DETERMINANTS OF HOUSEHOLD OVER-INDEBTEDNESS AND FINANCIAL FRAGILITY: AN EMPIRICAL STUDY OF MALAYSIAN CIVIL SERVANTS

The significant increase in household debt over the past decade poses a considerable concern for household financial position.Household over-borrowing reduces consumption and standard of living and increases household exposure to financial vulnerability.This micro-level study aims to investigate the probability of households being over-indebted and financially fragile by examining socio-economic characteristics, focusing on age, income, debt, number of dependents, and materialistic values.By employing binary and ordered logistic regression analyses, this study examines the probability of Malaysian civil servants being over-indebted and financially fragile due to their larger total debt accumulation compared to the Malaysian average.Findings reveal that nearly seven out of 10 Malaysian civil servants are over-indebted while almost three out of 10 are financially fragile.While the study identifies a moderate level of financially fragile households, about 47% of non-financially fragile households still encounter some form of financial constraint.Despite this, an analysis of household-perceived financial condition indicates that 65.1% are financially sound.Apart from the household age, income, debt, and number of dependents, the study indicates that household materialistic orientation plays a central role in determining the household's financial position.