Title: E-banking and consumer debt

Authors: Stanko Dimitrov; Brian Paul Cozzarin

Addresses: Department of Management Sciences, University of Waterloo, 200 University Avenue West, Waterloo, N2L 3G1, Canada ' Department of Management Sciences, University of Waterloo, 200 University Avenue West, Waterloo, N2L 3G1, Canada

Abstract: Canadian consumers have a debt problem and averaged a nationwide debt-to-income ratio of 1.654 in 2016. Based on current research, it is unclear whether e-banking has a positive or negative impact on this ratio. This paper hypothesises that e-banking increases consumer access to capital, and - using Canadian nationwide survey data - discovers that e-banking enhances the consumer's ability to access debt, thus leading to an increase of the debt-to-income ratio by two dollars more for every dollar earned. We suspect that the higher willingness to pay, along with preferring to be rejected for a loan via a web portal, leads to customers using e-banking to request loans via an e-banking portal as opposed to going to the bank. Concluding, this paper recommends an increase in government monitoring of the relationship between e-banking and personal debt.

Keywords: consumer debt; electronic banking; debt-to-income ratio; Canadian Financial Capability Survey.

DOI: 10.1504/IJEBANK.2021.117373

International Journal of Electronic Banking, 2021 Vol.3 No.1, pp.27 - 38

Received: 14 Oct 2020
Accepted: 01 Feb 2021
Published online: 01 Sep 2021 *

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