Financial Literacy Assessment Research Articles

Dealing with “Do Not Know” Responses in the Assessment of Financial Literacy: The Use of a Sample Selection Model

Financial literacy assessments typically rely on sample surveys containing sets of questions designed to gauge respondents’ comprehension of fundamental financial concepts necessary for making informed decisions. The answers to such questions, either categorical or continuous in nature, generally include a “Do not know” option. If those who choose the “Do not know” option are not a random sample of the population but exhibit peculiar characteristics, treating these observations as either incorrect responses or as missing data may distort the results regarding the determinants of financial literacy. A noteworthy case lies in the observation from survey studies that women tend to choose the “Do not know” option more frequently than men. In similar cases, treating the “Do not know” responses as incorrect answers increases the gender gap in financial literacy while treating them as missing values reduces the gap. We propose using a model with sample selection, which enables us to disentangle the inclination to answer “Do not know” from actual responses. By applying this model to a representative sample of the UK population, we do not find any systematic gender gap in financial knowledge. The study’s novel treatment of “Do not know” responses contributes valuable insights to the broader discourse on the determinants of financial literacy and the related gender-based differences.

Youth in individualistic countries have higher financial literacy: Evidence from PISA

AbstractFinancial literacy is an important life skill, but to date, it is mostly studied on the individual level. To investigate the role of national culture in financial literacy, we analyze data from 20 countries participating in the Program for International Student Assessment (PISA) 2018 financial literacy assessment with four approaches to measuring national culture: Hofstede, Schwartz, Inglehart–Welzel, and Minkov–Kaasa cultural dimension frameworks. This is the first study that links PISA financial literacy scores to these four culture models simultaneously, filling a gap in research on youth financial literacy. We find that culture explains an important part of within‐country variance in financial literacy. The results indicate that individualism is positively associated with youth financial literacy scores, with the Schwartz embeddedness dimension remaining consistent after a set of control variables. Therefore, financial education initiatives need to consider in their design and implication the cultural context of the participants.

Empowering futures: A financial literacy assessment among graduate students at Tribhuvan university

The purpose of this study is to assess the level of financial literacy among graduate students. The focus is on exploring the relationship between financial literacy and three key factors: financial attitude, financial knowledge, and financial behavior. The study targeted graduate students at Tribhuvan University's Faculty of Management (FOM) in Kathmandu valley with 710 students receiving a structured questionnaire. Total of 427 valid responses were received, establishing the sample for analysis. Descriptive and relational research designs was adopted for the analysis. Data was collected through a structured questionnaire, reflecting participants' financial attitudes, knowledge, and behaviors. The study concludes that there exists a positive association between the levels of students' financial attitudes, knowledge, and behaviors with their financial literacy. Additionally, the research findings reveal a significant and positive impact of financial attitude, knowledge, and behavior on financial literacy. Government authorities will utilize findings of the study for the development of policies aimed at enhancing financial literacy programs in Nepal. Banking and Financial Institutions (BFIs), Microfinance Institutions (MFIs) as well as regulators can use the insights to modify financial literacy programs that address the specific needs identified in the study. Professors, teachers, and trainers can incorporate with the study's results for curriculum planning, designing courses to foster financial attitudes, knowledge, and behaviors among graduate and post-graduate students.

Assessment of Financial Literacy of Public Schools Teachers: Generation X, Y and Z

Financial literacy is an important social skill, especially among teachers who play an important role in shaping the educational environment. This study focuses on three specific generations of teachers, Generation X, Generation Y (Millennials), and Generation Z (iGen), and aims to assess their financial literacy levels. The primary goal is to identify differences in financial literacy by generation by examining conceptual knowledge, financial behavior, and financial attitudes and awareness. A descriptive - comparative research design was used to survey teachers in the Department of Education – School Division Office of Cotabato. The sample consisted of teachers from Generation X, Generation Y and Generation Z. Quota - convenience sampling was used to collect a sample of 150 respondents, with a default quota of 50 respondents from each generation. The study used statistical analysis using one-way ANOVA to identify differences in financial literacy levels across generations. The findings revealed that all three generations exhibit high levels of financial literacy across dimensions of conceptual knowledge, financial behavior, and financial attitudes and awareness. However, there were statistically significant differences between Generations Y and Generation Z in terms of financial attitudes and awareness, while no significant differences were found in Generation X and Y or Generation X and Z. In conclusion, teachers in the Department of Education – School Division Office of Cotabato independently showcase commendable financial literacy across generations.

Survey of Medical Student Debt Status, Financial Literacy, and Desires for Financial Education

Objectives: The purpose of this study was to assess the financial literacy level of medical students, evaluate their perceptions about the importance of financial literacy, and determine the optimal timing and delivery for financial literacy education. Methods: From April to May 2019, a cross-sectional, anonymous, web-based survey was administered to a convenience sample of first-year (M1) to fourth-year (M4) medical students at the University of Michigan Medical School, with 216 of 680 (32%) students completing the survey. Respondents voluntarily answered 15 multiple choice questions on personal finance and 30 questions on their demographics, current financial situation, and opinions on financial literacy education. Individual financial proficiency was defined as answering 60% of the personal finance questions correctly. Results: Overall, respondents correctly answered 5.64 (38%) of the personal finance questions, with 41 (19%) students achieving financial proficiency. Lower performance on the financial literacy assessment was significantly associated with gender, age, and debt. Overall, 192 (89%) medical students believed that they should receive financial literacy training in medical school. Conclusions: Medical students demonstrate low levels of financial literacy and have a strong desire to improve their financial literacy during their medical education. Medical schools are well positioned to harness this interest for financial literacy education and integrate self-directed learning opportunities.

Retraction: An empirical assessment of financial literacy and behavioral biases on investment decision: Fresh evidence from small investor perception.

[This retracts the article DOI: 10.3389/fpsyg.2022.977444.].

Financial Literacy as a Key to Entrepreneurship Education: A Multi-Case Study Exploring Diversity and Inclusion

This article presents the results of the financial literacy assessment of young Mexican students between the ages of 17 and 24 enrolled in public and private institutions in five Mexican cities. This study’s objective was to approach the financial knowledge, behaviors, and attitudes of young Mexicans through focus groups and questionnaires to identify their perceptions of complex thinking and its use for financial products and services. The most relevant findings suggest that (a) most of the young participants in the study use banking services through their parents, (b) there are significant gender differences in financial knowledge and behaviors, (c) critical thinking significantly and positively correlates with financial behaviors and attitudes, and (d) the level of critical thinking predicts financial behavior. There is a need to develop women’s critical thinking to discern between the financial behavior they socially imitate and their capabilities to become more involved in financial issues, thus decreasing the gender gap.

Assessment of Financial Literacy and Its Impact on Investor’s Decisions in Saudi Arabia: A Study in the Context of Enabling Financial Planning to Strengthen Economic Development

The significance of financial literacy is increasing faster in today’s world. Financial literacy provides individuals with necessary and adequate financial knowledge and makes them professionally aware of managing their finances. It plays a vital role in the economic development of an economy. The study examines the impact of financial literacy on investors’ financial decisions, financial planning, selection of financial products, and financial literacy awareness program and its influence on investors’ investment decisions. In order to obtain information from the respondents, we employed a questionnaire that was both structured and self-administered. The investigation analyzes the survey responses from 360 respondents in Saudi Arabia. Various statistical methods such as descriptive statistics, correlation analysis, analysis of reliability, analysis of variance (ANOVA), and regression analysis were utilized to evaluate the data obtained. The results obtained in the study indicated that financial literacy has a significant impact on investors’ financial decisions, financial planning, and the selection of financial products that influence investors’ investment decisions. The research also found that financial literacy is affected by financial literacy awareness programs, which have a favorable influence on the investment decisions made by investors. The study’s findings will help prospective investors understand the importance of raising financial knowledge for their future financial goals.

Assessment of Financial Literacy: The Case of Hawkers in Sarawak, Malaysia

The purpose of the study is to assess the financial literacy of hawkers, describe the level of financial behaviour and attitude as well as to assess the level of financial awareness of hawkers in Pasar Tamu Bintulu, Sarawak, Malaysia. The study involves a sample size of 60 participants, who were randomly selected using simple random sampling. Data was collected through a survey questionnaire, which was analyzed using the Statistical Package for Social Sciences (SPSS), with descriptive statistics and crosstabulation are used to interpret the results. The survey results reveal that the financial literacy of hawkers in Pasar Tamu, Bintulu, Sarawak is deficient, with the elderly hawkers displaying lower financial knowledge. The research also observed that individuals with lower educational levels exhibited adverse financial practices. Furthermore, most of the hawkers were unfamiliar with various investment products and failed to utilize them effectively. The study revealed that most of the hawkers lacked financial awareness and had limited knowledge of how to use financial products and services offered in the market. The study's results indicate a requirement to enhance the financial literacy and education of both the surveyed participants and the general population, enabling them to make informed financial choices. The research emphasizes the significance of individuals acquiring adequate knowledge on personal finance, investments, and other financial matters to secure their financial future and avoid making costly errors. The study highlights the necessity for financial institutions, governments, and non-profit organizations to provide easily accessible and effective financial education programs and resources, such as workshops, online courses, and other educational initiatives. By implementing these measures, individuals can develop the skills and knowledge required to manage their finances and achieve their financial objectives. This study may be the first to evaluate the financial literacy of hawkers, as most prior research has focused on the financial literacy of SMEs.

The Cognitive Correlates of Financial Literacy in Older Adults

ABSTRACT Objectives This study examined the cognitive correlates of financial literacy using a comprehensive neuropsychological battery, and whether education modifies the relationship between cognition and financial literacy. Methods Sixty-six participants completed sociodemographic questionnaires, an assessment of financial literacy, and a neuropsychological assessment. Multiple linear regression models that controlled for age, sex, and education examined the main effects of cognitive measures that showed a significant bivariate association with financial literacy. Results After correcting for multiple comparisons, the Crystallized Composite score (p = .002) and the Picture Vocabulary test (p = .002) from the NIH Toolbox, and the Multilingual Naming Test (p > .001) from the Uniform Data Set 3 were associated with financial literacy. Contrary to our hypothesis, education did not interact with cognitive measures when considering financial literacy scores. Conclusions Findings suggest that vocabulary knowledge and semantic memory may play an important role in financial literacy in older age. Clinical Implications Assessing vocabulary knowledge and semantic processes may help to identify older adults with lower financial literacy skills. Additionally, financial literacy interventions may consider targeting individuals with lower vocabulary knowledge and semantic processing skills.

Assessment of financial literacy: case study of business students

The study of financial literacy on business students aims to highlight the financial literacy level of senior students of bachelor degree and postgraduate students.. Although the study illustrates how financial literacy associated with socio- demographic characteristics, financial education, financial behavior, family background, and social capital. The study employs mixed research methodology in which an administered questionnaire and focus group tools are used. The study finds that students’ interest for obtaining financial information is very low which reflects a low level of financial literacy. Although, theresults show a critical red flag of warning in understanding the basic financial concepts (inflation, simple interest rate calculation and portfolio diversification). Moreover, the results find that family background and financial socialization play a significant role in shaping family members’ financial literacy weather intentionally or spontaneously. Based on theresults of the analysis and focus group justification, theresearcher recommends that there is an insisting need for; enhancing the role of the universities in improving financial literacy, and recommends future studies to expand the range of study in light of the role of high education ministry, universities and financial institutions.

Financial Literacy Confidence and Retirement Planning: Evidence from China

Though ample empirical evidence demonstrates the relationship between objective financial literacy and retirement planning, we have a limited understanding of the role of individuals’ subjective financial literacy in their retirement planning. In this study, we examine how individuals’ financial literacy confidence bias affects their retirement planning behaviors using survey data in China. Based on the difference between respondents’ subjective and objective financial literacy from survey data, we construct measures of individuals’ financial literacy overconfidence and underconfidence for empirical analysis. Our results document the critical role of individuals’ assessment of financial literacy in their retirement planning. We find that individuals’ financial literacy overconfidence (underconfidence) significantly promotes (demotes) their retirement planning behaviors.

Differential item functioning across gender with MIMIC modeling: PISA 2018 financial literacy items

The aim of this study is to investigate the presence of DIF over the gender variable with the latent class modeling approach. Data were 953 students from the USA who participated in the PISA 2018 8th-grade financial literacy assessment. Latent class analysis (LCA) approach was used to determine the latent classes and the data fit the three-class model better in line with fit indices. To obtain more information about the characteristics of the emerging classes, uniform and non-uniform DIF sources were determined by using the Multiple Indicator Multiple Causes (MIMIC) model. The findings are very important in terms of contributing to the interpretation of latent classes. According to the results, the gender variable is a potential source of DIF for latent class indicators. Gathering unbiased estimates for the measurement and structural parameters, it is important to include direct effects in the classes. Ignoring these effects can lead to incorrect determination of implicit classess. An example of the application of Multiple Indicator Multiple Causes (MIMIC) model showed in a latent class framework with a stepwise approach with this study.

Methods of Financial Literature Assessment: Kazakhstan’s Experience

This research aims to study foreign experience and review the literature on methods for assessing financial literacy levels. Including analysis of financial literacy level in Kazakhstan based on official data from the AFRD. As a result, recommendations were developed for further improvement of the assessment methodology in Kazakhstan, based on the literature review. The research novelty lies in the systematization of the methods and approaches of various organizations and scientists to assess financial literacy in foreign countries. Additionally, development of recommendations for further improvement of financial literacy assessment based on foreign experience. Literature review results showed that many studies have standard features. Firstly, analysis of several factors may differ while the focus of their research interest. Secondly, the goal is to analyze t h e financial literacy of the population or specific groups of people. Secondary data analysis shows that financially illiterate citizens are inefficient participants in the securities market, have large debts, and use sources of financing irrationally. In terms of income – pensioners and youth. Therefore, there is a need for further development based on the experience of developed countries, where the level of financial literacy is high. The scientific significance of the work consists of the development of recommendations for improving the financial literacy of Kazakhstanis based on a methodological apparatus that considers integrated approaches and national restrictions. This is very important both for the theory and for the practice of further development of the state policy on improving the financial literacy of citizens of Kazakhstan.

An empirical assessment of financial literacy and behavioral biases on investment decision: Fresh evidence from small investor perception.

To have enough financial literacy, an investor must be able to make intelligent investment choices, and on the other hand, the heuristic bias, the framing effect, cognitive illusions, and herd mentality are all variables that contribute to the formation of behavioral biases, also known as illogical conduct, in the decision-making process. The current research looks specifically at behavioral biases and financial literacy influence investment choices, particularly on stock market investment. For the research, a representative sample of 450 individual investors was evaluated. A structured questionnaire was designed using the Likert’s scale method to elicit the research variables, and the data acquired were analyzed using the SEM method. According to the findings, there was a statistically significant link between heuristic bias and the development of behavioral bias in decision-making. Nevertheless, cognitive illusions, the herd mentality, and the framing effect all have a deleterious impact on behavioral biases. In addition, investors often adhere to heuristic biases rather than other irrational strategies when making investment judgments. Therefore, individual investors’ financial literacy level greatly influences the choices made about investments in the stock market.

Financial Literacy and Personal Financial Management Assessment among Students in Border Area of Indonesia-Timor Leste

Financial literacy has become a global trend and the need for individuals to take responsibility for their finances. Still, financial literacy and financial management have not yet become a course in some universities, especially Timor University, which lies in the border area of Indonesia-Timor Leste (BAITL). Economic literacy and student financial management levels need to be analyzed because they relate to expenditure, income, credit, savings, and investments. This study aimed to evaluate financial literacy level and personal financial management level among college students in BAITL. This research includes quantitative descriptive analysis. Data was collected using a questionnaire from 165 undergraduate college students in the mathematics education department of a public university in East Nusa Tenggara (NTT), Indonesia. The results showed that the total average level of student financial literacy (SFL) was 67.48%. The comprehensive middle student personal finance management (SPFM) is 57.34%, and the estimated result of the linear regression model is SPFM = 3.158 + 0.338SFL. These results were significant at a degree of freedom of 163 and Alpha 5% of the t-test results. From the study results, it can conclude that the personal financial management of students of mathematics education is still low. The level of financial literacy of students in the border area includes less literate. If the SFL is a fixed value, then each increase in SFL of 1 unit will increase SPFM 0.338.

Improving Financial Literacy Using the Medical Mini-MBA at a Canadian Medical School.

IntroductionFinancial literacy correlates with less debt and better retirement planning. Medical students, residents, and physicians often have poor financial literacy and large amounts of debt. We measured baseline financial literacy and whether it improved with the administration of a financial literacy course.MethodsWe created the Medical Mini-MBA,a six-week financial literacy course that targeted gaps in financial literacy among medical students and residents. Weekly topics included personal finance, investing, real estate and mortgage, physician billing and payment models, income and tax, and choosing a medical specialty. A 46-question financial literacy assessment was delivered to participants before and after the course.ResultsOf the 276 who participated in the course, 179 (64.86%) participated in the study. Participants who completed the course improved their financial literacy score by 10.10/46.00±5.12 (n=93, p<0.001). Self-assessment of financial literacy was positively correlated with financial literacy exam scores (r=0.366, p<0.001). Demographics such as gender, geography, education level, and first-degree relatives who are/were physicians had no effect on financial literacy scores.ConclusionsThe Medical Mini-MBA improved financial literacy at a Canadian medical school. Implementation of the coursemay equip medical students and residents for financial decisions. It avoids financial conflicts of interest and can supplement the medical curriculum.

FINANCIAL LITERACY AND COLLECTIVE INVESTMENT DECISIONS AMONG INVESTMENT CLUB MEMBERS IN UGANDA

Financial literacy among different groups of people has been a subject of research from different perspectives. The literature about financial literacy and the decision-making of a group of people in the form of an investment club requires special attention since groups are used as special vehicles to spur saving and investment in a number of countries including Uganda. In the face of these developments, it becomes important to assess the financial literacy of individuals that constitute these groups and how the level of their financial literacy affects investment decision-making by the groups to which they belong. This study examines the foregoing with a focus on investment clubs in Uganda. The study used quota sampling techniques to reach out to 66 individuals belonging to investment clubs with a view of assessing their financial literacy levels based on financial literacy knowledge as the key dimension of financial literacy. The specific objectives were to assess the effect of three identified indicators of financial literacy knowledge (Knowledge of interest rate, knowledge of inflation, and knowledge of liquidity) on the investment decision-making by the investment club members. A financial literacy assessment tool was used to assess levels of financial literacy and later on correlations and regressions were conducted to respond to the specific objectives. All the indicators of financial literacy knowledge were found to have a positive albeit low and moderate relationship with investment decision-making. Other factors outside the identified three indictors were found to contribute substantially to the investment decision-making by the investment club members and this formed part of the recommendations that require stakeholders to pay attention.

O PISA e a literacia financeira: os resultados de Portugal

In a context dominated by coronavirus disease and social inequalities in terms of health, in May 2020 the results of the 2018 financial literacy assessment of the Program for International Student Assessment (PISA), conducted by the Organization for Economic Co-operation and Development (OECD), were published. This large-scale international study has traditionally focused on reading, mathematical and science literacy, and more recently on collaborative problem solving and financial literacy. This article aims to analyze financial literacy. We have done it from the global data available from the countries participating in PISA, but with a particular focus on the data from Portugal. To that end, we analyzed the reports and databases produced by the OECD. The results showed that the majority of young Portuguese people seem to be reasonably prepared to respond actively to financial challenges. They have the minimum knowledge to deal with day-to-day financial issues. However, regional asymmetries were observed.

Financial education of schoolchildren with the use of digital technologies: European experience

An increasing number of countries are recognising the importance of financial literacy, and have included financial education in school curricula. Support for the implementation of financial education can be viewed by the main public, private and civic organizations a critical long-term investment in human capital. The issue of financial literacy is defined in the main state documents of Ukraine. The introduction of digital technologies has opened wide opportunities for their use in the field of financial education, they increase motivation to learn, stimulate students' cognitive interest and increase the efficiency of independent work. The issue of financial literacy is defined in the main basic documents of Ukraine, such as the Law of Ukraine "On Education" and "State Standard of Basic Secondary Education" (2020), in which entrepreneurship and financial literacy are key competencies. The aim of the article is to analyze the European experience in the formation of financial literacy in a digital learning environment in the context of reforming domestic education. To achieve this goal, a set of research methods was used: analysis and systematization of scientific literature, works of domestic and foreign authors; comparative and pedagogical analysis, which is used to compare and generalize different views on the organization of financial education in schools of the European Union. The article is considered the objectives and key components of the Core Competencies Framework on Financial Literacy for Youth developed by the OECD International Network on Financial Education (OECD/INFE) and presents the framework of core competencies. The results of the international study of the quality of education PISA-2018 on the assessment of financial literacy are considered. The experience of European countries in creating and using a digital learning environment for the effective implementation of financial education: portals, websites, games, etc. is considered and analyzed.