Financial literacy and advice perceptions among UK higher education students: an ethnicity tale?

Abstract

Although considerable efforts have been made in many countries to raise the financial literacy of those from disadvantaged backgrounds, it is unclear whether these are having an effect. This is particularly the case for those of ethnic minority background, who may suffer from other disadvantages. This study examines the financial literacy of students from two universities in the East Midlands region of the UK. It considers the role played by ethnic background. It is found that significant differences in financial literacy remain between the White majority and particular ethnic groups. In part, this appears to reflect their perceptions of the types of decision they see financial literacy relating to. Some ethnic groups saw financial literacy as being of more relevance for larger, less frequent financial decisions, but saw less connection, and relevance, to the day to day choices they had to make. Ethnicity also potentially has an indirect effect, as informal sources of advice, and those that promote a financial market perspective, tend to be valued more highly. The implications are worrying given that the respondents are the more highly educated independent young members of the population. Current attempts to assist the development of financial literacy therefore appear to be failing those from some ethnic minority groups. This will leave them at a continuing disadvantage, unless interventions can highlight the day to day importance and value of financial literacy.