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The Strathprints institutional repository is a digital archive of University of Strathclyde's Open Access research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including by researchers from the Department of Computer & Information Sciences involved in mathematically structured programming, similarity and metric search, computer security, software systems, combinatronics and digital health.

The Department also includes the iSchool Research Group, which performs leading research into socio-technical phenomena and topics such as information retrieval and information seeking behaviour.

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It's the economy stupid : modelling financial product purchases

Tang, Leilei and Thomas, L. and Thomas, S. and Bozzetto, J. (2007) It's the economy stupid : modelling financial product purchases. International Journal of Bank Marketing, 25 (1). pp. 22-38. ISSN 0265-2323

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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.