This research provides a first investigation into how interest-free financing promotions influence consumer behavior. Five experiments demonstrate that framing an economically equivalent financing offer in a way that makes salient that it is interest-free increases consumers’ demand for credit to finance experiential, but not material goods. This increased willingness to finance manifests for primarily experiential goods (e.g., vacations), goods with mixed benefits (e.g., bike) if their experiential aspects are highlighted, and mixed shopping baskets that provide primarily experiential benefits. Using mediation and moderation, the results suggest that this occurs because interest-free cues mitigate feelings of debt aversion for experiential purchases. Based on our findings, we highlight public policy and managerial implications.
Bauer, Johannes, Vicki Morwitz, and Liane Nagengast. "Interest-Free Financing Promotions Increase Consumers' Demand for Credit for Experiential Goods." Journal of the Association for Consumer Research 6, no. 1 (2021): 54-66.
Each author name for a Columbia Business School faculty member is linked to a faculty research page, which lists additional publications by that faculty member.
Each topic is linked to an index of publications on that topic.