Measures Of Financial Literacy Research Articles

A person-centered approach to financial capacity: early memory loss, financial management and decision-making

Objectives Previous research has noted that a person-centered approach to financial capacity assessment is feasible. This study of personal finance included a review of 12 months of checking account statements followed by research interviews to investigate income, spending, financial literacy, and financial decision-making. The objective of the study was to determine the convergent validity of excess spending to contextual aspects of financial decision-making, financial literacy, and early memory loss. Method Participants were 114 adults over the age of 60 who came primarily from two research registries; the Healthier Black Elders registry and the Michigan Alzheimer’s Disease Research Center registry. After sharing their checking statements participants completed two telephone interviews. Bivariate and multivariate analyses were used to compare those with no memory loss to the memory loss group, and to determine which measures were significantly related to excess spending. Results There was a significant difference in excess spending between those with early memory loss and those with no memory loss. There was a significant difference in financial decision-making risk scores between the groups, as well as on a memory measure and a financial literacy measure. In a hierarchical regression analysis financial decision-making was the only measure significantly related to excess spending. Conclusion This study documented the convergent validity of person-centered measures of personal spending and financial decision-making with early memory loss. Early memory loss was related to both excess spending and contextual aspects of financial decision-making.

Financial literacy status among non-government organisations’ financial managers in Kwazulu- Natal-South Africa

This study investigated the financial literacy status among financial non-government organisations (NGOs) managers in KwaZulu-Natal. The study adopted a quantitative research strategy; a Likert scale questionnaire was used to collect data from 53 managers purposively and conveniently sampled in KwaZulu-Natal. Robustness analysis was performed using SPSS version 28 for descriptive and inferential statistics. The findings of the study revealed that all independent variables correlate between 1.000 and -.364. This study provided practical and theoretical contributions in the field by deepening an understanding of the key variables identified by this research study, which has been justified by the most relevant literature that drives the financial literacy of NGOs and financial managers. The study further offered insight into constructs for measures of financial literacy in NGOs. This study added to the body of knowledge on the financial literacy of NGOs financial managers in South Africa. The study urgently recommends that NGOs, academia, policymakers, and other key players in the financial literacy field consider the urgent need for financial literacy training or short courses within this sector. These findings urgently call for the attention of the policymakers. This study offered a future research plan on the subject matter in the areas of the true extent of the practicality of financial literacy among financial non-government organisations’ managers that were not addressed in this article.

Crypto and financial literacy of cryptoasset owners versus non-owners: The role of gender differences

Abstract We measure crypto and financial literacy using microdata from the Bank of Canada’s Bitcoin Omnibus Survey. Our crypto literacy measure is based on three questions covering basic aspects of Bitcoin. The financial literacy measure we use is based on three questions covering basic aspects of conventional finance (the “Big Three”). We find that a significant share of Canadian Bitcoin owners have low crypto knowledge and low financial literacy. We also find gender differences in crypto literacy among Bitcoin owners, with female owners scoring lower in Bitcoin knowledge than male owners. We do not, however, find significant gender differences in financial literacy amongst Bitcoin owners. In contrast, non-owners show gender differences in both crypto and financial literacy.

The Impact of Loan Apps on Students: Exploring Financial Access, Risks, and Implications

This article explores the influence of loan applications on students, investigating the impact of these apps on their financial behavior, academic performance, and overall well-being. With the rapid proliferation of loan apps in recent years, it is crucial to understand the consequences they may have on student borrowers. The study examines the experiences of students who utilize loan apps, providing insights into the potential advantages and drawbacks associated with these financial tools. By analyzing the data collected from surveys and interviews, the research highlights the significance of responsible borrowing, financial literacy, and regulatory measures in mitigating the negative effects and maximizing the benefits of loan apps. The findings contribute to the existing literature on financial behaviors and offer recommendations for policymakers, educational institutions, and students to navigate this evolving landscape effectively. Loan apps have gained significant popularity among students, offering quick and convenient access to financial resources. These apps provide students with a platform to obtain loans with minimal paperwork and faster processing times compared to traditional lending institutions. While these apps offer benefits such as easy accessibility, they also raise concerns about potential negative consequences. This article aims to delve into the impact of loan apps on students, shedding light on their financial behaviors, academic performance, and overall well-being. The widespread use of loan apps among students has brought forth a variety of issues that warrant examination. Firstly, these apps can influence the financial behaviors of students, shaping their attitudes towards borrowing, spending, and saving. Understanding the impact of loan apps on students is of significant importance for various stakeholders. Firstly, policymakers can benefit from this research by gaining insights into the implications of loan app usage among students. This knowledge can inform the development of regulations and policies to safeguard students' financial well-being and prevent predatory lending practices. It can also aid in implementing initiatives to promote financial literacy and responsible borrowing among students. Educational institutions can utilize the findings to better support their students in managing their finances. By understanding the challenges and potential risks associated with loan apps, institutions can provide targeted resources, workshops, and counseling services to help s. From the result it is seen that Rate your internet accessibility after loan lending entered market got the first rank Rate your internet usage per day where as is the having the lowest rank

Defining and measuring financial literacy in the Indian context: a systematic literature review

PurposeThis paper aims to analyse how financial literacy (FL) is conceptualised and operationalised in the Indian context.Design/methodology/approachA systematic literature review (SLR) was conducted using the Preferred Reporting Items for Systematic Reviews and Meta-analyses (PRISMA) protocol. Thirty-six articles published between 2010 and 2020 were considered for analysis. The FL conceptualisation was examined based on knowledge, ability, skill, attitude and confidence elements. The FL operationalisation was analysed using the modified version of the Organisation for Economic Co-operation and Development’s (OECD) Programme for International Student Assessment (PISA) 2012 model for organising the domain for an assessment framework.FindingsThe findings indicate that, despite offering operationalisation details of the FL, 13 out of 36 studies did not include a conceptual definition of FL. Of the 23 studies that mentioned a conceptual definition, 87% are primarily focused on the “knowledge” element and only 39% have combined knowledge, ability/skill and attitude elements in defining FL. As in the developed countries, the Indian studies also preferred investment/saving-related contents in their FL measures. The volume of content focusing on the financial landscape is meagre amongst the FL measures used in India and developed countries. The survey instruments of most studies have been designed in the individuals’ context but have failed to measure the extent to which individuals apply the knowledge in performing their day-to-day financial transactions. Further, it was found that 20 out of 36 studies did not convert the FL level of their target groups into a single indicator or operational value.Originality/valueTo the best of our knowledge, this is the first study that explores the FL’s assessment practices in India. Further, this study offers new insights by comparing the contents of FL measures used in Indian studies with those used in developed countries.

Decoding the eco-financial mindset: financial literacy, attitudes, and efficacy measures and the spending behavior of Filipino millennials

In today's volatile economy, millennials stand out as a generation defined by their significant reliance on technology and the issues they encounter in their formative and later years. Experiencing from education costs and socio-economic backgrounds, problems exacerbated by the lack of financial acumen and economic downturns, millennials inevitably become financially vulnerable in the increasingly evolving financial landscape. This research delves into Filipino millennials' financial decision-making, focusing on financial literacy, financial attitude, financial efficacy, and spending behavior. Survey questionnaires were distributed among 431 millennials from the cities of Laguna, Philippines, through Google Forms. Data analysis was conducted through Structural Equation Modeling (SEM) and Confirmatory Factor Analysis (CFA) in Jamovi, unveiling strong positive correlations among eco-financial literacy, eco-financial efficacy, and eco-financial attitude, emphasizing their interdependence in shaping millennials' financial decisions. A negative correlation is identified between spending behavior and financial attitude and a breakdown of spending patterns revealed both variability and consistency of millennials’ spending patterns across categories. The findings emphasize the value of tailored financial education, training, and intervention programs. Such initiatives must be crafted with acute sensitivity, recognizing millennials' unique aspirations and inclination towards social media and peer influences.

Assessing the relative need and demand for financial education programs

We measure the relative need and demand for financial education programs among graduate stu- dents at a large university system. We find that self-assessed and measured financial literacy is sig- nificantly related to interest and demand for financial education. Individuals who self-report a high level of financial literacy but have low measured financial literacy are significantly less likely to be interested in financial education, while the opposite is true for financially literate individuals self- reporting a low level of financial literacy. Our study adds to research showing the importance of both believed and actual financial literacy measures and has implications for financial education programs.

Financial inclusion as an indicator of national security

The prerequisites for forming national security based on the creation and use of financial inclusion are studied. The essence of the concept of financial inclusion as a component of national security is defined. The expediency of its implementation for all segments of the population is substantiated. It is emphasized that financial inclusion is one of the five directions of the Strategy for the Development of the Financial Sector of Ukraine until 2025 and has specific strategic goals and performance indicators that are related to the level of public confidence in the financial system, the level of financial literacy of the population, and is reflected through the ratio of non-cash card transactions (including P2P) to the total number of transactions and the ratio of cash to GDP. An analysis of the indicators of the level of financial inclusion, which forms the basis of the Strategy for the Development of Ukraine's Financial Sector until 2025, shows that the current values of the indicators do not correspond to their target values. The carried-out analysis made proposing options for developing financial inclusion possible, considering its strategic vectors. In dynamics, the level of public awareness of the use of financial products in Ukraine and other countries worldwide is analyzed. A forecast of the use of financial products by number and type for 2023 – 2024 is made. Positive changes in awareness of financial products in Ukraine have been noted. The expediency and necessity of applying financial inclusion to ensure national security are substantiated. It is noted that the issue of financial inclusion has become especially relevant in the context of the Russian-Ukrainian war. The Top 4 financial products in terms of recognition in the context of age groups are analyzed, and the difference by age categories is reflected. The methods of applying financial inclusion are allocated, and the main aspects that affect it are identified. The main aspects of the information platform on the National Bank of Ukraine website, which is the formation and development of financial literacy among all strata and age categories, are studied. It is noted that financial literacy measures, which the National Bank of Ukraine initiated, require the support of partners. Keywords: financial inclusion, financial service, financial product, financial literacy, protection of user rights, National Bank of Ukraine.

Personal Finance Management Skills and Financial Sustainability Literacy Knowledge of Generation Y: An Empirical Analysis in Lithuania

Purpose
 
 We research Generation Y personal finance management skills by integrating three financial literacy measurement perspectives: financial knowledge, behaviour, and attitude towards sustainability.
 
 Design/methodology/approach
 
 A financial literacy measurement approach aligned with the OECD methodologies and comparative approach to evaluate the financial literacy competence of the Lithuanian youth (N=426) in the global context were applied. Analysis of variance using Levene’s test for equality of variances and t-test for equality of means were employed to check for the differences in Generation Y financial literacy patterns. The correlation between all three financial literacy perspectives was evaluated.
 
 Findings
 
 The results unfold Lithuanian millennials’ intermediate level financial literacy competence: moderate financial knowledge, positive financial behaviour, and more positive financial attitude towards sustainability, where the latter exceeds the global sustainability concern. Furthermore, our tests indicate the differences in Generation Y financial knowledge in terms of gender and education and the differences in their attitude on financial sustainability in terms of gender, education, income source, and monthly income. Moreover, our research evidences the statistically significant proportional relationship between Generation Y financial behaviour and their attitude towards the sustainability principles application in the financial services.
 
 Originality/value
 
 In terms of financial literacy, global research extensively focuses on selected countries; Lithuania, the Baltic States, or Eastern and Central European countries are seldom considered. Previous research identifies the existing differences between age groups when evaluating their financial literacy and level of personal finance planning skills. In contrast, our research contributes to increasing the body of knowledge of financial sustainability literacy, and to a better understanding of financial literacy by shedding light on the patterns of Generation Y in Lithuania and provides roots for developing insights for both finance literacy policy makers and financial service providers.

Understanding the Determinants of Aspirations in Rural Tanzania: Does Financial Literacy Matter?

Aspirations have recently received increased attention in the analysis of poverty and its dynamics. The argument is that aspirations provide reference points for individuals’ forward-looking decisions and behaviours. Understanding of what determines aspirations is vitally important to design development interventions that can raise aspirations. In this paper, we analyse whether financial literacy is associated with individuals’ aspirations. Using data from more than 2000 Tanzanian households, we find a robust positive correlation between financial literacy and aspirations. Our results are robust to using alternative financial literacy measure, controlling for extensive covariates and non-cognitive traits, and sensitivity analyses to omitted variables. Overall, our findings suggest that aspirations could be influenced to improve poor individuals’ future investments and forward-looking behaviour.

Financial Literacy and IPO Underpricing

AbstractUsing an international sample of IPO firms and two country-level measures of financial literacy, we find strong evidence that financial literacy is negatively associated with IPO underpricing. In cross-sectional analyses, we find that the effect of financial literacy in reducing IPO underpricing is more pronounced when the information environment is less transparent. Employing path analysis, we document that information friction, firm transparency, and stock market participation are mechanisms that mediate this relationship. Our study contributes to and extends the literature by providing strong evidence that citizens’ financial literacy has an important and consistent influence on IPO underpricing.

Influence of Financial Literacy on Credit Uptake by Youth Enterprises in Machakos Town, Kenya

Credit to youth undertaking small-scale businesses enables them to engage in self-employment projects with the main goal of generating income. However, credit uptake by youth is believed to be depended on and enhanced by the possession of business and entrepreneurial skills which are critical components of financial literacy. The biggest challenge to most youth is financial illiteracy which makes them lack the ability to integrate what they know with what they can do to earn a living. This study sought to examine how financial literacy influences credit uptake by youth enterprises in Machakos Town, Kenya. Specifically, the study focused on establishing the influence of bookkeeping skills, budgeting skills, debt management skills, and financial knowledge on credit uptake by youth entrepreneurs in Machakos Town, Kenya. The study employed a descriptive research design. From a target population of 1704 youth enterprises, a sample of 314 were selected randomly to participate as respondents. A structured questionnaire was used to collect data. Simple and Multiple regressions were used to test hypotheses. The regression results revealed an R2 of 0.754. This meant that holding other variables constant, financial literacy variables account for 75.4% of the variability in credit uptake by the sampled youth entrepreneurs. Generally, all the measures of financial literacy had a positive significant influence on the dependent variable. Specifically, the coefficients of bookkeeping skills, budgeting skills, debt management skills, and financial knowledge all had a p = 0.000. The findings of this study provide a guide on the policy that targets financial literacy as a critical component in enhancing self-employment by youth in Kenya.

Digital Platform, Financial Literacy and Motivation on Generation Z's Decision to Invest in Islamic Stocks: A Structural Equation Modelling Analysis

This study aims to determine the relationship between the measurement and structural models of digital platform, financial literacy, motivation, and Generation Z's decision to invest in Islamic stocks. Furthermore, this study uses Structural Equation Modeling (SEM) analysis and involves more than two variables, with 123 respondents from West Nusa Tenggara, Indonesia, who actively invest in Islamic stocks, providing accurate information through multivariate analysis. The study found that digital platforms and motivation have a significant impact on Generation Z's decision to invest in Islamic stocks, while financial literacy has an insignificant effect. However, the analysis results indicated that financial literacy has indirectly motivated them to invest in these types of stocks through motivation. This suggests that digital platforms and motivation play a crucial role in investment decisions. Therefore, service providers need to continuously develop digital applications as transaction tools to cater to the needs of Generation Z. Additionally, improving financial literacy is crucial to increasing people's investment skills, even though it may not directly affect investment decisions.

Financial literacy mediates the effect between verbal intelligence and financial anxiety

Financial anxiety can impact financial decision-making negatively. Theoretically, knowledge is considered to help mitigate stress in making decisions. However, the empirical results are inconsistent with respect to the association between financial literacy (knowledge of financial terms and concepts) and financial anxiety, perhaps because of the employment of limited psychometric measures. Furthermore, cognitive intelligence and financial literacy inter-correlate positively, suggesting that any effect between financial literacy and financial anxiety may be accounted for by intelligence, a construct known to facilitate problem solving. Consequently, measures of verbal intelligence (vocabulary and verbal reasoning), financial literacy, and financial anxiety were administered to a sample of 553 adults. Vocabulary and verbal reasoning were found to associate positively with financial literacy, however, only vocabulary associated with financial literacy uniquely. Furthermore, while vocabulary and financial literacy correlated negatively with financial anxiety, the effect between vocabulary and financial anxiety was fully mediated by financial literacy, controlling for education and age. We conclude that financial literacy appears to have a direct effect onto financial anxiety, independently of the effects of verbal intelligence, formal education, and age, supporting the potential usefulness of financial literacy training.

Financial literacy as a determinant of market participation: New evidence from China using IV-GMM

We analyze the relationship between financial literacy (FL) and market participation among Chinese households. Our ordinary least square (OLS) regression results show that advanced FL is statistically positively related to market participation. Because of endogeneity concerns between FL and market participation, researchers have challenged OLS results for their bias and inconsistency. We consider the instrumental variable estimator using the generalized method of moments (IV-GMM) that aims to remedy endogeneity issue. We perform the Hansen J test of over-identification restrictions to ensure that the excluded instruments are appropriately independent of the error process. The IV-GMM estimates show that individuals with a higher advanced FL score are more likely to invest in stock markets. Specifically, with an additional one point of the advanced FL score, the probability of market participation will increase by about 12% points. We also perform robustness tests using different model specifications and different FL measures. Results are consistent with the main finding that advanced FL is positively related to market participation. Based on the results of the IV-GMM, we conclude that individuals with a higher level of advanced FL are more likely to participate in stock markets.

Education and financial literacy: Evidence from compulsory schooling law in China

In this paper, we explore whether educational attainment affects financial literacy. Exploiting the exogenous variation in the implementation of the Compulsory Schooling Law in China, we estimate the causal effects of education on financial knowledge acquisition and explore the potential mechanisms. Using urban household data from the 2018 China Family Panel Studies, we find that educational attainment is associated with higher levels of financial literacy, and this relationship is likely causal. Further analysis reveals that math skills and sociability are two factors underlying the education-financial literacy nexus. Moreover, the positive effects of education on financial literacy are robust to several robustness checks, such as placebo tests, alternative measures of financial literacy, and sample restrictions. Finally, we show that educational attainment significantly improves basic literacy but exerts a trivial effect on advanced financial literacy. Our findings shed lights on how to improve financial literacy among a broad population.

CONCEPTUALIZING AND OPERATIONALIZING ISLAMIC FINANCIAL LITERACY: A MULTIDIMENSIONAL FRAMEWORK

Islamic financial literacy is a prerequisite for Muslim financial well-being. Despite the fact that Islam provides clear guidance on financial arrangements, Muslims, particularly in Malaysia, have demonstrated financial ineptitude as evidenced by poor financial behaviours and a high number of bankruptcies, which warrants due scrutiny by current research. Nevertheless, determining the actual level of Islamic financial literacy, let alone devising control measures, has been challenging due to the lack of a validated measurement model of Islamic financial literacy. Furthermore, the lack of a standard definition has hampered empirical research in this area. Therefore, this study aims to scrutinize the concept of financial literacy from Islamic standpoint prior proposing a standard measurement. Underpinned by the Theory of Family Resource Management (FRM), Islamic financial literacy is denoted by Islamic financial knowledge, Islamic financial attitudes, and Islamic financial behaviours. These three primary components are further broken down into three sub-components: Islamic financial products, Islamic philanthropy, and financial management. The proposed measurement of Islamic financial literacy would serve as a parameter for measuring the level of Islamic financial literacy of the community in various groups, allowing subsequent measures to strengthen it to be devised.

Exploratory Factor and Reliability Analysis of Financial Literacy Instrument to Assess Low-Income Groups in Malaysia

Financial literacy (FL) helps individuals make more assertive and efficient financial decisions. However, there is limited knowledge regarding the dimensions of FL as pertaining to low-income or Bottom 40% (B40) households in Malaysia. Therefore, the present study examined the reliability and validity of the B40 financial literacy measurement scale. A self-administered survey questionnaire was employed. The sample consisted of 100 respondents randomly selected from B40 households in Johor, Malaysia. The analysis was carried out through Exploratory Factor Analysis (EFA) via IBM-SPSS version 22.0 software. To measure the FL constructs, the study initially developed 59 items; however, six items were deleted as the factor loading was below the 0.50 cut-off point, while 53 items were retained as their factor loading was more than 0.50. Because the study validates the dimension that leads to improved FL, the findings are particularly beneficial to Malaysian B40 households who have been identified as the most vulnerable group; the findings will help action to be taken to improve the FL levels of B40 households.

Borrower Financial Literacy and Credit Decision Rationality Amongst People who Take Loans from Money Lenders in the Major Urban Areas of Uganda

This research study was carried out to establish the relationship between financial literacy and credit decision rationality amongst people who take loans from money lenders in the major urban areas of Uganda. Focusing on the relationship was based on the need to establish whether credit decision rationality of these borrowers was based on their level of financial literacy. The concept of financial literacy was conceptualized by assessing the three key measures of financial literacy;- financial knowledge, financial skills, and financial behavior. Based on this conceptualization, three hypotheses were formulated and tested. The people that take loans from money lenders in the major urban areas of Uganda were considered to form the population of the study. A maximum sample of 385 [as recommended by Krejcie and Morgan (1970)] was selected. A 93% response rate was realized. Correlation and regression analyses were carried out to test the hypotheses. The results indicated that financial literacy has a 19.4% influence on changes in credit decision rationality of people that take loans from money lenders in the major urban areas of Uganda. Additionally, the results indicated that financial behavior has the highest significant association with and influence on credit decision rationality, followed by financial skills. Financial knowledge also has influence on credit decision rationality though the influence is not statistically significant. Based on these results, it is recommended that, financial literacy be enhanced amongst Ugandans, especially those that tend to take loans from money lenders. In the process of enhancing financial literacy, there is need to put emphasis on attaining or instilling appropriate financial behavior that can enable a person reduce his or her debt burden.

Financial Stressors and Resources Associated With Financial Exploitation.

Background and ObjectivesThe prevalence of older adult financial exploitation (FE) is increasing. Population-based survey estimates of FE in the older adult population range from 5% to 11%. Given the growing prevalence of FE victimization in older adult populations, understanding the population’s vulnerability to FE has increased in importance. This study investigates a conceptual framework in an attempt to understand how financial stressors and resources are associated with substantiated FE in a sample consisting largely of Black older adults.Research Design and MethodsThe study uses a cross-sectional design to investigate group differences among a total sample of 142 community-dwelling older adult participants, 62 of whom sought services to address FE and 80 with no history of FE.ResultsThe group of older adults who sought services to address FE was more likely to be unmarried and had fewer years of education. Measures of financial literacy and perceived financial vulnerability had protective and risk effects, respectively.Discussion and ImplicationsThe present study found that sociodemographic and financial stress and resource measures have significant relationships with FE. These findings support the conceptual framework describing their relationship. This new conceptual framework provides a guiding factor in better understanding vulnerability to FE in older adults. The study also adds to the paucity of research completed on FE with Black older adults.