Factors Affecting Choice of Investemnts

International Research Journal of Finance and Economics
ISSN 1450-2887 Issue 40 (2010)

© EuroJournals Publishing, Inc. 2010
http://www.eurojournals.com/finance.htm
The Analysis of Factors Affecting Investment Choices of

Households in Turkey with Multinomial Logit Model
Halil Tunalı
Department of Economics, Faculty of Economics, İstanbul University
Beyazıt, İstanbul, Turkey
E-mail: htunali@istanbul.edu.tr
Tel: +530 592 95 68; Fax: +212 668 91 50
Ferda Yerdelen Tatoğlu

Department of Econometrics, Faculty of Economics, İstanbul University
Beyazıt, İstanbul, Turkey
E-mail: yerdelen@istanbul.edu.tr
Tel: +212 4400000 – 11652; Fax: +212 668 91 50
Abstract
Households don’t spend all of their income but save some of them for various
purposes. One of these purposes is to invest. The choice of investment instruments are
affected not only by financial factors but also by socio-psychological factors. Revealing
how individuals determine their investment choices in a world in which investment
instruments are very diversified, will be useful to both portfolio managers and economic
policy makers. In this paper, investment choices are classified into seven categories, and
elements affecting investment choices are determined by analyzing with multinomial logit
model the data obtained from 1300 public surveys conducted in the city of İstanbul in
Turkey that can be accepted as a small sample of Turkey. The results show that investment
choices of households are affected not only by economic factors but also by social and
personal factors.
Keywords: investment choices, households, multinomial logit model, Turkey.
1. Introduction
Saving is the surplus of income after consumption. The factors affecting consumption can also affect
savings (Modigliani and Brumberg, 1954; Friedman, 1957; Campbell, 1987; Campbell and Clarida,
1987; Attanasio et al, 1999; Chambers ve Schlagenhauf, 2002). Both saving and consumption depend
on the level of income and each of these is an increasing function of the level of income. Saving rates
and growth rates are positively correlated (Houthakker, 1961, 1965; Modigliani, 1970). The level of
income of households depends on the national income growth (Barro and Sala-i-Martin, 1995; Reinhart
et al, 1996). In Standard growth model higher saving results in higher growth. On the other hand a
growing body of evidence suggests that there is a causation running from growth to saving (Carroll et
al, 2000). But some empirical works suggest that there is a limited relation between growth and saving
rates (Carroll and Weil, 1994; Rodrik, 2000; Deaton and Paxson, 2000). In some work the wealth is
also considered as an important element affecting savings (Gomes et al, 2004; Dynan et al, 2004).
International Research Journal of Finance and Economics - Issue 40 (2010) 187
Economic actors save for various purposes. Uncertainty in the futures drives households to save for
precautionary motive (Deaton, 1991; Carroll, 1992, 2001, 2004, 2006; Romer, 2001). Social security
web, private pension programs, family support, house ownership all affect saving motive for
precaution (Buiter, 2008; Curcuru, 2003; Bajtels-mit and VanDerhai, 1997; Sourdin, 2005). If there are
no such insurances, propensity to save will increase, for example for those working in informal
economy or in agricultural sector.
An increase in child and youth population or changes in demographic structure will in general
affect propensity to save. (Schultz, 2004; Lee and Mason, 2006; Higgins and Matthew, 1998).
Sometimes people want to have children for precautionary reasons, against the uncertainties in the
future. Although having children for these reasons could decrease savings, it is nourished from
expenditures serving the same purpose (Attanasio et al, 1999; Scholt et al, 2006; Skinner, 2007).
Household aims to keep and even to increase the real value of their savings, and also to cash in
whenever they want (Jappelli and Pagano, 1994; Laibson, 1997; Gross and Souleles, 2002). In order to
reach these purposes savings must be converted into profitable investments. Today there are a wide
range of investment options. (Cooper and Kaplanis, 1994; Koruyan,1996; Usul et al, 2002; Carroll,
2001).
Many factors affect household’s investment choices, the most important of which can be listed
as wealth (Barro and Sala-i-Martin, 1995; Reinhart et al, 1996; Modigliani and Brumberg, 1954;
Friedman, 1957; Campbell, 1987; Campbell and Clarida, 1987; Attanasio et al, 1999; Chambers and
Schlagenhauf, 2002; Gomes et al, 2004; Dynan et al, 2004), human capital (Romer, 1989), gender
(Vickie and VanDerbei, 1997; Hinz et al, 1997; Jianakoplos and Bernasek, 1998), age (Ameriks and
Zeldes, 2004; Gourinchas and Parker, 2002), expectations and habits (Campbell, 1987; Friedman,
1957; Jappelli and Pagano, 1997; Carroll and Weil, 1994; Carroll et al, 2000), family and environment
(Cooper and Kaplanis, 1994; Simons, 1999; Jacobs and Levy, 1996; Schirripa and Tecotzky, 2000;
Anderson et al, 2001; Palsson, 1996) and credit card ownership (Laibson, 1997; Gross and Nicholas
Souleles, 2002).
In this paper, the data obtained from 1300 public surveys are analyzed with multinomial logit
model to predict the factors affecting investment choices.
There are a few works that used public surveys to predict investment choices in Turkey. In Ş.
Üçdoğruk and S. Bozkuş’s work (2007) which used the 2003 data of Turkish Statistical Institution
Budget Survey, factors affecting household’s investment choices are predicted by using multinomial
logit model. According to this work household’s investment choices are generally affected by age,
educational background and income of household head. In an other econometric work using the data of
Turkish Statistical Institution 2004 and 2006 Household Budget Surveys by Van Rijckeghem and Üçer
(2009), demographic and socio-economic factors like age, house ownership, interest income,
educational background and income are found related with household investment choices.
2. Methodology
The purpose of this paper is to predict the factors affecting investment choices of household living in
the city of İstanbul that can be accepted as a small sample of Turkey. For this purpose, 1300 surveys
are conducted in İstanbul and questions are directed to household head. First of all, investment choices
(our dependent variable) are classified into 7 categories according to the answers to the question of
“Which investment option do you prefer for the major part of your savings? as follows:
Demand deposit
Time deposit (TL or foreign currency)
Gold
Treasury Bill and Government Bond
Real-estate
Automobile
Stock Exchange
188 International Research Journal of Finance and Economics - Issue 40 (2010)
Questions and independent variables in the survey can be classified in to 3 different categories:
Personal Questions: Profession, gender, educational background, marital status, household
size (number of persons in household), habit of game of chance, social security.
Income Questions: Annual income, frequency of income, frequency of drawing income from
bank account.
Credit Card and Expenditure Questions: Expenditure and payment choices, credit card
ownership, number of credit card owned, number of credit card used, the main purpose of credit card
usage, whether using credit card increases expenditure, the rate of credit card expenditure in household
total expenditure, the rate of saving in household income, the main factor affecting consumption
decision.
After summarizing independent variable, descriptive statistics are analyzed with multinomial
logit model and expositions are made according to probability results.
3. Empirical Results
Descriptive statistics about each variable are exposed below. They are shown in Table 1. When we
look at descriptive statistics about the dependent variable (investment choices) we see that the majority
of participants (33.3 percent) choose to invest in demand deposit. 23.7 percent of participants choose to
invest in demand deposit (TL or foreign currency). The rates of those who choose to invest in gold,
real-estate, Treasury bill or Government bond, stock-exchange and automobile are respectively 16.5
percent, 5.7 percent, 3.2 percent, 2.2 percent and 1.2 percent.
Fourteen percent of the participants are specialists, 13 percent are tradesmen, 12.7 percent are
workers and the rest are in the “other” category. 53.4 percent of participants are male, 62.5 percent are
married, 52.2 percent are covered by Social Security Institution, some 50 percent play games of
chance, 36.5 percent are high school graduate and 40.7 percent are university graduate and post-
graduate.
The majority of participants (some 66.8 percent) have monthly income and 44.8 percent of
them draw their salary from their bank account in one go. 57 percent of them use cash and 40.4 percent
use credit cards in their payments; the majority (74.8 percent) have credit cards; 23 percent have only
one credit card; for the 23.4 percent of participants the most important reason for using credit card is
the opportunity of paying by installments; for the 50 percent of participants using credit card did not
increase their expenditures; for the 46.5 percent the most important factor in taking consumption
decision is their needs.
For there are many variables and the possibility of autocorrelation, independent variables are
classified according to categories in cited questions groups in the methodology section, and 3 different
models are created. These 3 models are estimated using multinomial logit model and estimation results
are shown in Table 2. In the first column of Table 2 are shown variables affecting investment choices
of households; relative risk ratios obtained from the estimation of these 3 models are shown in other
columns in Tables 2.
A. Model 1: The Effect of Personal Factors on Investment Choices

The LR statistic of the first model is significant and its Pseudo R2 is about 0.29. Personal factors as
independent variables explain about 29 percent of the variation in the investment choices. The
variables that have significant effects on investment choices are exposed below.
Being female has a positive effect on the probability of investing in time deposit and in gold but
negative effect on investing in stock exchange. Females generally prefer to invest in safer instruments
than males do. Time deposit and gold are in that category. In addition, gold is preferred as ornament by
women in Turkey. Females don’t prefer to invest in risky instruments and/or instruments requiring
technical knowledge like stock exchange. Coefficients also support this view. Females invest in time
deposit 1.4 times and in gold 1.7 times more than males do.
Being unmarried has a negative effect on the probability of investing in time deposit, gold,
Treasury bill, Government bond and real estate. It is thought normal that the unmarried don’t demand
gold as ornament or safeguard, and don’t invest in relatively safer instruments like gold or time
deposit. The need for a house or a safer investment is more dominant for the married.
Playing games of chance very frequently has a positive effect on the probability of investing in
time deposit and in stock exchange. Especially, playing games of chance very frequently has an effect
on investing in the stock exchange 4.7 times greater than other categories have. This result can be
interpreted that those who play games of chance in Turkey also take in the stock exchange the same.
Instead of investing in stock exchange after a deep and technical analysis, these persons invest in stock
exchange with some tips and without any technical analysis, just like in games of chance.
Being worker has a negative effect on the probability of investing in gold. Being sale/customer
representative has a negative effect on the probability of investing in Treasury bill and Government
bond. Being employer has a positive effect on the probability of investing real estate. In İstanbul,
investing in real estate is always lucrative but needs big capital. Employers generally have high
incomes and they can afford real estate investments.
Having a relatively low educational background (primary and high school) affects positively
the probability of investing in gold. It’s normal that persons having a relatively low educational
background prefer to invest in simple and traditional investment instruments rather than in complex
one. Having a primary school education affects negatively the probability of investing in Treasury bill
and Government bond; having a high school education affects negatively the probability of investing in
real estate. For Treasury bill and Government bond were technical and complex investment
instruments to those having a primary school education, they generally don’t prefer to invest in these
types of investment instruments. Real estate investment doesn’t necessitate complex and technical
knowledge but necessitate higher finance. According to data obtained from cross tabulation persons
having low education level also have low income; so it’s difficult for them to invest in real estate.
Household size affects negatively the probability of investing in gold, Treasury bill and
Government bond. As household size increases the rate of saving from income decreases and
investment in gold, Treasury bill and Government bond also decreases.
Being covered by Government Retirement Fund or having no social security affects negatively
the probability of investing in real estate. In Turkey, those covered by Government Retirement Fund
are civil servants and for the majority of them have low income they can hardly invest in real estate.
Civil servants generally use their post-retirement gratuity to buy a house. On the other hand, it’s very
difficult for those having no social security to invest in real estate because they have generally low
income.
B. Model 2: The Effect of Income on Investment Choices

The LR statistic of the model is significant and its Pseudo R2 is about 0.14. Income variables as
explanatory variables explain about 14 percent of the investment choices variation.
Getting daily income (per diem) affects negatively the probability of investing in time deposit,
real estate and stock exchange. Getting weekly income affects negatively the probability of investing in
real estate. These persons generally have low income and can’t save enough to invest in these
instruments.
Having no regular monthly income affects negatively the probability of investing in gold,
Treasury bill, Government bond, real estate, automobile and stock exchange. Drawing monthly income
from bank account in two equal parts affects negatively the probability of investing in Treasury bill,
Government bond, real estate and automobile. Drawing monthly income from bank account when
necessary affects negatively the probability of investing in Treasury bill, Government bond, real estate,
automobile and stock exchange.
The increase in total annual income affects positively the probability of investing in real estate
and negatively that of investing in automobile.
C. Model 3: The Effect of Credit Cards and Expenditures on Investment Choices

The LR statistic of the model is significant and its Pseudo R2 is about 0.27. Credit cards and
expenditures which are explanatory variables explain approximately 27 percent of the variation in the
investment choices.
Using mostly credit cards in payments affects positively the probability of investing in time
deposit. On the other hand, paying by check affects negatively the probability of investing in gold. The
use of credit cards decreases the cash need and increases time deposit. In Turkey, those using checks in
their payments are businessmen, so it’s normal that they don’t invest in gold.
The increase in the number of those saying that “Using credit cards did not increase my
spending” affects positively the probability of investing in time deposit because their savings are not
negatively affected by credit card usage. But this answer affects negatively the probability of investing
in Treasury bill, Government bond, real estate, automobile and in stock exchange. According to cross
tabulation these persons are in low/middle income groups, they use their credit cards very carefully and
when necessary, thus using credit cards don’t increase their spending and they choose to invest in time
deposit.
Having no credit card now and in the past affects negatively the probability of investing in
gold, Treasury bill, Government bond, real estate, automobile and stock exchange. According to cross
tabulation, these people are mostly in low/middle income groups so it’s difficult for them to save. For
they are in low/middle income groups and don’t use credit cards, they can not invest the money they
don’t use in a month in short term investment instruments (i.e. stock exchange).
The increase in the number of credit cards owned affects positively the probability of investing
in gold and real estate. On the other hand the increase in the number of credit cards used affects
negatively the probability of investing in gold and real estate. This difference shows that not all of the
credit cards possessed are actively used. Banks send credit cards to almost everyone, especially to high
income individuals without their demand. The important detail here is not the credit cards owned but
credit cards used. According to data obtained from our survey, when the number of credit cards used
increases spending also increases and saving decreases. When we take into account that some of
tradesmen use credit cards in their businesses it becomes clear why the increase in the number of credit
cards used affects negatively the probability of investing in gold and real estate. On the other hand,
some people who don’t use all of the credit cards they hold are high income individuals and they hold
these credit cards as a status symbol. These people can afford to invest in areas requiring high finance
like real estate.
Holding credit cards as a status symbol or for security benefits affects positively the probability
of investing in gold, Treasury bill, Government Bond, real estate and stock exchange. They have
respectively 3.5 percent, 4.6 percent, 3.9 percent and 4.9 percent higher effect than other credit card
categories have. According to cross tabulation those holding credit cards as a status symbol and for
security benefits are in high income group and their propensity to save is also high. The increase in the
number of those saying that “The main reason for me to use credit card is that it eliminate to carry cash
on me” affects positively the probability of investing in Treasury bill and Government bond. Using
credit cards mostly in business dealings affects positively the probability of investing in Treasury bill,
Government bond, automobile and stock exchange. They have respectively 9.9 percent, 4.1 percent,
3.1 percent and 5 percent higher effect than other credit card categories have. These people are
employer and in high income group. The increase in the number of those saying that “I buy now but
pay later” affects negatively the probability of investing in real estate.
The increase in the number of those saying that “The main factor determining my consumption
decision is the general economic condition and inflation” affects positively the probability of investing
in gold. As the economy worsen, people decrease consumption, try to save more and traditionally
prefer gold because it is seen as a safe harbor. The increase in the number of those saying that “The
main factor determining my consumption decision is the proportionate share of prices of goods in my
current income” affects negatively the probability of investing in gold, Treasury bill, Government
bond, real estate, automobile and stock exchange. These people are in low income group and can save
less. The increase in the number of those saying that “The main factor determining my consumption
decision is the proportionate share of prices of goods in my lifetime income” affects positively the
probability of investing in Treasury bill and Government bond (6.6 times greater than other categories)
and in stock exchange.
The increase in the rate of payments by credit card in total payments affects negatively the
probability of investing in Treasury bill, Government bond, automobile and stock exchange. According
to cross tabulation, paying mostly by credit cards increase total expenditures and decrease savings.
As the propensity to save increases, the probability of investing in Treasury bill, Government
bond and real estate also increases. The high income group have greater propensity to save and can
invest in these investment areas.
4. Summary and Concluding Remarks

In this paper, investment choices and factors affecting them are determined by using multinomial logit
model in the city of İstanbul in Turkey. According to results, females, those who are married or with
low levels of education choose to invest in safer instruments like gold and time deposit instead of risky
ones or requiring technical knowledge and pursuit. There is also a positive relationship between
education level, income and investment instruments. As the education level increases, income and the
probability of investing in high capital requiring instruments also increase. The high relationship
between playing games of chance very frequently and the probability of investing in stock exchange
shows that these people approach similarly to both of them. According to results, household size and
social security affect the propensity to save. One of the important results is that there is a positive
relationship between annual income and the probability of investing in real estate. There are also
important relationships between investment choices and credit card ownership, the number of credit
cards owned and the purpose of holding credit cards. For example, paying mostly by credit cards
increases the probability of investing in time deposit. On the other hand, it is one of the interesting
results that having no credit card now and in the past affects negatively the probability of investing in
almost all investment options. The danger of inflation and worsening economic conditions leads people
to invest in traditional investment option like gold. There is a positive relationship between
determining consumption decisions according to lifetime income and investing in Treasury bill,
Government bond and stock exchange. The increase in the propensity to save increases also the
probability of investing in Treasury bill, Government bond and real estate. According to cross
tabulation, the increase in the number of credit cards used affects positively the probability of investing
the portion of monthly income not used in the same month in stock exchange.
This paper investigates relationships between investment choices and personal factors, personal
savings, credit cards and expenditures. Using survey method enabled to prepare very diversified and
comprehensive questions range in order to determine investment choices and to obtain data to deduce
conclusions different from those up to now. One of the important contributions of this study is that, not
only it supports numerically the relationships introduced by economic theory with econometric
estimations it also displays different relations using these estimated results.
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Appendix
Table 1: Descriptive Statistics
Principal Category
VARIABLES Frequency Percent Mean Standard Deviation
(P.C.)
Investment Choices 1114 2.2567 1.45139
Demand Deposit 433 33.3 0.3331 0.4715 P.C.
Time Deposit 308 23.7 0.2369 0.42536
Gold 215 16.5 0.1654 0.37167
Treasury bill and Government bond 41 3.2 0.0215 0.17484
Real Estate 74 5.7 0.0569 0.23178
Automobile 15 1.2 0.0115 0.10684
Stock Exchange 28 2.2 0.0215 0.14523
Profession 1295 5.3143 2.92078
Specialist 183.0 14.1 0.1408 0.34792 P.C.
Manager 122.0 9.4 0.0938 0.29173
Civil Servant 112.0 8.6 0.0862 0.28070
Employer 79.0 6.1 0.0608 0.23900
Tradesman 168.0 13.0 0.1292 0.33558
Sale/Customer Representative 151.0 11.7 0.1162 0.32053
Worker 164.0 12.7 0.1262 0.33215
Servant, office-boy, etc. 83.0 6.4 0.0638 0.24457
Retired 85.0 6.6 0.0654 0.24730
Other 148.0 11.4 0.1138 0.31775
Gender 1299 1.5343 0.49902
Female 605.0 46.6 0.4654 0.49899
Male 694.0 53.4 0.5338 0.49905 P.C.
Education Level 1297 3.1704 0.79512
Not literate 11.0 0.8 0.0085 0.09163
Primary School 285.0 22.0 0.2192 0.41388
High school 473.0 36.5 0.3638 0.48129
University and post graduate 528.0 40.7 0.4062 0.49130 P.C.
Marital Status 1292 1.3754 0.48441
Married 807.0 62.5 0.6208 0.48538 P.C.
Other 485.0 37.5 0.3731 0.48381
Hose hold size (continuous variable) 1276 3.5306 1.35641
Social Security 1292 2.1680 0.90122
Social Security Organization for
278.0 21.5 0.2138 0.41018
Artisans and the Self-Employed
Social Security Institution 675.0 52.2 0.5192 0.49982 P.C.
Retirement Fund 183.0 14.2 0.1408 0.34792
No social security 156.0 12.1 0.1200 0.32509
Game of Chance 1292 1.8707 1.02010
Never 657.0 50.9 0.5054 0.50016 P.C.
Very Scarcely 254.0 19.7 0.1954 0.39665
Sometimes 272.0 21.1 1.8337 0.97337
Very often 109.0 8.4 0.5646 0.49600
Total Annual Income (continuous
1095 33.0464 42.35258
variable, 000 TL)
Frequency of getting income 1276 2.9655 1.03525
Daily 144.0 11.3 0.1108 0.31397
Weekly 103.0 8.1 0.0792 0.27020
Monthly 853.0 66.8 0.6562 0.47517 P.C.
Annual 5.0 0.4 0.0038 0.06192
Irregular 171.0 13.4 0.1315 0.33812
Frequency of drawing monthly
1260 2.5683 1.60250
income from bank account
At one go 582.0 44.8 0.4477 0.49745 P.C.
Two equal parts 97.0 7.7 0.0746 0.26287
Three equal parts 27.0 2.1 0.0208 0.14267
When necessary 391.0 31.0 0.3008 0.45877
No regular monthly income 163.0 12.9 0.1254 0.33128
The most widely used means of
1287 1.8337 0.97337
payment
Cash 734.0 57.0 0.5646 0.49600 P.C.
Check 33.0 2.6 0.0254 0.15735
Credit Card 520.0 40.4 0.4000 0.49009
Credit Card Ownership 1300 1.2300 0.44586
Yes 953.0 74.8 0.7485 0.43406 P.C.
No 307.0 24.1 0.2408 0.42772
The number of credit cards owned
935 1.8885 2.08459
(continuous variable)
The number of credit cards used
907 1.5200 1.62602
(continuous variable)
The main reason for using credit
930 2.4415 2.23358
card
I eliminate to carry cash on me 206.0 15.8 0.1585 0.36531
I can buy even if I have not money 163.0 12.5 0.1254 0.33128
For security and prestige 48.0 3.7 0.0369 0.18865
I can buy with installments 304.0 23.4 0.2338 0.42334 P.C.
I buy now but pay later 73.0 5.6 0.0562 0.23031
I use credit card because I have no
sufficient salary to live on for the time 56.0 4.3 0.0431 0.20311
being
I use credit cards in my business
59.0 4.5 0.0454 0.20823
dealings
Other 21.0 1.6 0.0162 0.12612
Whether or not using credit cards
934 1.0777 0.79701
increases your spending
Yes 467 50 0.3592 0.47996
No 467 50 0.3592 0.47996 P.C.
The rate of payment by credit card
in total payment (%, continuous 1297 0.3302 0.30496
variable)
The main factor affecting
1295 4.32290 2.22322
consumption decision
The share of price of goods in my
308.0 23.8 0.2369 0.42536
current income
The share of price of goods in my
28.0 2.2 0.0215 0.14523
lifetime income
General economic condition 167.0 12.9 0.1285 0.33473
Inflation 57.0 4.4 0.0438 0.20483
Interest rate 15.0 1.2 0.0115 0.10684
Needs 602.0 46.5 0.4631 0.49883 P.C.
Habits 118.0 9.1 0.0908 0.28739
Table 2: Models
TIME DEPOSIT Model 1 Model 2 Model 3

Profession
Manager 1.3220
Civil servant -0.6194
Employer 1.2941
Tradesman 1.1931
Sale/Customer Representative 1.1586
Worker 1.07406
Servant, Office-boy, etc. -0.7644
Retired 1.1081
Other -0.7579
Gender
Female 1.4057*
Education Level
Not literate 1.69e-20
Primary School -0.9435
High School 1.0928
Marital Status
Other -0.4573*
Household Size -0.9297
Social Security
Social Security Organization for Artisans and the Self-Employed -0.6788
Government Retirement Fund -0.8177
No Social Security -0.7889
Games of Chance
Very Scarcely 1.1409
Sometimes 1.3540
Very Often 2.4196*
Total Annual Income (000 TL) 1.0012
Frequency of Getting Income
Daily -0.4356*
Weekly -0.8942
Annual -0.7074
Irregular 0.9779
Frequency of drawing monthly income from bank account
Two equal parts 1.2619
Three equal parts 1.0255
When necessary 1.2866
No regular monthly income -0.7459
The most widely used means of payment
Check -0.7590
Credit card 1.9270*
Credit card ownership
No -0.7476
The number of credit card owned -0.9091
The number of credit card used 1.0274
The main reason for using credit card
I eliminate to carry cash on me 1.1629
I can buy even if I have not money -0.8619
For prestige and security 1.0356
I buy now but pay later 1.0481
I use credit card because I have no sufficient salary to live on for
1.9330
the time being
I use credit cards in my business dealings -0.7201
Other 0.1232
Whether or not using credit cards increases your spending
No 1.4212*
The rate of payment by credit card in total payment (%) -0.5310
The main factor affecting consumption decision
The share of price of goods in my current income -0.403*
The share of price of goods in my lifetime income 1.3958
General economic condition -0.8244
Inflation -0.8060
Interest rates 1.5267
Habits -0.6721
GOLD
Profession
Manager 1.1174
Employer -0.5462
Tradesman -0.9958
Sale/customer representative -0.8060
Worker -0.4529*
Servant, office-boy, etc. -0.5568
Retired -0.5824
Other -0.6865
Gender
Female 1.6714*
Education level
Not literate -2.50e-2
Primary school 1.8628*
High school 1.5616*
Marital status
Other -0.5561*
Household size -0.8831*
Social security
No social security -0.7678
Games of chance
Very Scarcely -0.8275
Sometimes -0.6774
Very often 1.05638
Total annual income (000 TL) -0.9978
Frequency of getting income
Daily -0.6288
Weekly 1.1041
Annual -2.44e-15
Irregular -0.9840
Two equal parts 1.1591
Three equal parts 1.2048
When necessary -0.8531
No regular monthly income -0.4662*
Check -0.1099*
Credit card 1.0146
No -0.6431*
The number of credit cards owned 1.2168*
The number of credit cards used -0.6298*
I can buy even if I have not money 1.2556
For prestige and security 3.4931*
I buy now and pay later 1.2654
-0.7573
the time being
I use credit cards in my business dealings 2.1093
Other -1.56e-15
No -0.9602
The share of price of goods in my lifetime income -4.39e-15
General economic condition 2.0150*
Inflation 3.2929*
Interest rates -1.15e-15
Habits -0.5391
TREASURY BILL, GOVERNMENT BOND
Profession
Manager 1.4258
Employer 1.8676
Tradesman 2.5433
Sale/customer representative -0.0921*
Worker -1.64e-15
Servant, office-boy, etc. 1.2642
Retired -0.2185
Other -0.1968
Gender
Female -0.5699
Education level
Primary school -0.0669*
High school -0.9047
Marital status
Other -0.3828*
Household size -0.8188*
Social Security
No security -0.2223
Games of chance
Very scarcely -0.7369
Sometimes -0.9852
Very often 1.2023
Daily -0.6747
Weekly -2.82e-15
Annual 2.5621
Irregular -0.5544
Two equal parts -0.184*
Three equal parts -0.5006
When necessary -0.472*
No regular income -0.1906
Check -0.1370
Credit card -0.9417
No -0.0264*
The number of credit cards owned -0.9774
The number of credit cards used 0.8861
I eliminate to carry cash on me 2.6702*
I buy now but pay later -0.3650
-1.31e-14
the time being
I use credit cards in my business dealings 9.8479*
Other 1.3401
No -0.4250*
The rate of payment by credit card in total payment (%) -0.0963*
The share of price of goods in my lifetime income 6.5754*
General economic condition 1.0532
Inflation 1.3123
Habits -0.5970
REAL ESTATE
Profession
Manager 1.6144
Employer 4.3617*
Tradesman 2.0509
Sale/customer representative -1.12e-15
Worker -0.5304
Servant, office-boy, etc. -1.94e-15
Retired -0.5304
Other 1.0485
Gender
Female -0.7987
Education Level
Not literate -0.9924
Primary school -0.6508
High school -0.4838
Marital Status
Other -0.4824*
Household size -0.9020
Social security
Government Retirement Fund -0.2508*
No social security -0.0799*
Games of chance
Sometimes -0.7779
Very often -0.8619
Total annual income (000 TL) 1.0047*
Per diem (daily) -0.4507*
Weekly -0.4220
Annual 3.7656
Irregular 1.5543
Two equal parts -0.0961*
Three equal parts -0.4548
Check -0.8949
Credit card -0.6582
No -0.0875*
The number of credit card owned 1.2348*
The number of credit card used -0.7027*
1.0970
the time being
other 1.6461
no -0.5307*
Inflation 1.8539
Interest rates -0.9031
habits -0.6166
AUTOMOBILE
Profession
Manager -5.97e-15
Civil servants -2.88e-15
Employer -0.4528
Tradesman 1.0227
Worker -1.01e-15
Servant, office-boy, etc. -0.1306
Retired -1.37e-15
Other -2.18e-15
Gender
Female -0.2796
Education level
Primary school 3.8039
High school -0.7381
Marital status
Other -0.8820
Social security
Government Retirement Fund -9.47e-15
Games of chance
Very scarcely -3.25e-15
Sometimes -0.3434
Very often -0.8848
Total annual income (000 TL) -0.9508*
Daily -0.3072
Weekly -0.2177
Annual -3.36e-14
Irregular 4.5883
In two equal parts -0.2087*
In three equal parts -9.81e-15
Check -3.43e-15
Credit card -0.3430
No -0.0546*
For prestige and security 5.1429
I buy now but pay later 2.1147
-4.66e-14
the time being
Other -1.44e-14
Other -0.3121*
Inflation 4.3451
Habits -0.3961
STOCK EXCHANGE
Profession
Manager -0.8589
Employer -0.8241
tradesman -0.5570
Worker -0.2046
Servant, office-boy, etc. -1.21e-15
Retired -1.05e-15
Other -1.32e-15
Gender
Female -0.3943*
Education level
Primary school -0.7910
High school -0.4573
Marital status
Other -0.5004
Social security
Government Retirement Fund 1.0000
Games of chance
Sometimes 1.0441
Very often 4.7447*
Daily -0.1835*
Weekly -0.2718*
Annual -5.60e-15
Irregular -0.9141
In two equal parts -1.82e-15
In three equal parts -0.7033
When necessary -0.3145
No regular income -0.1331
Check -0.4811
Credit card 1.2780
No -0.0241*
-1.09e-14
the time being
other -6.26e-15
No -0.3205*
The share of price of goods in my lifetime income 9.8200*
General economic condition -0.9639
Inflation -0.8859
Habits -0.6086
LR statistic 1251.25* 493.33* 1153.74*
Pseudo R2 0.2944 0.1364 0.2668
* indicates 95% significance level.

Factors Affecting Choice of Investemnts

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International Research Journal of Finance and Economics

ISSN 1450-2887 Issue 40 (2010)

The Analysis of Factors Affecting Investment Choices of

Ferda Yerdelen Tatoğlu

Keywords: investment choices, households, multinomial logit model, Turkey.

A. Model 1: The Effect of Personal Factors on Investment Choices

B. Model 2: The Effect of Income on Investment Choices

C. Model 3: The Effect of Credit Cards and Expenditures on Investment Choices

4. Summary and Concluding Remarks

TIME DEPOSIT Model 1 Model 2 Model 3

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