A Descriptive Study on the Reasons for Borrowing Loans Among the Public
DOI:
https://doi.org/10.46610/JESFR.2026.v07i02.006Keywords:
Borrowing behaviour, Borrowing decisions, Consumption, EMI, Emergency needs, Financial institutions, Financial literacy, Household finance, InvestmentAbstract
Borrowing has become an important financial source for individuals and households to meet both planned and unexpected financial needs. However, excessive borrowing may lead to financial stress and repayment difficulties. The present study aims to identify the major reasons for borrowing loans among the public. The study adopts a descriptive research design. Primary data were collected from 150 respondents belonging to different financial backgrounds in the southern part of Coimbatore District in the State of Tamil Nadu using a structured questionnaire with the help of convenience sampling. Respondents from different age groups, with different occupations, participated in the study. The collected data were analysed using frequency analysis, percentage analysis, ranking analysis, and mean score analysis. The findings reveal that the respondents borrow for various purposes such as consumption, investment, and other emergency purposes such as medical expenses and debt repayment. The respondents primarily borrow either for investment purposes or to meet a combination of consumption and emergency financial requirements, indicating that both productive investments and essential household financial needs are becoming the major drivers of borrowing decisions. The study was strengthened with the help of multiple response analysis and cross-tabulation to examine respondents’ borrowing behaviour across demographic and economic characteristics. The analysis identified key borrowing patterns based on occupational status, household size, monthly income, loan amount, borrowing sources, and borrowing purposes, highlighting respondents’ preference for investment-oriented and digital credit facilities. These findings provide a comprehensive understanding of borrowing behaviour. The productive investments are business (including agriculture) with 35% and education with 22.5%, whereas comparatively fewer respondents borrow for financial investments such as shares and securities (17%) or for the purchase of jewellery (6%). The non-productive investments, such as the purchase of household appliances (66.7%) and vehicles (53.5%), festivals and celebrations (32.5%), and marriage and family functions (26.3%), would not generate any return in the future, and the result reflects higher expectations of wants which are beyond the purchasing power of the respondents. The study has also made analysis on the selection of source of borrowing by the respondents and also the factors that influences the borrowing decisions. The study concludes that responsible borrowing, proper financial planning, regular savings, and improved financial literacy are essential for reducing unnecessary borrowing and ensuring long-term financial stability.
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