Higher Level Of Financial Literacy Research Articles

Financial Literacy in Romania: A Test of Economics and Business Students

Abstract Romania is in a rather dishonorable position from the financial literacy perspective in the European Union, ranking last among countries. To increase the level of financial education of the Romanian population, public and private institutions, organizations, and companies have recently taken the initiative in this field, mostly after 2015. Our contribution builds on these recent developments and aims at testing the level of basic financial literacy of Romanian university students, enrolled in business and economics studies, using the OECD Financial literacy test. Data was collected through an online survey on a voluntary basis, and the responses were analyzed using statistical indicators. Results indicate a rather high level of financial literacy among students, but also significant differences among respondents that may be explained by several demographic characteristics and specific attributes. The most important characteristics that influence the degree of financial literacy of students are age, students’ cycle of studies, the way the students live, property ownership and students’ involvement in financial market transactions and contracts. We stress towards the need to act through concrete measures to improve young people financial literacy, as a necessary condition to navigate in an increasingly complex environment, where finance plays an essential role.

Does Financial Literacy Reduce Money Stress?

As advocates of financial literacy education, it is a hard pill to swallow when data show little impact on financial behaviours. Unfortunately, our expectations that university students with higher levels of financial literacy have reduced money management stress and good behaviours, leading to higher levels of financial wellbeing, were expunged. We did find, however, that being older and having higher levels of income contributed most significantly and consistently to explaining financial wellbeing. Proponents of financial literacy education should not lose hope but recognise limits to transferring knowledge and set goals based on evidence of what works.

Does financial literacy mitigate gender differences in investment behavioral bias?

This study investigates gender differences in a number of behavioral biases using an online survey of individual investors aged eighteen and over, each of whom has at least one year of stock trading experience in Taiwan. The results reveal that women are significantly more regret averse than men, whereas men have significantly stronger self-attribution, illusion of control, and confirmation biases than women. However, among those who have a high level of financial literacy, the prevalence of behavioral biases is similar across both genders. This suggests that financial literacy mitigates gender differences in behavioral bias.

Empirical Study on Personal Financial Literacy of University Students for Develop the Financial Education

Earlier surveys showed students inadequate knowledge of personal finances and pointed out the need to develop financial education. Researchers had stated that female students tend to display a lower level of personal financial literacy than male students as they have lower self-confidence and less interest to learn about Personal Finance. This study used the data gathered from Estonian university students (210 women, 326 men) by survey questionnaire. The study focused on gender differences in financial knowledge and the choices and opinions that may affect financial literacy. Results showed that females who had chosen the math-based academic discipline had a higher level of financial literacy than male students did. Furthermore, 79% of women had the interest to improve their knowledge in Personal Finance and their self-confidence was slightly higher than male students. The results obtained give the direction for future research and enable it to enhance financial education.

The Mediating Role of Risk Tolerance in the Relationship between Financial Literacy and Investment Performance

The main objective of this research paper is to study the impact of financial literacy on investment performance, with the mediating effects of risk tolerance. Data was collected using a standardised questionnaire from 203 individual investors in Chennai, India and the results indicate that there is a significant positive relationship between financial literacy and investment performance while the level of risk tolerance is partially mediating that relationship. This study is the first of its kind which has explored the mediating role of risk tolerance, and it demonstrated that higher levels of financial literacy make investors more tolerant towards risk which in turn makes a better and satisfying investment performance. This study has several implications for investors, financial advisors and policymakers. It also aids in understanding the significance of financial literacy for the investors and ameliorating awareness and intention to invest among the non-investors.

Cash demand and financial literacy: A case study using Japanese survey data

Understanding the statistical relationship between cash demand and financial literacy is important in addressing policy concerns in Japan because the government has tried to reduce cash demands for day-to-day transactions and hoarding. However, few scholars have investigated this point because the available statistics on household cash demand do not contain the standard proxy variable for financial literacy and they do not distinguish cash demands among various households for day-to-day transactions and hoarding. Findings from this research fill these gaps by first imputing the missing financial literacy variable from other surveys and then by comparing the distribution of cash holdings for the high, middle, and low levels of financial literacy groups. In comparing the distributions of cash holdings by the three groups, cash distributions were also compared after dropping the observations above higher percentiles, expecting that the cash demand for hoarding would show up in the higher percentile of the cash distributions. Thus, it was possible to examine cash demands for day-to-day transactions. A comparison of the distribution of the ratio of cash demands to total financial assets holdings plus cash demands (hereafter cash ratio) across three levels of financial literacy groups was also made. It was found that a person with a higher level of financial literacy tends to have a large amount of cash holdings, perhaps mainly for the sake of hoarding; however, the person also tends to have other kinds of financial assets and thus a lower cash ratio value. Taking those findings at face value, the promotion of financial literacy and cashless payments for day-to-day transactions would reduce the relatively small amount of cash demands for day-to-day transactions, but it would not necessarily reduce the amount of cash demands for hoarding.

Does financial literacy affect the value of financial advice? A contingent valuation approach

The paper examines the determinants of investors’ willingness to pay (WTP) for suitable advice. We use contingent valuation, a method frequently used to estimate the value of non-market goods and services, with a unique survey data to estimate WTP for suitable advice. We find that investors with a high level of financial literacy recognize the value of financial advice; therefore, they have a higher WTP. These investors are also less likely to consult with a financial adviser if the advisory fee exceeds investors’ maximum WTP. We also suggest the policy implications of our empirical results.

Financial Literacy and Intertemporal Arbitrage

We study the role of financial literacy for inter-temporal decision-making using an adapted version of the Convex Time Budget Protocol (Andreoni and Sprenger 2012). While we find no evidence of dynamically inconsistent preferences in the aggregate, we document substantial heterogeneity in choice-patterns and estimated parameters at the individual-level: We find that subjects with higher levels of financial literacy are more likely to make patient inter-temporal choices, to allocate the entire budget to a single payment-date, allocate the entire budget to corner choices as interest rates increase, and to show individual discount factors which are in line with extra-experimental market rates. At the same time, financial literacy is uncorrelated with choice consistency and estimated individual error parameters. These results serve as suggestive evidence for inter-temporal arbitrage among financially literate respondents, thereby revealing a potential confound in time-preference elicitation tasks relying on time-dated monetary rewards.

Education and FinTech Adoption: Evidence from China

In this paper, we explore the role of education in household FinTech adoption. Using representative nationwide household data from the 2017 China Household Finance Survey, we employ the change in China’s compulsory schooling law in the 1980s as an instrumental variable for educational attainment. We find that among Chinese households, education has statistically significant and economically important effects on the use of various FinTech services, including digital banking, mobile payment, digital wealth management, and digital consumer credit. Further analysis indicates that exogeneous increases in education lead to higher levels of financial literacy and social trust, both of which are potential drivers of FinTech adoption. Our findings provide new insights into the importance of education for household financial decision making and technology adoption.

Crushing Debt or Savvy Strategy? Financial Literacy and Student Perceptions of their Student Loan Debt

Almost three quarters of American college students use loans to fund their college education, although according to public discourse student debt is a critical problem. Grounded in social reproduction theory and consumer socialization theory this study examines the influence of financial literacy on students’ college financing decisions, perceptions of student loan debt, and education-related behavior. A sample of 429 undergraduate students selected using systematic cluster sampling from a large public university in the southeast completed a survey containing closed and open ended questions. Participants reported moderate levels of financial literacy (72.3%) and student loan awareness (62.7%). Only 20% of students in this sample used estimated college expenses to determine how much to borrow. Students with higher levels of financial literacy were more likely to view their student loan debt positively as a financial strategy, were less concerned about their ability to repay their loans, and made better financing and education-related decisions compared to students with lower levels of financial literacy. Students with lower levels of financial literacy were more likely to make counterproductive decisions. Student loans are an increasingly necessary strategy for educational attainment; their effective utilization requires a level of financial literacy which most students do not possess.

Financial Literacy and Retirement Planning among Government Officers in Malaysia

ABSTRACTThis study examines the level of financial literacy, financial behaviour and retirement planning behaviour and its dynamics among Malaysian government officers involving 320 employees working in the federal government administrative centre in Putrajaya and Kuala Lumpur using a questionnaire. Findings show high level of financial literacy, good financial behaviour but a mediocre in retirement planning behaviour, and only education and personal income positively influence financial literacy. Age and gender of officers do not influence financial literacy. Furthermore, financial literacy does not correlate with retirement planning and neither does it mediate the relationship between financial behaviour and retirement planning.

Financial Behavior of the Population of the Republic of Kalmykia: An Economic and Statistical Analysis

Introduction. The large-scale work to improve the financial literacy of the population of Russia, initiated by the leadership of the country in 2011, has enhanced the developments aimed at studying the peculiarities of the financial behavior of the population of individual regions. The purpose of the study is to resolve the contradiction between the irrational financial behavior of people living in the Republic of Kalmykia, described by scientists and journalists, and the results of a nationwide sociological study, according to which Kalmykia is among the regions with a high level of financial literacy. Materials and Methods. The results of the nationwide sociological study ‘Financial Literacy Ranking of the Regions of Russia 2018’ and the official statistics from the websites of the Russian Federal State Statistics Service (Rosstat) and the Bank of Russia formed the information base of the conducted study. In terms of methods, tools for time series analysis were used. Results. A detailed analysis of the statistical data describing the financial behavior of the population of the Republic of Kalmykia has been performed, namely: per capita income of the population, the volume of loans granted to individuals, the share of overdue loans and the volume of deposits made by individuals. A negative ratio has been revealed between the value of loans provided to individuals in the region and the volume of deposits made by them. A conclusion has been drawn that it is necessary to study the reasons for such irrational financial behavior of the population of the Republic of Kalmykia and to develop effective measures to improve financial literacy. Discussion and Conclusion. The irrationality of the financial behavior of the population of the Republic of Kalmykia has been objectively confirmed by the dynamics of statistical indicators characterizing the levels of the loan debts and savings. At the same time, an analysis of financial literacy ranking results has shown that the Republic of Kalmykia received a high ranking due to a higher level of use of the Internet banking services and plastic cards, however, a low level of savings activity and a high level of trust in banks in the Republic of Kalmykia have also been confirmed. The results obtained can be used in the development of financial education programs for residents of various regions with similar problems.

THE LEVEL OF FINANCIAL LITERACY OF ACADEMIC YOUTH FROM RURAL AREAS IN THE MALOPOLSKIE VOIVODSHIP

The main purpose of the work is to define and characterize the level of financial literacy of students coming from rural areas in the Malopolskie voivodship in 2018. The main source of data used was primary information from the author’s own study (the PAPI method, a group of 170 respondents). The research used a set of questions to assess the level of financial literacy of adults proposed by the OECD INFE. In addition to primary sources, Polish and foreign literature on the subject was also used to achieve the goal. Total statistical indicators (mean, minimum, maximum) were used for data analysis and the non-parametric chi-square test (χ2). As results from the analysis, students are characterised by an average level of financial literacy, which may indicate a low effectiveness of financial education activities carried out at various levels of education in Poland. The factors determining the level of financial literacy of rural youth were gender and the field of study. Men and people studying economics were characterized by a higher level of financial literacy. Financial behaviour is a component of financial literacy in which students received the lowest results. The minimum target score in this module was obtained by only 24% of people.

Fintech and Financial Literacy in the Lao PDR

A growing literature has examined the role of financial literacy in an individual’s income, saving behavior and the use of various financial products. However, so far, no one has examined the relationship between financial literacy and the awareness and adoption of financial technology (fintech) products, i.e., financial products provided via internet-based and mobile-based platforms. This paper examines this relationship in a developing country, the Lao People’s Democratic Republic (PDR). We use information collected in the Lao PDR using the standardized questionnaire developed by the Organization for Economic Cooperation and Development International Network on Financial Education (OECD/INFE) to calculate our financial literacy. We find that a higher level of financial literacy has strong and positive effects on an individual’s awareness of fintech products. This result still holds when we use a set of instrumental variables for the financial literacy variable. However, there is insufficient data to find a significant relationship between financial literacy and the use of fintech products.

Analysis of financial literacy tendencies with young people

The following skills, such as planning of personal finances, formation and diversification of savings, augmentations of personal capital, and open-mindedness to new initiatives in the entrepreneurship activities, enhance the financial sustainability of the population, and are decisive for their life quality. Every person in certain circumstances can be financially and economically active, if s/he has got such competence as financial literacy which is much more important in the course of life than the level of income or professional qualifications, because, hereafter the governing factor will be not the possession of financial instruments by the person, but skills of effective management for the achievement of one’s own objectives.Knowledge of financial matters at a young age makes administration of finances much easier when becoming adult, getting education, or joining the labor market. At the same time the necessity of improving the financial literacy among young people and educating schoolchildren is more and more discussed. Taking into consideration the fact that young individuals are a significant factor for the development of national economy, substantial improvement of young people’s financial literacy is essential. Young people with a high level of financial literacy would be those who could give greater contribution to state economy, so it is important to research the level of financial literacy among young people. The objective of the present research is to analyze the financial literacy of young people in Daugavpils. Methods used in the research: monographic method – theoretical description of financial literacy, graphical method – graphical representation of obtained results, interview method (questionnaire) – data acquisition required for the research, statistical method – analysis of statistical information, comparative method – description of the obtained data and drawing conclusions. The financial literacy of Daugavpils youth has been researched and evaluated. The results of the questionnaires show that more than half of respondents have given good estimates of their financial literacy; however, at the same time research results prove that the overall level of financial literacy is not sufficiently high.

Financial Inclusion, Financial Literacy and Economically Vulnerable Populations in the Middle East and North Africa

ABSTRACT Using microdata from the 2014 Global Findex, along with macroeconomic indicators, we investigate financial inclusion for the MENA region. We find that economically vulnerable populations are significantly less likely to be financially included. Households living in MENA countries with higher levels of financial literacy are more likely to be engaged in positive savings behaviors and less likely to be borrowing, especially from informal sources. Financial literacy and other macro characteristics, however, do not relate to all individuals equally, especially for those most vulnerable. The findings have important implications for policies in the MENA region, where prolonged conflicts make financial inclusion an even more urgent, yet challenging, goal.

Financial Literacy and Preparation for Retirement

The economic and financial landscape facing individuals as they move through their life-cycle is becoming increasing complex. Internationally, declines in the coverage and generosity of public programmes mean that individuals now need to assume responsibility for a greater share of their future retirement saving and health and long-term care costs. Financial literacy, defined as knowledge of fundamental financial concepts and the ability to do simple financial calculations, is a key skill required to ensure adequate financial protection in older age. In this paper, we investigate the extent to which financial literacy is an important determinant of financial protection in the older pre-retirement population in Ireland. Using data from the Irish Longitudinal Study on Ageing (TILDA), we find significantly higher levels of financial literacy among men, those with higher levels of education and cognition, and the self-employed. Financial literacy is in turn associated with higher total household wealth, lower financial stress and higher expected retirement income. We find little evidence that those with higher levels of financial literacy are more likely to have various forms of supplementary pension cover however, which may reflect a limited role for financial literacy over and above other important determinants such as income and education.

Is The Financial Literacy Affected by The Field of Study? (A Comparison of Specialised Secondary Schools)

The transition to a market economy system, changes in the lifestyle, the impact of new technologies, strengthening marketing efforts of financial intermediaries, all place increasing pressure on the ability to make correct financial judgments and the decisions, generally referred to as “financial literacy”. However, the content of this term is not defined precisely, many research studies analyzed this phenomenon and confirmed relatively low levels both in adults and in the young generation and its dependence on many factors. The aim of our study is to find out if the level of financial literacy is affected by the field of the study. We used a questionnaire-based research methodology. We asked two student groups to compare and provide the solution to three model financial situations. One group included students of a business academy and the second group included students of a secondary grammar school. Our results confirmed the slightly higher level of financial literacy of the students of the grammar school. The differences between these two groups of students did not confirm the impact of the field of study but turned our attention to other influencing factors.

Financial Literacy and Saving for Retirement among Kenyan Households

In this paper I examine financial literacy and saving for retirement in Kenya using the household survey of 2016 from FinAccess Kenya. I use probit regressions to determine the effect financial literacy has on individuals saving regularly as well as saving for retirement. My findings show that households with higher levels of financial literacy will tend to have a higher likelihood to save on a regular basis and subsequently save for retirement. I find that women, the less educated, rural and lower income households tend to have lower levels of financial literacy measured by both knowledge of financial concepts and effective numeracy. Inasmuch as this disparity exists between the groups with regard to levels of financial literacy, there is interestingly neither location disparity between rural and urban households nor gender disparity with reference to saving. To investigate the nexus of causality between financial literacy and saving for retirement, I develop an instrumental variable approach by using the proximity of a household to the nearest public secondary school. I find a positive effect of financial literacy on saving for retirement.

Financial Management of Overseas Filipino Workers’ Beneficiaries

The study determined the financial management of overseas Filipino workers’ beneficiaries from selected cities and municipalities in Negros Occidental, Philippines in terms of their financial literacy, the extent of remittance allocation, and level of investment preference. Using a descriptive causal-comparative research design, the data were collected using a survey questionnaire and were analyzed with the use of descriptive and inferential statistics. Major findings of the study showed that beneficiaries had a high level of financial literacy, moderate extent of remittance allocation, and moderate level of investment preference. Also, findings revealed that remittance was allocated mainly to household expenses, education, and payment for debts. Both financial literacy and investment preference were significantly related to education and the amount of regular remittance. In addition, a significant relationship was found between financial literacy and the extent of remittance allocation and level of investment preference.