Higher Financial Literacy Research Articles

PENGARUH LITERASI DAN PENGALAMAN KEUANGAN TERHADAP PENGELOLAAN KEUANGAN MELALUI NIAT BERPERILAKU PADA PENGRAJIN KASUR BUSA KECAMATAN PAKISAJI KABUPATEN MALANG

In developing a business, financial management of MSMEs plays an important role. This study aims to examine the effect of financial literacy and experience on the financial management of foam mattress craftsmen, as well as to examine whether behavioral intention is a mediating variable between financial literacy and experience with financial management. The survey was conducted on foam mattress craftsmen using total sampling technique, and the data were analyzed using Path Analysis. The results showed a significant positive influence between financial experience and financial management behavior. In addition, this study proves that financial literacy has an indirect effect on financial management through behavioral intentions. The managerial implications of this study emphasize the importance of having good financial experience in improving financial management. In addition, this study provides new insights that individuals with high financial literacy also need to have good Financial behavioral intentions to manage their business finances more carefully.

Literacy, profile, and determinants of Bitcoin, Ethereum, and Litecoin: Survey results

This study attempts to assess individuals’ Bitcoin, Ethereum and Litecoin literacy, and then identifies different profiles based on the literacy levels of these cryptocurrencies, and further investigates whether financial literacy explains Bitcoin, Ethereum and Litecoin literacy. Using a sample from higher learning institutions in Malaysia, the results indicate that individuals exhibit higher knowledge on Bitcoin compared to Ethereum and Litecoin. Cluster analysis revealed two clusters, where the high-cryptocurrency-literacy cluster (high in Bitcoin, Ethereum, and Litecoin literacy) has a distinct demographic profile and higher financial literacy than the low-cryptocurrency-literacy cluster (low in Bitcoin, Ethereum, and Litecoin literacy). Financial literacy is shown to explain Bitcoin and Ethereum literacy, but not Litecoin literacy.

Insights on Crypto Investors from a German Personal Finance Management App

This study investigates the socio-economic characteristics, behavioral preferences, and consumption of individuals who own crypto-assets. Our empirical analysis utilizes data from a German personal finance management app where users connect their bank accounts and depots. We conducted a survey and elicited behavioral factors for financial decision-making. By combining survey with account and security account data, we identify crypto investors’ preferences for financial decision-making and financial advice. Our results suggest that, in particular, students or self-employed, young, and male individuals who are risk-seeking and impatient are more likely to have invested in crypto-assets. Most crypto owners have less experience with financial advisory. They see it as too time-consuming and qualitatively poor, and instead, they prefer to decide on their own as they have self-reported high financial literacy. Investigating their consumption in more detail we conclude that crypto investors more often spend on travelling, electronics, and food delivery and less on health. Our findings suggest policymakers in identifying high-risk consumers and investors, and help financial institutions develop appropriate products.

Analysis of Financial Literacy Level of Fifth-Graders at Public Elementary Schools in Gondokusuman Sub-district, Yogyakarta City

Introduction to financial literacy from an early age will make children accustomed to managing finances properly and correctly in the future. This study aimed to analyze the financial literacy level of fifth-graders at public elementary schools in the Gondokusuman Sub-district. This research is a descriptive quantitative survey method. The population was 394 students, with a total sample of 196, following Krejcie Morgan’s minimum sample determination table, by using a cluster sampling technique. The data collection technique used a closed statement questionnaire. The data obtained were then analyzed descriptively. The results of this study indicate that the financial literacy level of fifth-graders was obtained from four indicators. Indicator of personal financial planning and personal financial control, on average, were at a moderate financial literacy level, with a financial literacy level of 75.74%; indicator of saving was at a high financial literacy level, with a financial literacy level of 82.03%; indicator of risk control was at a moderate financial literacy level, with a financial literacy level of 69.34%; indicator of income management and investment benefits was at a moderate financial literacy level, with a financial literacy level of 76.07%. From the accumulation of all these indicators, the resulting level of financial literacy in fifth-grade students at public elementary schools in the Gondokusuman Sub-district was 77.39%, included in the category of moderate financial literacy level. Thus, it needs to be improved by providing financial literacy knowledge, such as distinguishing between needs and wants and managing personal finances.

Feeling comfortable with a mortgage: The impact of framing, financial literacy and advice

AbstractThe family home is the most important asset on household balance sheets, aside from human capital. Choosing a suitable mortgage is therefore critical to financial well-being but households often make costly mistakes. We collect data in an online survey to test borrowers’ comfort with, and understanding of, mortgage debt. We analyze the impact of financial literacy, mortgage broker advice and whether the loan is framed as a lump sum debt or an equivalent stream of repayments. We conjecture that participants’ comfort with loans and their ability to match lump sum debt to equivalent repayment streams will help them to choose a suitable mortgage. Results show that participants with high financial literacy are less comfortable with mortgage debt in general and also less sensitive to framing than those with low financial literacy. Literate participants are better able to match repayment streams with the equivalent lump sums. Endogeneity-controlled regression analysis shows that consulting brokers leads to higher comfort with debt and lower sensitivity to framing. Survey responses also indicate more uncertainty about future house prices among borrowers who intend to consult brokers than among those who do not.

Do Smart Depositors Avoid Inefficient Bank Runs? An Experimental Study

ABSTRACT This paper investigates whether being smart makes depositors less prone to getting involved in a bank run. We conduct a series of experiments with students, modeling the a-la Diamond-Dybvig deposit market with liquidity shocks, changing macroeconomic conditions, and risk-based investment technologies. Our results suggest that smarter depositors – those having better academic achievements – choose the strategy of avoiding early withdrawals more frequently, adding to the evidence that higher financial literacy may prevent coordination failures in deposit markets. We also suggest that panic withdrawals are more probable in markets with poorer economic conditions, but depositors show weak sensitivity to bank investment risks.

Categorical Modeling of Determinants of Financial Inclusion and Financial Literacy of Women MSMEs in Pacitan

Preliminary research data prior to the Covid-19 pandemic, namely that 150 women MSME had unique characteristics in terms of sociodemographic factors and levels of financial literacy and inclusion. It can be empirically proven that these three variables will have an important role in each other through the multiInomial logit categorical equation model according to the Bayar et al. research procedure. al. (2020). The important result to be achieved is that the researchers want to prove the business potential of women SMEs in Pacitan, which so far has not been exposed to BI UMKM as a common market place for all SMEs in Indonesia. There is a stigma that the low financial literacy and inclusion (OJK) score of MSME actors is a negative effect of less exposure to the business potential of MSME actors in the local area. The results of this study succeeded in describing the sociodemographic profile of women MSME in Pacitan with several characteristics, namely the dominance of having a productive age of 40-55 years, the majority having high school education; have a turnover of over 10 million per month and most of them have used access to bank and non-bank financial institutions, usually pawnshops for storage and credit applications. Furthermore, this study succeeded in proposing a categorical equation model with multinomial logistic regression through STATA 13.0 software on the three attributes of low, medium and high financial literacy and inclusion referring to the research model from Bayar et.al. (2020) and managed to find that the sociodemographic variable of age is always a determining factor in each model panel. The implication is that individually, women MSME actors with high financial literacy can make financial decisions more quickly than just participating in mentoring or the community in such area.

Financial literacy and retirees' resource allocation decisions in New Zealand

We investigate the relationship between financial literacy, debt anxiety, risk tolerance, and subsequent resource allocation decisions for cohorts of retirees. Using a survey and the novel comparative method of Multi-Criteria Decision-Making Analysis we prioritise retirement allocation choices of older New Zealanders. Retirees display high financial literacy and together with debt anxiety this is significantly correlated with resource allocation preferences. Financial literacy reduces debt anxiety in men, increases the risk tolerance of women and is associated with a higher preference for KiwiSaver. Greater debt anxiety is associated with debt repayment, and debt avoidance in old age is critical to long-term wellbeing.

Determinant of Financial Literacy on Indonesian Migrant Employees in Malaysia

Malaysia is the main destination for Indonesian migrant employees to work aboard. This research aims to investigate the factors influenced financial literacy of Indonesian Migrant Employee in Malaysia. Ordered Logistic Regression is employed in this research in order to conduct a survey among 303 Indonesian Migrant Workers. OLS model employed to test the effect of financial attitude, financial behavior, financial knowledge, financial socialization, and demographic variables on the financial literacy. The result found that financial attitude, financial behavior and financial socialization have positive and statistically affects on the financial literacy. Meanwhile, in term of age, participants at 36-50 years old have positively and statistically affects on the financial literacy, while senior and diploma students have a higher financial literacy in terms the level of education. In addition, Gender also have positively and statistically effects on financial literacy. This study contributes to increase the discourse of financial literacy especially in financial knowledge that needs to be improved by government for Indonesian employee.

Can Fintech Alleviate the Financing Constraints of Enterprises?—Evidence from the Chinese Securities Market

Whether Fintech enabled by big data technology can improve the efficiency of credit allocation and how it would do has always been the focus in the capital market, especially the intermediary mechanism, which has not yet been convincingly explained. This paper empirically tests the logical relationship and micro mechanism between Fintech and the corporate financing constraint dilemma by using the data of China’s A-share non-financial listed companies from 2011 to 2018. The research found that Fintech has a significant mitigation effect on corporate financing constraints, and the coverage capability of Fintech has a stronger mitigation effect compared to the depth of use. Mechanism research shows that the “technology enabling” role of Fintech can alleviate the financing constraints of enterprises by reducing the degree of information asymmetry between capital supply and demand sides and reducing financing costs. Heterogeneity research shows that the mitigation effect of Fintech on corporate financing constraints is more significant in enterprises with private property, non-main board listing, senior executives with high financial literacy, and enterprises with strong competitive positions in the industry. Further research shows that, in order to identify the impact of Fintech on corporate financing types under an environment without internal control defects, Fintech enables enterprises facing financing constraints to obtain more commercial credit and bank loans; at a time when it is difficult to obtain bank loans, commercial credit has become an alternative financing method of bank loans, promoting the transfer of credit resources from traditional mortgage guarantees to enterprise commercial credit. This study provides a perspective for the research on how Fintech alleviates corporate financing constraints, and it reveals the characteristics of digital empowerment in the development of China’s capital market, providing a theoretical basis and evidence supporting the formulation of relevant policies.

Determinants of financial risk tolerance: Evidence from the Indonesian millennials

The purpose of this study is to examine the level of Indonesian millennials’ financial risk tolerance and the effect of gender, family occupation background, geographical location and financial literacy on financial risk tolerance. This research applies a quantitative approach using primary data that were collected through questionnaires. The sample used for this survey comprises 410 university students from western (Java, Sumatra, Kalimantan) and eastern (Bali, Nusa Tenggara, Sulawesi, Maluku, Papua) parts of Indonesia. The online survey was distributed to various universities in Indonesia. The one-way ANOVA and multiple regression methods were used for the analysis. The results show that: 1) the level of Indonesian millennials’ risk tolerance is moderate, 2) the level of Indonesian millennials’ financial risk tolerance is different, 3) gender, geographical location and financial literacy significantly affect the financial risk tolerance, and 4) family occupation background does not significantly affect the financial risk tolerance. These findings offer managerial insights into business practices in the financial industry to develop individualized investment portfolios based on investors’ financial risk tolerance. In addition, financial advisors are recommended to offer relatively riskier financial products to millennials from West Indonesia and those with higher financial literacy.

Guessing, math, or something else? Lay people's processes for valuing annuities

AbstractResearchers have long been trying to understand why individuals dislike annuities. Here, we investigate if the process individuals use to assess the financial value of annuities may lead them to inaccurately value annuities. In Study 1, participants were asked to assess the monthly payments associated with a specific annuity lump sum or the annuity lump sum associated with a specific monthly payment. They were then asked to describe how they arrived at their answers. We find that when making this assessment, 42% of participants report attempts at using math, with some even describing mathematical formulas. Most other participants reported guessing instead. Reporting attempts at math is more common among participants with higher financial literacy and numeracy. Reported attempts at math, financial literacy, and numeracy predict arriving at more realistic financial values for annuities, as well as incorporating assessments of life expectancy in the math. Based on this process knowledge, we then designed an experiment in Study 2 and tested the effect of presenting information about life expectancy, providing feedback about payouts or their combination. We find that we can thereby change the assessed financial value of annuities and increase participants' interest in annuities, especially among participants that reported attempts at using math. Understanding the processes individuals use to assess the value of annuities informs theory and practice.

Academic community's investment decision in sharia stock market: The impact of financial literacy

This study aims to determine the impact of Islamic financial literacy on the academic community at IAIN Ambon in investing in the Islamic capital market. The research methodology uses interpretive qualitative techniques. Data were collected through observation and in-depth interviews with the academic community who became informants who were determined using the purposive sampling technique. The results of the study revealed that the academic community of IAIN Ambon has high financial literacy because they received special education through investment courses and special Islamic capital markets for students, and training for lecturers and other staff, but it has not had a maximum impact on investment decisions in the Islamic capital market. The reason is that the implementation and assistance from the results of education and training are not carried out optimally. Another cause is the level of income and risk that the community thinks so that it creates boredom to invest.

Social Interaction, Financial Literacy, and Household Financial Fragility

With the rapid development of digitalization, social interaction is becoming more and more frequent and complex, and the problem of household financial fragility is becoming more and more prominent, which brings challenges to macro financial stability. In order to explore the relationship between social interaction and household financial vulnerability, Based on the data of China Family Panel Studies(CFPS) 2018, this paper constructs an index system of social interaction, financial literacy and household financial fragility, discusses the influence mechanism of social interaction on household financial fragility, and clarifies the mechanism of social interaction affecting household financial fragility through financial literacy. The results show that social interaction significantly alleviates household financial fragility; social interaction alleviates household financial fragility by improving financial literacy ; this impact mainly exists in subgroups with higher financial literacy, urban and Internet-using households. Therefore, household financial fragility can be alleviated by improving social interaction conditions and narrowing the financial literacy gap.

An asymmetrical approach to understanding consumer characteristics in banking trust during the COVID-19 pandemic in Italy

This study aims to examine how perceived banking management, the perception of the context in which the banking system operates, and other consumer characteristics have interacted to create different recipes of banking trust during the second wave which began in October 2020 of the COVID-19 pandemic in Italy. To scrutinize this configurational reasoning, fuzzy set qualitative comparative analysis (fsQCA) was implemented. Using a sample of 1319 Italian respondents, this study suggests that high financial literacy combined with an optimistic attitude during the pandemic are key factors for achieving high banking trust. Furthermore, the results suggest that high perceived conspiracy is linked to low banking trust. These findings can help managers design differentiated strategies to attract depositors and invite the Italian government to double its efforts in restoring the people’s optimism.

Implementation of Magic Formula and Acquirer’s Multiple Stock Investment Strategy in The Indonesia Stock Exchange

The Indonesia Capital Market has experienced a significant increase in investors from 2019 until now. The increase in the number of new Indonesian capital market investors is dominated by people under 30 years who prefer to invest in stocks and mutual funds. This increase in new investors does not follow by high financial literacy. Research regarding financial literacy and investment return in Indonesia showed that financial literacy affects investment return. Therefore, Indonesia’s new investors will most likely experience losses due to their lack of financial literacy. Even though there are equity funds for novice stock investors that help them minimize the error they would make if they invest themselves, they cannot choose the equity funds randomly since most equity funds cannot beat the market benchmark. This study proposed using the Magic Formula and Acquirer’s Multiple as an investment strategy for new investors in Indonesia. Both Magic Formula and Acquirer’s Multiple generated an average annual return greater than the market and Indonesia Equity Funds listed since 2016 with an average return of 26,24% and 26,32% annually. The Sharpe ratio of both methods also generated a higher ratio than the market, where Magic Formula generated an average Sharpe ratio of 0,930 annually, while Acquirer’s Multiple generated an average ratio of 1,038. The acquirer’s Multiple is recommended for novice investors because it outperforms the Magic Formula and the market in terms of actual annual returns and risk-adjusted returns.

Financial literacy and household energy efficiency: An analysis of credit market and supply chain

We use survey data from China households to investigate the impact of financial literacy on household energy efficiency. We aggregate the household energy use and carbon emissions after calculating the energy and carbon intensity of the related sectors of household expenditure. We show that households with high financial literacy perform higher energy use and carbon emissions but lower energy efficiency. Furthermore, the credit market and supply chain have statistically positive effects on energy use and carbon emissions. The results suggest that the government should take more decisive action to reduce carbon emissions, not rely on households voluntarily.

Pengaruh Literasi Keuangan, Illusion of Control dan Overconfidence terhadap Keputusan Investasi pada Investor di Tulungagung

This study aims to analyze financial literacy, illusion of control and overconfidence on investment decisions for investors in Tulungagung. This research uses accidental sampling technique with a sample of 40 respondents from novice investors in Tulungagung. The results of this study indicate that the variables of financial literacy and overconfidence simultaneously affect investment decisions. Respondents belong to the group of investors who understand financial concepts well and feel confident. Meanwhile, the illusion of control variable has no effect on investment decisions. Respondents are included in the group of investors who are categorized as having higher financial literacy. The conclusion of this study is that financial literacy has a significant positive impact on investment among investors in Tulungagung.
 Keyword: illusion of control, investation, financial literacy, overconfidence

IMPLEMENTATION OF FINANCIAL LITERACY ON COMMUNITY FINANCIAL MANAGEMENT IN TOMOHON CITY

During the current pandemic, people are required to be able to manage their finances well in order to survive difficult times when facing difficult situations. However, in reality, not a few people still have difficulty in managing their finances due to lack of knowledge about good financial management, so that many people suffer from economic downturns that have even more severe impacts on the decline in the level of community welfare in the City of Tomohon. This study aims to determine and analyze the extent to which the implementation of financial literacy on the financial management of the people in the city of Tomohon. This research is quantitative research using multiple linear regression analysis method. Based on the results of the analysis, financial literacy has a significant and positive effect on people's financial management, so with high financial literacy, one can form wise financial behavior and effective financial management.

Moderating effect of financial literacy on the relationship between socioeconomic status and depression

This study examined the moderating effect of financial literacy on the relationship between socioeconomic status and depression. A questionnaire survey of 2173 employees using multiple regression and simple slope analyses showed that the relationship between socioeconomic status and depression was weaker among Japanese employees with high financial literacy than among those with low financial literacy. Interpretation from a financial capability framework perspective, including a sense of control and the potential for prevention and intervention of socioeconomic status-related depression through educational interventions related to financial literacy, was discussed.