Assessing consumer literacy on financial complex products

Luís Filipe Rodrigues,Abílio Oliveira,Helena Rodrigues,Carlos J Costa

doi:10.1016/j.jbef.2019.02.005

Abstract

Consumer financial education has become an important research topic, due to the growth of a wide range of investment products available in online banking. The individuals are exposed to highly complex financial products without understanding the risk and what product is suitable for them. This study investigates and measured the financial education of individuals in complex financial products. A quiz game was developed for a bank website to measure 1597 bank clients in complex products literacy. The survey also enabled a comparison between the basic and advanced skills of financial literacy knowledge. The results highlight a satisfactory overall financial literacy level. While basic knowledge level between individuals has a higher degree, there are serious concerns in advanced skill level. This study contributes to an understanding of adults’ knowledge about the prediction of the risk of investments in complex financial products, as well as providing value to ongoing financial literacy research.

Highlights

The current economic conditions have raised serious fears about individual investors’ financial security, for those who lack the skills and resources to withstand financial market downturns and take advantage of upswings
In order to understand the financial literacy among individual investors, we analyzed the questionnaire data obtained from Oct/10/2016 to Nov/11/2016
To evaluate the individual investor’s knowledge toward financial literacy, we analyzed the score of each group of questions by the degree of difficulty

Summary

Introduction

The current economic conditions have raised serious fears about individual investors’ financial security, for those who lack the skills and resources to withstand financial market downturns and take advantage of upswings. The two most important of these are purchase and investment planning. As these options are becoming more complex, questions are raised about individual financial wellbeing. With the expansion of e-banking, the financial markets around the globe have become more accessible to individual investors, as well as offering new financial bank products and services that are ever more complex. The asset price movements and the financial market volatility, cause of the financial crisis, challenge individual investors to obtain more data and to be ready to pursue investment decisions

Methods

Results

Discussion

Conclusion