Integrating positive financial attitudes to nurture students’ identity as informed financial decision-makers in high power distance Chinese contexts

Abstract

Research on financial literacy has focused on the influence of teachers and parents in financial literacy education, which mediates the impact on students’ financial behaviour. Much less attention has been given to the influence of traditional Chinese hierarchical culture on a child’s identity as a student. This paper applies Lee’s (2017) theory of identity grafting to examine how student self-identity towards personal financial management is reflected in their financial behaviour, and whether nurturing students with positive financial attitudes can improve the financial behaviour of students who are challenged by power distance values. We surveyed 1164 students from 39 secondary schools. We first focus on the influence of power distance on students that endorse the traditional Chinese values that superiors and subordinates should know their place and behave accordingly. Second, we focus on how students’ positive financial attitude interact with power distance effects. The results from structural equation modelling show that that high endorsement of power distance has a negative impact on financial behaviour in spending and that positive financial attitude has a positive influence on financial behaviour in spending, protection and planning. Further, students who highly endorse power distance values but have positive financial attitudes can still demonstrate positive financial behaviour. This paper is the first to validate identity grafting effects on students via statistical study. The implications of the findings on identity grafting are discussed.