Financial Self-confidence Research Articles

Examining financial literacy and the financial aspects of Hofstede's four-factor culture model in Hungary

The paper examines the financial culture and the use of financial knowledge of the Hungarian population based on Hofstede’s four-factor cultural dimension theory. Three research questions (financial application of Hofstede’s cultural model, testing it among the Hungarian population, and examining the relationship between financial knowledge and application) were investigated using a questionnaire-based quantitative research method on a representative sample. To answer the research questions, variables were grouped using principal component analysis, cluster analysis was performed to typify the population, and correlation analysis was carried out for financial knowledge and application. Based on the study, we recommended that financial education is important. A limitation of the study is that it is not representative in terms of educational attainment, but it is suitable for describing the financial characteristics of the Hungarian population. The study found that the Hungarian population can be characterized by applying Hofstede’s cultural model of finance. A significant part of the population holds collectivist views. It is also important to note that financial self-confidence and success orientation are not related to financial knowledge and its successful application.

Parents Influence Responsible Credit Use in Young Adults: Empirical Evidence from the United States, France, and Brazil.

From the start of adulthood, consumers are frequently faced with complex financial decisions, and the consequences of these decisions may be reflected throughout the rest of their lives. As access to credit has expanded among college students around the world, it is critical that we understand both universal and culture-specific processes. Although some work has examined credit card use in two cultures simultaneously, there is, to our knowledge, no research examining such use in three cultures on three continents and across both genders. This study analyzes credit card use behavior among 1458 young adults living either in Brazil, the United States, or France. A structural equations model is used to incorporate relationships between the latent variables. The model, which was validated by the study, examines how financial well-being is affected by the way in which the individual uses credit cards, which in its turn is affected by social comparison and by financial self-confidence, the latter being also impacted by the financial education received from the parents. In the comparison between groups we found evidence that men are more dependent on parental education than women.

The problematization of consumers in Swedish financial literacy education

ABSTRACT Using the concept of problematization, this paper reveals the rationale for governing consumers in the practice of Swedish financial literacy education. Before the 1980s, the problematization of consumers was characterized by teaching economic thrift to ‘at-risk groups’. Through observations of and interviews with teachers and organizers, as well as analyzes of policy texts, this study shows that contemporary financial education instead describes a whole population of consumers lacking ‘financial self-confidence’. This study also shows how social, political, and economic developments prompted the problematization of the previously unnoticed issue of Swedish citizens’ ‘financial literacy’. Neo-liberal ideas and reforms, financialization, and the Organization for Economic Cooperation and Development’s promotion of financial literacy are all strong factors in the current problematization of Swedish consumers and the ongoing practice of financial education. Financial education attempts to foster economically rational, responsible, self-reliant financial citizens; in other words, it seeks to make people more like the ‘virtual consumer’ of neo- classic economic theory. The ideal consumer of contemporary financial education is expected to turn to financial markets to ensure his or her economic welfare. Doing so is assumed to lead consumers to contribute to efficient and stable global and national financial markets. However, consistent with the local problematization of Swedish consumers as having diverse problems and needs in relation to finance, such education is adjusted to fit different categories of consumers. While some are said to require financial ‘inspiration’ to become active and engaged financial consumers, the traditional morality of thrift still characterizes financial education tailored for consumers deemed to be at risk of over-indebtedness.

The Mediating Effect of Financial Self-Efficacy on the Financial Literacy-Behavior Relationship: A Case of Generation Y Professionals

A comprehensive financial literacy questionnaire surveyed prospective psychological constructs as antecedents (financial literacy, economic perception, financial self-confidence, financial behavior, and personal financial performance) of applying financial self-efficacy in a large sample of working students in the hospitality and tourism industry. It is expected that financial literacy and economic perception are key antecedents of financial self-efficacy, which in turns may influence financial behaviors and personal financial performance in shaping a working student’s future skills for designing effective financial plans. For this purpose, the structural equations model was empirically tested. Moreover, the mediating indirect effects of financial self-efficacy in the relationships between financial literacy and economic environment on financial behavior and financial performance were tested through a two-phase methodological analysis. This study contributes to the literature by investigating the effects of financial self-efficacy, financial literacy and economic perception on personal financial behavior. The significance of the contribution is to propose and examine empirically a theory-based model of financial self-efficacy and financial behavior-performance in a service context among Generation Yers.

Do bank credit rejection and financial education affect financial self-confidence?

PurposeThe purpose of this paper is to examine empirically the determinants of owner manager financial self-confidence. In particular, it estimates the effect of bank credit rejection and financial education (FE) on the financial self-confidence of business owners.Design/methodology/approachThis paper uses data from 2004 and 2008 surveys of 2,500 UK small and medium sized enterprises (SMEs). An ordered probit estimation is used to measure and assess the effect of bank credit rejection and FE variables on financial self-confidence for the two periods. The authors also explore potential differences in self-confidence between males and females.FindingsThe results show that outright bank credit rejection reduces financial self-confidence among owner managers whereas partial bank credit rejection is found to help boost confidence prior to the financial crisis. There is strong evidence that FE increases financial self-confidence. Finally, the authors find no association between gender and reported self-confidence in finance.Research limitations/implicationsEntrepreneurs and potential entrepreneurs are encouraged to explore financial literacy and knowledge with a view to increasing their financial self-confidence. This will help SMEs to deal with the banks or other finance providers more efficiently. In addition, better application procedures and information on lending criteria may help SMEs to minimize the probability of bank credit rejection. So the current study has implications for professional bodies as well. The study, however, is restricted to sole proprietor and partnership SMEs and in the UK context only.Practical implicationsFinancial self-confidence has a progressive effect on entrepreneurship and entrepreneurial venture growth. The financial self-confidence of owner managers can support their entrepreneurial capability in starting and operating one or more businesses. As entrepreneurs successfully start and operate their own businesses, they are contributing to economic development through job creation, employment and tax contribution.Originality/valueThis paper makes an original contribution in highlighting the usefulness of FE in boosting financial self-confidence among entrepreneurs and potential entrepreneurs. It is also found that the experience of bank credit rejection reduces entrepreneurs’ financial self-confidence.

Attitudes towards credit and finances among college students in China and the United States

Although there is growing concern about the issue of credit card debt among college students in China, little research has examined attitudes to money and debt among that group. The present study compared financial self-confidence, perceived financial wellbeing, attitudes to debt, and parent education about money and debt in 410 college students from the US and China. Although college students in China reported fewer credit cards and less debt, they also reported lower levels of financial self-confidence and financial wellbeing. In both cultures, delay of gratification and parental education predicted both self-confidence and financial wellbeing.