It's the economy stupid: modelling financial product purchases


Tang, L.L., Thomas, L.C., Thomas, S. and Bozzetto, J. (2007) It's the economy stupid: modelling financial product purchases. International Journal of Bank Marketing, 25, (1), 22-38. (doi:10.1108/02652320710722597).

Download

Full text not available from this repository.

Description/Abstract

Purpose – The purpose of this research is to undertake an examination of the impacts of socio-demographic and economic variables on the probability of purchasing financial products. There is relatively little empirical research that has been taken to understand how the underlying economy affects customers' subsequent financial product purchase behaviours. Understanding this influence would improve prediction of when purchases will occur and hence is important for the Customer lifetime value models of financial service organisations.
Design/methodology/approach – Two proportional hazard modelling approaches – Cox and Weibull – are compared in terms of predictive ability on a data set from a major insurance company. The risk factors for purchase are both economic and socio-demographic.
Findings – The results show that the external economic environment is an extremely important influence in driving customers' financial products purchasing behaviours. Furthermore, the results also indicate that Cox's proportional hazard models are superior to Weibull proportional hazard models in this case because of an annual purchase effect.
Practical implications – Financial organisations need to consider the current economic conditions before determining how much marketing effort to undertake.
Originality/value – The originality of this paper is that it considers economic conditions and socio-demographic variables in modelling the long run purchase behaviour of customers for insurance and savings products. It has a large data set from a major insurance company. It is also one of the first papers to make a detailed comparison between the semi-parametric and parametric proportional hazard models in the bank marketing area.

Item Type: Article
ISSNs: 0265-2323 (print)
Related URLs:
Keywords: customer service management, economic fluctuations, financial services
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Divisions: University Structure - Pre August 2011 > School of Management
ePrint ID: 58370
Date Deposited: 15 Aug 2008
Last Modified: 27 Mar 2014 18:40
URI: http://eprints.soton.ac.uk/id/eprint/58370

Actions (login required)

View Item View Item