на второй телефон"]

Thirdly, this may be the goal of obtaining “intangible” benefits, in particular, investing in “human resources” (Becker, 1993), namely, getting an education at a university

"Of course I could go to another university on a budget place, but that would be a completely different education." ( Ann 21)[ " Конечно я могла бы пойти в другой университет на бюджет, но это было бы уже совсем другое образование"]

I would also like to mention the topic of credit cards (5 of our informants have it). In general, credit card experience and attitudes are divided into two camps. So, for some, a credit card initially seemed to be something convenient and useful, however, as informants note, using it turned out to be not so convenient due to the constant self-control of their expenses and replenishment. And for others, this is just a salvation when you need to reach the salary.

"A credit card is a real evil in general, I already keep the money in cash, because I don't feel it on the card, they swim away unnoticed and that's all, they don't exist anymore"(Dasha 22)[ "Кредитка это вообще сущее зло, я и так то деньги храню наличкой, потому что на карте я их не ощущаю, уплывают куда то незаметно и все, нет их уже"]

"A credit card, if you think so, is very cool, but there must be an understanding, for example, my salary date does not match with the date of payments for the apartment and it would help me a lot in this regard, but of course I'll say again you should understand and use it wisely"(Denis 23)[ "Кредитная карта это если так подумать очень круто, но обязательно должно быть понимание, вот например у меня число зарплаты не совпадает с числом оплаты за квартиру и она бы мне очень помогла в этом плане, но конечно еще раз скажу ты должен понимать и использовать ее с умом"]

Banks

The topic of analysis of the practice of choosing banks and the type of loan is in the list of research tasks, namely, it was necessary to find out how the choice of a loan and a credit organization is made and according to what criteria. The choice of loan type is formed on the basis of what the informant pursues: for example, buy an apartment or buy a phone. In all cases, in our sample, when buying real estate, informants resorted to mortgage lending. In other cases, the choice of loan type is formed on the basis of a bank offer, and the most convenient and suitable option is selected. However, as it turned out, informants do not pay much attention to the choice of the banks themselves, and, often, the selection and comparison of banks does not occur at all. Accordingly, in some cases, search for any detailed information about banks and loan offers is not carried out.

"Well, I think, educational loans were only in Sberbank, so the choice was not exist at all"(Dasha 22)[" Ну по-моему тогда образовательные кредиты были только в Сбербанке, поэтому выбора то как бы у нас и не было"]

According to informants, there was no choice yet for the reason that when, for example, a telephone is consumed in a loan, the loan application is submitted directly to the store, and which bank approves the application, credit relations take place. Therefore, in such a situation, most often, the choice of banks does not occur, since the bank is selected automatically. Nevertheless, when the choice of banks was nevertheless possible, the main criteria were popularity and fame, which for some informants became the main basis for building trust in the bank. This judgment is consistent with the result of a study by Strebkov (2007b, p. 98), where credit consumers are classified by bank selection strategies - in this case, they are “mass credit consumers” and they tend to choose popular and well-known banks under the influence of mass advertising. Also, preference was given to the bank with the best loan offers for informants, most often this criterion was a low interest rate.

"Well, first of all, I would pay attention to the image of the bank, so that it has its own story there, VTB, Sberbank, Home loan, we all know them very well"( Katya 21)[ " Ну в первую очередь я бы обращала внимание на имидж банка, чтобы у него была история там своя, ВТБ, Сбербанк, Хоум кредит мы все их прекрасно знаем"]

Speaking about problematic and conflict situations with the bank, informants in many respects referred to “pitfalls” in the contract, which the bank employees did not speak about when concluding the agreement, and two informants emphasized the importance of the official statement that you paid off the loan to the bank and are no longer his debtor.

"The loan is small, and the contract length is about 20 pages and you need to read it all to evaluate what is written in small font, plus there are a lot of words of phrases that I don't understand at all, and when I concluded the contract, I called my lawyer who just helped me explain what's here it's written in general, because people in the store themselves do not understand, they don't give us such a loan, the bank gives a loan "( Denis 23)[ "Кредит небольшой, а договор листов на 20 и тебе нужно это все прочитать оценить что написано маленьким шрифтом плюс там очень много слов фраз которые я вообще не понимаю и когда я заключал договор, я позвал своего товарища юриста, который просто помог мне объяснить что тут написано вообще, потому что люди в магазине сами не понимают, они такие кредит даем не мы, кредит дает банк"]

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