Social Influence on Consumer Financial Product Preferences

  • Ferdinand D. Anabo UP Cesar E.A. Virata School of Business
  • Dave De Guzman Centeno UP Cesar E.A. Virata School of Business

Abstract

This paper uses conjoint analysis to examine the social influence (e.g., social group recommendations) of an individual consumer’s immediate social circle on his/her financial product preferences. It proposes that social influence from individuals with whom the consumer has strong ties is stronger than that from those with whom he/she has weak ties in choosing financial products through word-of-mouth referral or recommendation. The importance of social influence on financial product preference is associated with consumers’ familiarity with the product and their susceptibility to interpersonal influence. Results reveal that recommendations from social groups with strong ties are influential when forming preferences on financial products. Moreover, social influence becomes significant in financial product selection when consumers are less familiar with the product and are more susceptible to interpersonal influence. While this kind of social influence shows a contributory effect, it has a marginal estimated utility compared with the more explicit attributes of financial product choices (e.g., risks and returns). Despite the expected observation, the study shows a tendency to defer to the value of social influence in contexts where consumers are not familiar with a financial product.

Author Biographies

Ferdinand D. Anabo, UP Cesar E.A. Virata School of Business

Correspondence: Tel: +63 2 928 4571; Fax: +63 2 929 7991
Email: fdanabo@upd.edu.ph

Dave De Guzman Centeno, UP Cesar E.A. Virata School of Business

Correspondence: Tel: +63 2 928 4571; Fax: +63 2 929 7991
Email: dave.centeno@upd.edu.ph
Dr. Centeno acknowledges the Office of the Chancellor of the University of the Philippines Diliman, through the Office of the Vice Chancellor for Research and Development, for funding support through the Ph.D. Incentive Award (Project No. 191908).

Published
2019-06-20
Section
Articles