FACULTY OF BUSINESS, ECONOMICS AND ACCOUNTANCY

SEMESTER 2, 2019/2020

BD30006 ACADEMIC WRITING

PROPOSAL
TITTLE:
DETERMINANT OF SAVING BEHAVIOUR AMONG YOUNG
EMPLOYEE IN MALAYSIA
INTRODUCTION

Savings are an important element to sustain economic development. Even if its function are
Significant at various levels (especially households, companies and public savings),
nevertheless, this three component closely are related. Domar (1946) and Tang (2010)
suggest that Long-term economic growth depends on savings efficiency, since a high
savings rate would increase capital investment and thus boost productivity. High savings
could hedge countries from economic recessions and financial crises, ensure shock periods
and significant ways of better life. It also leads to wealth accumulation, which allows people
to improve their standard of living and new possibilities (Gokhale, 2000; Cowen, 2006).
Awareness of factors influencing saving behaviour of individuals are really important and
crucial for maintaining economic development in Malaysia.
Saving has been an important factor in the economic growth and development phase in
the last few decades. Saving, logically, facilitates investments that cause one country's
economic development. The speed of economic growth is dictated by the ability to save
according to Harrod (1939) and Domar (1946), as the high level of savings would increase
investment rate and thus boost economic growth. Tang (2010) reported, following an
empirical analysis by the YDL Granger Causality Test to reveal Malaysia's savings-led growth
hypothesis within multivariate frameworks, that saving will result in long-term economic
growth and that increased savings will ultimately affect capital accumulation. Besides being
unaware of savings, the Malaysians also accumulated considerable debt owing to overuse
loans, lack of budgeting, overconsumption, poor purchasing and spending skills, low wages
and poor money awareness. Between 1990 and 2011, 224,943 cases of bankruptcy were
reported by the Malaysian Insolvency Department, with the worst being young adults under
the age of 30. For many Malaysian scholars, therefore, studying the financial conduct of
university students is very common
PROBLEM STATEMENT

With Malaysian saving rates being unfavourably reduced, many academics, educators as
well as policymakers have become very worried about the saving actions of Malaysians. In
the past year, Sabri and McDonald (2008) found that young people in Malaysia are reluctant
to spend money on student loans and actively invest on non-academic purposes because of
a lack of financial literacy. Many of them also faced financial difficulties. Skills and financial
resources management are important to everyday life because they help people cope with
financial problems every day and take correct choices ( Kempson, Corrald & Moore, 2006).
Pinto, Mansfield and Parente (2004) also reported that the young employee more likely to
buy and use credit card, the more likely they are to hold high unpaid balance. As Cohran
says, Sanders and Aleksa (2008) are less likely to be affected by potential threats and
possible costs, both impulsive and contemporary people with little self-control. If they do not
control themselves, they are more likely to spend as they wish and ultimately lead to over-
expenses and lack of spending on a "rainy day".
These factors are important for deciding the actions of young workers, but most
previous studies focus only on one factor rather than multiple factors that influence their
behaviour. This study therefore aims to incorporate a range of variables to assess young
employees' saving actions more accurately. There is also a lack of study based on
philosophy that focuses on the saving of individuals. In general, theoretical experiments will
help to better understand the mindset and behavioural influences underlying a given
behaviour. The Malaysian Government has made enormous efforts to encourage higher
savings among its people. Nevertheless, the savings rate remains small and most of the
Malaysians do not get enough money, as the majority of their disposable income has been
paid into debt service. It further generates doubt about their ability to save, which in the
end may give detrimental effect to the growth of the nation's economy. Such houses in
many countries also face the same dilemma, with borrowings funding the majority of their
country's consumer growth leading to problems of debt. (Lunde and Poppe, 1991; Lea et. al.
1993; Webley and Nyhus, 2001).
Nonetheless, the debt problem particularly among young Malaysians is probably due
to an inadequate financial awareness, an excess of unnecessary products or the purchasing
of impetus and a preservation of wealthy lives, which has led them to resort to credits to
satisfy their requirements. The high cost of young adults also makes it easy for them to
achieve Banks to support their credit-based banking facilities in particular. This unhealthy
expenditure trend led to the number of financial advisors three times higher, with
approximately 280,428 individuals registered with the Malaysian Credit Advisory Agency
(AKPK)'s financial and debt
Management systems since its establishment in 2006. This problem raised concern about
the need to train young people to plan their future and to educate them particularly about
the value of beginning their savings beforehand to ensure adequate retirement income. In
previous studies, the researchers are very interested in carrying out a study on this topic
given the importance of saving and inadequate empirical research to clearly detect the
determinants of saving behaviour among young workers in Malaysia.

OBJECTIVE OF STUDY
1. To examine the relationship between financial literacy and saving behaviour among
young employee in Malaysia.
2. To analyze the relationship between parental socialization and saving behaviour
among the young employees in Malaysia.
3. To investigate the relationship between peer influence and saving behaviour among
the young employee in Malaysia.
4. To determine the relationship of self-control and saving behaviour among the young
employee in Malaysia.

SIGNIFICANT OF STUDY

This study are related to savings behavior among young employee in Malaysia. This study
can help to enhance the young employee knowledge about financial situation and factor that
may effecting their savings. It is also can help to identify the factors effecting savings
behavior among young employee in Malaysia. In addition, this research will inform and give
an information to financial institutions about the Malaysia Citizens' saving actions that can
help them boost their service.so by that the financial institution will provide various forms of
savings. Students and teachers can take advantage of my research to learn about Malaysia
Citizen's behavior in saving and further research into behavior saving through their study.
This study also shows that the Malaysian citizen saving behavior is very familiar to them and
that they can create an idea to increase Malaysian citizens' saving rate increases Malaysia's
GDP.
LITERATURE REVIEW

The underlying theory of the model developed in this research is based on Theory of
planned Behavior. This theory of rationalized action, human conduct was believed. This
theory was introduced in 1991 by Icek Ajzen. The theory of the planned behaviour,
combined with its assumed power over the actions and subjective expectations of society
actions, uses the mood and viewpoint of an individual in order to influence their behavioral
intent. In certain situations, when someone has a negative behavior and thinks they have no
influence over this action, the individual is less likely to do so. This action is not accepted by
people within society, and will therefore adversely affect the intent of an individual for
action. The attitude and perceived behavioral control of an individual will affect its purpose
and behavioral action positively or negatively according to its personal views. For this study,
attitude is used to evaluate how financial literacy could predict the savings behavior among
young employee in Malaysia. The assumed regulation of actions is used to justify self-
discipline is the easiest way to save as young workers with high degree of self-regulation.
They have the power, self-control and delay of fulfillment, to regulate their wishes. At the
other hand, subjective expectations apply to how social factors impact the ability of students
to invest and save. This will explains how parents and economic impact can affect their
savings behavior.

Diagram: 1 Adjzen (1991) Theory of Planned Behavior

Attitude

Subjective Norm Behavior

Perceived behavior
control
FIGURE 1: CONCEPTUAL FRAMEWORK

H1
Financial Literacy

H2
Parental Socialization

H3 SAVINGS BEHAVIOR
Peer Influence

H4
Self- control

Factors that effecting savings behavior

Social influence includes an individual or community using their social power to change their
attitude or behavior in a certain direction. (Franzoi, 2006). Social influence applies to
parenting and peer control in this analysis. Several literatures have recognized the role of
parents in the financial socialization of their children. (See Cude et. al., 2006; Sam et. al,
2012), in which Parents have tremendous impact on the financial actions of their children,
and they will become the role model for their children in the management of their financial
matters. A continuum of positive parental and family social services is important for the
success of young adults and adolescents. If parents have shown positive financial conduct,
they become models of their children's financial position and will cause positive behavior in
young adults. In addition, the power of peers or friends may also predict the financial
actions of individuals. In Malaysia, the apparent explanation why young adults have been
abused in financial management was claimed because of peer pressure. (Household debts
are self-inflicted” 2013). Similar with Duflo and Saez (2002), People whose interests are
similar appear to belong to the same group, and thus create a connection between group
and individual behavior. They concluded that peer influences play a significant role in
university employee pension savings decisions in the US.

Discussions on self-control on the other hand, have been tied to various behaviors
such as wealth accumulation (Letkiewicz and Fox, 2014). People with no regulation over
themselves are more likely to have money and credit issues and to buy impulses. (Faber and
Vohs 2004; Verplanken and Herabadi 2001). A further Esenvalde (2011) studies have
emphasized that the relationship between individual achievement motivation and savings
behaviour, not only has self-control been positively related to savings behavior. The
economic saving approach seeks to minimize the impact on household saving practices of
macro, economy and micro- or human powers (Walden 2012). The microeconomic behavior
of young workers is generally explained by economic models linked to consumption and
saving. A lack of financial awareness would also raise the financial burden of individuals with
debt, which is good for failing to pay consumer loans (Gathergood, 2012). Individual
financial planning in Malaysia is still in its infancy, since most Malaysians don't manage their
own financial affairs (Citi, 2008 and Gan, 2008; as cited in Boon et. al, 2011). Lack of
information and financial expertise contribute to this issue, which represents the reluctance
of individuals to conduct personal financial planning. Only financial knowlege is not
necessary for a good adult life. Alternatively, positive attitudes and confidence should be
encouraged to help young people make clever decisions, especially young adults.

METHODOLOGY
An online survey containing all questions relating to saving behaviors was developed for the
selection process. The questioner consist of young employee in Malaysia from ages 18-40
years old. The data collection was presented using convenient sampling technique. The
amount of time taken to answer the question and survey for each people was approximately
around 15-20 minutes. There are two part of this questioner which is part A, and B. Part A
are about demographic profile of respondent it is comprises of questions related to basic
demographic information such as gender, type of job, marital status, age and ethnicity. Part
B are consists of several items measuring both dependent and independent variables. Part
B, All questions were designed using five points likert scale ranging from (1) Strongly
disagree to (5) Strongly agree, and was modified to suit the youth saving behavior context.

SAMPLE OF QUESTIONER
Section A: Demographic profile of respondents
Tick one (/)

Gender
Female [ ]
Male [ ]

Ages
Between 18-23 years old [ ]
Between 24-30 years old [ ]
Between 31-35 years old [ ]
Between 32-40 years old [ ]

Jobs status
Government Sectors [ ]
Private sector [ ]
Self-employee [ ]

Ethnicity
Malay [ ]
Chinese [ ]
India [ ]
Bumiputera sabah
Marital Status
Single [ ]
Married [ ]
Divorced [ ]
Widowed [ ]

Monthly income
Less than RM2000 [ ]
Between RM2000-RM5000 [ ]
Between RM6000-RM10,000 [ ]
More than RM10,000 [ ]

Part B: Please determine your degree of agreement on the following statements by

choosing the answer box given ranging from: Strongly Disagree (1), Disagree (2),
Neutral (3), Agree (4), Strongly agree (5).

Financial literacy
1. I have better understanding of how to invest my money.
2. I have better understanding of how to manage my credit use.
3. I have a very clear idea of my financial needs during retirement.
4. I have the ability to maintain financial records for my income and expenditure.
5. I have little or no difficulty in managing my money.
6. I have better understanding of financial instrument (e.g bonds, stock, T-bill, future
contract, option and etc.)
7. I have the ability to prepare my own weekly (monthly) budget.

Parental Socialization
1. I always talk about money management with my parents.
2. It’s good when my parents control my spending.
3. My parents are proud of me for saving.
4. My parents are good example for me when it comes to money management.
5. It’s a good thing to ask my parents to keep hold of my money sometimes to help me
save.
 6. I appreciate it when my parents give me advice about what to do with my money.
7. I save money because I don’t think my parents should pay for things I don’t really
need but like
8. Saving is something I do regularly because my parents wanted me to save when I
was little.

Peers Influences
1. As far as I know, some of my friends regularly do save with a saving account.
2. I always discuss about money management issue (saving) with my friends.
3. I always compare the amount of saving and spending with my friends.
4. I always spend my leisure time with friends.
5. I always involve in money spending activities with friends.

Self -Control
1. I don’t save, because I think it’s too hard.
2. I enjoy spending money on things that aren’t practical.
3. When I get money, I always spend it immediately (within 1 or 2 days).
4. ‘I see it, I like it, I buy it’ describes me.
5. ‘Just do it’ describes the way I buy things.
6. ‘Buy now, think about it later’ describes me.
7. I’m easily attracted by lure.
8. I always failed to control myself from spending money.
9. When I set saving goals for myself, I rarely achieve them.
10. I am more concerned with what happens to me in short run than in the long
run.

Savings behavior
1. I put money aside on a regular basis for the future.
2. In order to save, I often compare prices before I make a purchase.
3. In order to save, I always follow a careful monthly budget.
4. I always have money available in the event of emergency.
5. In order to save, I plan to reduce my expenditure.
6. I save to achieve certain goals

References
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human decision processes, 50.2 (1991 179-211).
2. Boon, T. H., Yee, H. S., & Ting, H. W. (2011) Financial literacy and personal financial
planning in Klang Valley, Malaysia. International Journal of Economics and
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need to learn. Proceedings of the Eastern Family Economics and Resource
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