Abstract
There is much debate about the impact of personal finance education on financial knowledge, attitudes and behaviour, particularly based on studies in the United Kingdom (UK) and United States of America (US). This paper makes a contribution to this debate, drawing on analysis of a survey of 521 undergraduate students at Bogor Agricultural University (IPB) in Indonesia in 2015. As part of that study, we measured the impact of a 14-week personal finance education course on financial knowledge, attitudes and behaviour. Our findings show that, when controlling for other factors, the personal finance course did, indeed, have a positive and statistically significant impact on financial knowledge. However, there was no statistically significant impact of the course on financial attitudes or behaviour. Our analysis also shows that family financial socialisation was an important driver of financial knowledge, attitudes and behaviour while other drivers of financial behaviour included income, work experience, year/field of study and discussing money with friends. We do not argue here that formal financial education is unimportant but that its role in changing attitudes and behaviour should be considered carefully if this is, indeed, its aim.
Highlights
Financial Capability and Education in an Increasingly Financialised WorldFinancialisation and the rapid advances in information technology throughout the world have created a more complexThe research for this paper was carried out as part of doctoral studies by Irni Johan who was awarded her PhD in 2018.Electronic supplementary material The online version of this article contains supplementary material, which is available to authorized users.and dynamic financial sector, in terms of both products and systems (Marcolin and Abraham 2006)
This paper focuses on the role of financial education in relation to financial capability
The analysis began by comparing the financial knowledge, attitudes, and behaviour of those who took part in the financial education course with those who did not
Summary
Financial Capability and Education in an Increasingly Financialised World. The research for this paper was carried out as part of doctoral studies by Irni Johan who was awarded her PhD in 2018 (see https://etheses.bham.ac.uk/id/eprint/8171/). Individuals in low, middle, and high income countries are increasingly engaging with this financialised world and this has made money management more complex generally while opening people up to new vulnerabilities such as risky financial transactions, misleading information, fraud and so on. Jiang and Dunn (2013) revealed that young people had higher levels of debt, spent more money on credit cards, and tended to pay off bills relatively slowly compared to the previous generation at the same stage of life due to stagnating wages, low incomes, and paying off education fees. Jiang and Dunn (2013) point to easier access to credit and more permissive attitudes to debt as potentially contributing to young people’s financial problems
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