FACULTY OF ECONOMICS AND BUSINESS

DEPARTMENT OF ACCOUNTING AND FINANCE

GROUP ASSIGNMENT 3

EBQ2054
RESEARCH METHODOLOGY ECONOMICS & BUSINESS

THEORETICAL FRAMEWORK
THE EFFECTS OF FINANCIAL DISTRESS AMONG UNIMAS STUDENTS

SUBMITTED BY:
No. Group Members Name Matric No.
1 CHRISTINUS NG KA HING 40922
2 DALJEET KAUR A/P GAG JIT SINGH 40983
3 MOHD SYAFIQ BIN WAHID 42285
4 NUR DJUITA BINTI JAMALUDDIN 43089
5 NURUL NATASYA BINTI AZLY 43603
6 SULAIMAN BIN MOHD FAISAL 44274

LECTURER : MADAM SALAWATI BINTI SAHARI

DATE : 16 APRIL 2017

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 Table of Contents

1.0 Theoretical Roy Adaptation Model ............................................................................. 2

2.0 Theoretical Framework ............................................................................................... 3

2.1 Diagram of Theoretical ...................................................................................... 3

2.1.1 Empirical Specification of the RAM .......................................................... 3

3.0 Hypothesis Development & Variables ........................................................................ 4

4.0 Measurement .............................................................................................................. 7

4.1 Variables ............................................................................................................ 7

4.1.1 Unavoidable Expenses .............................................................................. 7
4.1.2 Lifestyle .................................................................................................... 8
4.1.3 Peer Pressure ............................................................................................ 8
4.1.4 Tuition Fees ............................................................................................... 9
4.1.5 Debt Loans ............................................................................................. 10
4.1.6 Financial Planning & Awareness............................................................. 11

5.0 References ................................................................................................................ 13

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1.0 Theoretical Roy Adaptation Model

In the study of Heckman et al. (2014), Roy Adaptation Model (RAM) had been
adopted based on an earlier research by Roy (1970). The study of Heckman et al. (2014)
depicted a framework that indicates student as the adaptive system of interest in RAM and
self-concept as the primary coping mechanism of interest referred to as effectors in RAM.
Based on the concept of RAM, the adaptive system manages and handles external and
internal stimuli of a person through processes and effectors called as coping mechanisms with
the outcome of either adaptation or ineffective response (Roy, 1970). RAM had been used
widely as a general model in nursing context but recently, this model has grown to be applied
in broader context such as in knowledge development, interdependence mode for global
society, role function and group identity mode for organizations and physical adaptive mode
for family (Roy et al., 2011). This model is indeed applicable to almost every aspect of
research because of its subjective components that researchers can relate to their particular
context of study.

With the purpose of this study in mind, a theoretical framework had been constructed
based on RAM components. Referring to Figure 2, the adaptive system which manages and
handles the external and internal stimuli is the university students or specifically the focused
group of university students that the study is measuring upon. The primary coping
mechanism of interest or known as effectors, is the six Independent Variables (IV) in this
study which are unavoidable expenses, lifestyle, peer pressure, tuition fees, debts loan, and
financial planning and awareness. The constructed framework strives to prove that college
students are dealing with all six effectors in their daily life in order to manage their financials
and as a result, the students will be left with either a situation whereby he or she is in
financial distress or free from it. To enumerate in research context, the outcome of this
adaptation process will either produce low financial distress which refers to adaptation, or
high financial distress which refers to ineffective response in RAM. As a general rule,
positive effectors such as positive peers influence and modest lifestyle can lead students to
have lower financial distress. To conclude, all the six variables (IV) known as the effectors
can be well measured and explained by RAM in predicting students financial situation.

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2.0 Theoretical Framework

2.1 Diagram of Theoretical

DIAGRAM OF THEORETICAL
(The Effects of Financial Distress among UNIMAS Students)
FRAMEWORK

Unavoidable expenses
Lifestyles
Peer pressure
Tuition fees
Debt loans
Financial planning
and awareness

HUMAN ADAPTIVE SYSTEM

Figure 2. Conceptual Framework Based On Roy Adaptation Model

2.1.1 Empirical Specification of the RAM

This study develops an empirical model based on the RAM. In this framework, the
students are the adaptive system of interest and given the literature on university students
wellness, the primary coping mechanism referred to as effectors in the RAM of interest is the
factors of financial distress. We can classify these factors as the cause of the occurrence of
financial distress among students. As the student is presented with possible financial stressors
(stimuli), he or she processes these stressors based on previous adaptation and his or her self-

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concept to handle the financial distress, whether it is or is not one of the causes of financial
problems among students. The output can be either low financial distress (adaptation/health)
or high financial distress (ineffective responses/illness). In the RAM framework, adaptation
refers to their level of learning, emotion management, and judgment (Roy & Andrews, 2008).
That is, as students experiencing financial hardships, they learn to cope with or adapt to new
financial stressors more effectively. Unavoidable expenses, lifestyle, peer pressure, tuition
fees, debt loans, and financial planning and awareness were chosen to represent the students
problem. This empirical model is represented in Figure 2.

3.0 Hypothesis Development & Variables

The effects of financial distress among UNIMAS students specified in the proposed
framework is supported by the study of Heckman et al. (2014) indicates an exploratory
examination of UNIMAS students that are associated with increased likelihood of reporting
financial distress, as well as possible factors (e.g. unavoidable expenses, lifestyle, peer
pressure, tuition fees, debts loan, financial planning and awareness) that could be targeted to
help students respond to financial distress. Thus, the following hypotheses are proposed.

H1 = High unavoidable expenses cause financial distress among UNIMAS Students.

According to Davis (2016), unmanaged unavoidable expenses of individual can cause

financial distress. Based on Goren (2016), he suggested that expenses are divided into four
categories. First, he thinks of them as either fixed (i.e., repeating on a monthly or annual
basis) or variable (i.e., coming up unexpectedly). Expenses can also be either wants (i.e., the
fun stuff) or needs (i.e., the required stuff), which mean different things to different people.
Combining these traits gives us fixed wants, fixed needs, variable wants, and variable needs.

H2 = High lifestyle causes financial distress among UNIMAS students.

According to a survey conducted by Save the Student (Butler, 2016), 80% of

students worry about making ends meet. One of the factors that influence the university

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students and their financial situation is the lifestyle a student leads. According to the
Merriam-Webster dictionary, the definition of lifestyle is, a particular way of living. One
may choose to live lavishly or be more frugal, it all depends on the individual. However, a
trend can be seen whereby most of the university students choose to live out of their means.

H3 = High peer pressure causes financial distress among UNIMAS students.

In accordance to American Academy of Child & Adolescent Psychiatry (2012), peer

pressure is the phenomenon wherein people tend to be influenced by the conducts and
contemplative ways of their close acquaintances. Peer pressure begins in the early age but it
can change in flow of time and respective of the surrounding environment. It can bring both
positive and negative influences on a person regardless of the situation. According to Xu et
al., (2015), young adults who are an extrovert have lesser tendency to experience financial
distress rather than those who are more open to their surroundings. Therefore, when students
are exposed to peers who spend a lot, they tend to be influenced by that particular peers
spending behaviour as well.

H4 = High tuition fees causes financial distress among UNIMAS students.

Tuition fees play an important role in the economics of public higher education. It is
essentially the education prices. Malaysia tuition fee levels do not change with a familys
income level, but eligibility for financial aid does change and tuition fee costs are offset by
means-tested grants and/or government subsidized loans. According to Britt (2016), a
potential source of financial stress for college students is the cost of tuition and fees, which
has grown at 3 times the rate of inflation. According to Johnstone and Marcucci (2010), there
is a non-instructional fee which refers to a charge levied to recover all or most of the
expenses associated with a particular institution provided good or service that is frequently
partaken by some but not all students, such as the costs of food and lodging, or of health and
transportation services, and which might, in other circumstances, be privately provided.

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H5 = High debt loans cause financial distress among UNIMAS students.
According to the study by Drentea, (2000); Jenkins et al, (2008); Roberts et al.,
(1999), they have shown that a simple relationship existed between debts and mental health
problems such as anxiety and depression. Furthermore, the debts have been associated with a
decreased sense of financial well-being and higher levels of stress reported overall (Norvilitis
et.al, 2006). At the same time, the impact on students who take credit cards have positive and
negative effects that enable them to manage their debts better. According to Henry et al.
(2001) assertion and found that credit card debt is attributable to the positive financial
behaviour that is negative and financial stress. In addition, they found that the majority of
students thought it is acceptable to borrow money to pay tuition costs related items, diseases
and living expenses.

H6 = Low Financial Planning & Awareness Causes Financial Distress among UNIMAS

Money is an asset that plays an important role in our daily lives, especially in the
current economic uncertainty. This is because whenever we are, we need money. Without
money, many necessities of life cannot be fulfilled. There is a saying that money is not
everything, but the current reality of life is now almost all the affairs of life require money. It
is not only important to those who are already working but its also important to the students
attending a school or university. Hence, because money is important in life, it must be
managed properly to improve the quality of life. The failure of the students to realize the
importance of effective financial management will cause them to be plagued with negative
mental health, (Roberts & Golding, 1999) identified a link between adverse financial
situations of college students and the negative impact on mental and physical health.

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4.0 Measurement

4.1 Variables

4.1.1 Unavoidable Expenses

Unavoidable expenses, several different questions will be conducted to identify the

type of expenses needed and disbursement to avoid financial distress. The responses to the
following survey items could potentially cause financial distress among UNIMAS students:

Question 1
What is your average monthly income at your disposal from the following sources?
(At your disposal is the money which is meant for monthly consumption, no matter when it
was earned.)
Add a0 or strike-out box if you did not receive any income from a certain source
Average Income
Description Statement
(RM per month)
1. Provision from family/partner
Financial Support from public sources/others
2. Non-repayable grant/ scholarship
3. Repayable loan (PTPTN/MARA)
4. Self-earned income through paid job
5. Savings (e.g. previously earned money)
6.` Other source (include other public or private support)
Total Income (RM)

Question 2
What are your average monthly expenses for the following needs?
Add a 0 or strike-out box if no money was spent on a certain type of costs.
Paid by
I pay out of my
Living cost parent/partner/
own pocket
(RM per month) others for me
(RM per month)
(RM per month)
Accommodation (including utilities, water,
1.
electricity)
Living/daily expenses (food, clothing, toiletries
2.
etc.)
3. Social and leisure activities
4. Transportation
5. Health cost (e.g. medical insurance)

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6. Debt payment
7. Other regular costs (tobacco, pets, insurance etc.)
8. Emergency
Total (RM)

The above survey questionnaire was modified based on the feedback from
respondents. The first question indicates that how much average monthly income sources for
students. In the second question, the respondents were requested to allocate a constant sum
scale (data-ratio) of money spent among a set of stimuli living costs with respect to some
criterion. It means that the total income must be equivalent with the total costs. According to
Constantin (2014), issue of unavoidable expenses could be solved by using a constant sum
scale to achieve the respondents self-stated satisfaction on the expenses decision. Living
costs was used to represent this measure.

4.1.2 Lifestyle

This research will be conducted as a multi-state project whereby students of different

public universities are given questionnaires to answer. One of the lifestyle decisions that
cause financial distress among university students is having a credit card. Students are asked
to select the response that best described how often they engage in 10 specific financial
management practices. Eight additional questions will be asked which includes Who has had
the most significant influence in shaping what you know and think about money?

To gain additional insights, in-depth focus groups also will be conducted with about
10 students in one group. After conducting these tests a financial fitness score will be
generated for each respondent, taking into consideration the total number of items that were
applicable to the respondent. The results will be used to classify students as not financially
at-risk, somewhat at-risk, and financially at-risk.

4.1.3 Peer Pressure

In the research of Otto (2009), Likert scale measurement had been used to measure
the extent of peer influence towards respondent in regards of their saving behaviour. The

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same measurement is taken in this study whereby respondents will be asked a few question in
regards of their spending behaviour that may be influenced by their peers. The questions
signify the influence of respondents closest peers and highlight the impact of them towards
the respondent. A greater score denotes stronger peer pressure and contradictive score
denotes otherwise. Sample questions for this variables measurement are as follows:

Questions 1 2 3 4 5
Strongly Agree Moderate Slightly Strongly
Agree Disagree Disagree
You tend to spend a lot in the
presence of your peers.
Your peers opinion matters a lot in
your buying decision.
Your peers spend more than you do.

4.1.4 Tuition Fees

With changes to the system of financing higher education, particularly the

introduction of fees, there is also a need to monitor the effect of this change on levels of
student stress. Previous research has found that financial concerns can be a significant factor
in causing individuals stress (Joo, Durband, and Grable, 2008). Research needs to examine
whether these changes in levels of tuition fee are having a significant effect on levels of
student stress when compared to previous levels.

A prospective cohort study was used, following UNIMAS students from first to final
year of every programmes in the university. In studying institution-level price variation, we
examine program-specific prices within the institutions. These cohorts were charged different
amount of tuition fees at session 2013/2014 fees level and session 2014/2015 increased fees
level. The program-specific analysis is assembled from collection of numerous historical and
archival data sources within institution database. We also focus broadly on 3-year courses
and 4-year courses as it is the average time taken for students attend public universities.

Standardized measures were used whereby questionnaire were completed online at

four times 3-4 months apart across just over a year in participants first 2 years at university.

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For logistical reasons, questionnaires were completed at slightly different times for those
starting university in 2013 compared with 2014. Time 1 was FebruaryJune 2014 for the
2013 cohort and SeptemberDecember for the 2014 cohort. Time 2 was September-
December 2014 for the 2013 cohort and February-June 2015 for the 2014 cohort. Time 3 was
FebruaryJune 2015 for the 2013 cohort and SeptemberDecember 2015 for the 2014 cohort.
Time 4 was September-December 2015 for the 2013 cohort and February-June 2016 for the
2014 cohort. Participants were only included in current analysis if they completed baseline
and at least one other time point.

The following standardized measures were used to assess students stress level. For
all the measures, higher scores represent more severe symptoms or worse stress level.

Clinical outcomes routine evaluation general population version (CORE-GP). This is

a 14-item measure of global mental health with questions such as I have felt
optimistic about my future and I have felt tense, nervous or unhappy.
Seven-item-generalized anxiety disorder questionnaire (GAD-7). A seven-item
measure is designed to screen for generalized anxiety disorder asking frequency of
symptoms in past two weeks such as trouble relaxing and not being able to stop or
control worrying. Scores above 10 are suggestive of generalized anxiety disorder.
Centre for epidemiological studies depression scale (CES-D). This 20-item measure is
designed to measure symptoms of depression in the past two weeks, and is designed
specifically for epidemiological research with general population samples. Questions
ask about frequency of symptoms such as I was happy and I felt that people
disliked me. Scores above 15 are suggestive of depression.
Perceived stress scale (PSS). This 10-questionnaire assess global perceived stress in
the last month, using items such as how often individuals have felt unable to control
the important things in your life or felt that things were going your way?

4.1.5 Debt Loans

A single item was used to measure a subjective financial distress. This kind of
research will be explored of predicting variables of students life in university. There are
different set of questions to be conducted to perform the measurement of financial distress
among students. Based on the questionnaire survey, question 1, 2 and 3 focus on the

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behaviour or character of the respondents on how they feel when they have a debt loan in
their life. The respondents were asked, " How stressed are you when you have a loan debt "
on a scale of 1-5 which means 1 is not stress at all and 5 is extremely stressed.

The example of Questionnaires of Debt Loan

No Questions 1 2 3 4 5
1 How stressed are you when you have a debt loan
2 How stressed are you manage your debt loan
3 How stressed are you when you cannot settle the debt at the
end of month.

4.1.6 Financial Planning and Awareness

Interval scale measurement is employed to measure the independent variable.

Financial planning and awareness are measured via five-point Likert scale ranging from
strongly disagree (1) to strongly agree (5). There were several different questions from (Nga,
Yong, & Sellappan, 2010). A higher scale indicates respondents possess greater financial
planning and awareness and vice versa. The responses to the following survey items were
classified as financial stressors that could potentially cause financial distress among
university students:

1. I have better understanding of how to invest my money.

2. I have better understanding of how to manage my credit use.
3. I have the ability to maintain financial records for my income and
expenditure.
4. I have little or no difficulty in managing my money.
5. I have the ability to prepare my own weekly/monthly budget.

All items above allowed students to respond on a five-point Likert type scale, ranging
from 1 to 5. These responses were condensed into three categories - those who agreed, those
who neutral and those who disagreed. This coding was used since an ordinal variable would
have to assume that the scale between responses such as strongly agree to agree compared to
neutral to disagree is constant. For the purposes of this study, it was more useful to

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distinguish students exhibited the circumstances or behaviours in all items from those who
did not and the degree to which these circumstances or behaviour were true was not the
focus.

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5.0 References

American Academy of Child & Adolescent Psychiatry (2012). Retrieved from https://www.aacap.org/

Britt, S. L., Mendiola, M. R., Schink, G. H., Tibbetts, R. H., & Jones, S. H. (2016). Financial Stress,
Coping Strategy, and Academic Achievement of College Students. Journal of Financial
Counseling and Planning, 27(2), 172-183.

Butler, J. (2016). Save The Student. Retrieved from http://www.savethestudent.org/

Drentea, P. (2000). Age, debt and anxiety. Journal of Health and Social Behavior, 41(4), 437-450.

Heckman, S., Lim, H., & Montalto, C. (2014). Factors Related to Financial Stress among College
Students. Journal of Financial Therapy,5 (1) 3. http://dx.doi.org/10.4148/1944-9771.1063

Henry, R. A., Weber, J. G., & Yarbrough, D. (2001). Money management practices of college
students. College Student Journal, 4, 244-247.

Jenkins, R., Bhugra, D., Bebbington, P., Brugha, T., Farrell, M., Coid, J., Fryers, T., Meltzer, H.
(2008). Debt, income and mental disorder in the general population. Psychological Medicine,
38(10), 1485-93.

Johnstone, D. B., & Marcucci, P. N. (2010). Financing Higher Education Worldwide: Who Pays?
Who Should Pay? Baltimore, MD: Johns Hopkins University Press.

Nga, J. K., Yong, L. H., & Sellappan, R. D. (2010). A study of financial awareness among youths.
Young Consumers, pp.277-290.

Norvilitis, J. M., Merwin, M. M., Osberg, T. M., Roehling, P. V., Young, P., & Kamas, M. M. (2006).
Personality factors, money attitudes, financial knowledge, and credit-card debt in college
students. Journal of Applied Social Psychology, 36, 1395-1413.

Otto, A. M. C. (2009). The economic psychology of adolescent saving. Exeter: University of Exeter.

Richardson, T., Elliott, P., & Roberts, R. (2015). The impact of tuition fees amount on mental health
over time in British students. Journal of Public Health, 37(3), 412-418.

Richardson, T., Elliott, P., Roberts, R., & Jansen, M. (2017). A Longitudinal Study of Financial
Difficulties and Mental Health in a National Sample of British Undergraduate Students.
Community Mental Health Journal, 53(3), 344-352.

Roberts, R., & Golding, J. (1999). The Effects of Economic Circumstances on British Students'
Mental and Physical Health. Journal of American College Health., Vol. 48 Issue 3, p103.

Roy, C. (1970). Adaptation: A conceptual framework for nursing. Nursing Outlook, 18(3), 42-45.

Roy, C. (2011). Extending the Roy Adaptation Model to Meet Changing Global Needs. Nursing
Science Quarterly, 24(4), 345-351. DOI:10.1177/0894318411419210

Xu, Y., Beller, A. H., Roberts, B. W., & Brown, J. R. (2015). Personality and young adult financial
distress. Journal of Economic Psychology, 90-100. Retrieved from
www.elsevier.com/locate/joep

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