Date of Graduation


Document Type


Degree Name

Doctor of Philosophy in Business Administration (PhD)

Degree Level





Daniel Villanova

Committee Member

Scot Burton

Second Committee Member

Ronn Smith


banking, consumer borrowing, financial decision making, information leakage, internal reference points, loan terms, selective accessibility


Consumers continue to demonstrate a willingness to accrue more debt. They are also more accepting of increased repayment risk via the acceptance of longer loan terms. Extant research on consumer borrowing consists primarily of experiments designed to assess consumer choices and understand how consumers evaluate loan attributes in relation to one another within consumer borrowing contexts (Kamleitner, Hoelzl, and Kirchler 2012; Ranyard et al., 2006). Thus, prior research examines consumer responses to loan information rather than the generation of loan parameters at the time of financing. With important implications for consumers, marketers of financial products, academic researchers, and federal regulators, this research seeks to understand how managerially relevant interventions and firm communications impact consumer borrowing preferences. Specifically, this research examines the role of consumer loan application formats and advertised terms in the consumer loan decision making process.

Essay 1 considers the effect of consumer loan applications leading with monthly payment versus loan amount elicitations on principal requests and ultimately consumer willingness to proceed with those requests. This research not only demonstrates an effect for an oft overlooked phenomenon (consumers’ generation of loan requests) that actively uses two different elicitation procedures, but it also provides insight into the downstream consequences for consumers as well as financial institutions. Five studies demonstrate that the monthly payment (vs. loan amount) format leads to consumers requesting different principal amounts. For lower cost loans with a given term and interest rate, the monthly payment (vs. loan amount) format results in larger principal requests. This effect reverses for higher cost acquisitions because individuals’ budget slack caps out around $500 per month (Pew Charitable Trusts 2016). These studies provide insight into how consumer loan application formats can affect consumer borrowing, as well as the psychological underpinnings responsible for the effect.

Essay 2 considers the effect of marketed reference points on consumer term preferences. Automobile dealers and financial institutions often promote varying term lengths to attract more buyers and increase sales. Yet, there is surprisingly little research that addresses the effects of advertised terms for promoted financing offers on consumer borrowing preferences. This research examines the effect of longer versus shorter advertised terms on term preferences via a dual process that relies on both the assimilation of advertised terms into one’s internal reference term, as well as the belief that advertised terms are recommended terms by the dealer, as parallel mediators for the effect. Findings from five studies show that advertised terms have a significant influence on desired terms and that this effect does not depend on consumers’ level of financial literacy. Furthermore, adding a shorter default loan term to consumer loan applications, which is a simple change financial institutions can implement in their systems, attenuates the effect of longer advertised terms on consumer loan term preferences. These findings have implications for marketers of financial products, academic researchers, consumers, and public policy.