The impact of advertising on over-indebtedness of consumers in Lebanon : from a commercial banking perspective

Abstract

The purpose of this study is to investigate how consumerism and credit debts are influenced by advertising in the presence of extensive credit availability. It is observed that advertising has substantial effect on excessive spending. Moreover, the availability of credit may have paved the way for huge amount of debt amongst Lebanese. External and internal influences such as financial and debt illiteracy, sociocultural and socioeconomic pressures, and mainly media and advertising play a key role in consumers over-indebtedness. In addition to external influences, it highlights the responsibility of financial institutions, such as banks, in driving Lebanese customers into over-indebtedness. Enhancing our understanding of what over-indebtedness is and how it is caused, the paper provides the basis for tailoring over-indebtedness solutions to the root causes of the phenomenon and addressing the challenge at all suitable levels. A qualitative supply-side research methodology is conducted through focus groups with key informants of banking sector involved with consumer credit and debt. Key intervention strategies are proposed in relation to consumer education, financial services regulations to target and support over-indebted households.