Low Level Of Financial Literacy Research Articles

Women are invisible?! A literature survey on gender gap and financial training

Most of the existing definitions and measurements of financial literacy have been tailored for developed countries. Although financial literacy and financial behaviour are usually assessed at the household level, the gender dimension of household agents is less explored which may overshadow the women’s low level of financial literacy. This paper is a selective systematic review aiming to survey the existing literature on financial training where the focus is on two main issues, namely, financial training and gender disparity in financial literacy. Based on a thorough literature review, we identify research gaps in each of these dimensions. The identified gaps are then used to formulate two promising research ideas. Specifically, the promising research ideas seek to investigate the gender disparity and propose a novel method for financial training.

Cyber crimes in the banking sector: Case study of Vietnam

The technological revolution 4.0 brings great opportunities, but also cybercrimes to economic sectors, especially to banks. Using secondary data and survey results of 305 bank clients, the main findings of this paper are: (i) there are several types of cybercrimes in the banking sector; (ii) Vietnam is one of the top countries worldwide having hackers and being attacked by hackers, especially the banking sector. Three most common attacks are skimming, hacking and phishing. Number of cybercrime attacks in Vietnam are increasing rapidly over years; (iii) Vietnamese customers are very vulnerable to cybercrime in banking, as more than 58% seem to hear about cybercrimes, and how banks provide services to let them know about their transactions. However, more than 50% do not have any deep knowledge or any measures for preventing cybercrime; (iii) Customers believe in banks, but do not think that banks can deal with cybercrime issues well. They still feel traditional transactions are more secure than e-transactions; (iv) the reasons for high cybercrimes come from commercial banks (low management and human capacity), supporting environment (inadequate), legal framework (not yet strong and strict enough on cybercrimes), and clients (low level of financial literacy). Therefore, several solutions should be carried out, from all stakeholders, for improving the cybersecurity in Vietnamese banks.

Financial literacy of high school students in the Netherlands: knowledge, attitudes, self-efficacy, and behavior

We examined levels of financial literacy (knowledge, attitudes, self-efficacy, and self-reported behavior) among 15-year-old high school students in the Netherlands (N = 2025), and investigated which factors are associated with the different financial literacy components. Our findings show lower levels of financial literacy among students in the lowest track in high school, students with low mathematical ability, immigrant students, students with low SES, students with mothers without a university degree, and students who do not discuss financial matters with family and peers. Notably, our findings show a large gap in financial knowledge levels between the lowest and highest high-school tracks in the Netherlands. These findings are useful for designing effective financial education and intervention programs, and for identifying groups that may benefit the most from financial education programs.

Business Education: Key for Achieving Financial Inclusion in Palestine

Financial education is the process of building knowledge, skills and attitudes to become financially literate. It is meant to educate people on good money management practices with respect to earning, spending, saving, borrowing, and investing. Financial education is meant to enable people to shift from reactive to proactive decision-making and work towards fulfilling their financial goals. By broadening people’s understanding of financial options and principles, financial education builds skills to use financial products and services, and promotes attitudes and behaviors that support more effective use of scarce financial resources. Financial education builds skills to use financial products and services, and promotes attitudes and behaviors that support more effective use of scarce financial resources and financial inclusion. The results of this work show that low levels of financial inclusion are associated with lower levels of financial literacy. Recent research permitted to identify various ways in which policy makers are developing financial education policies for financial inclusion.

Can Financial Literacy Education Reduce the Use of Medicaid and SNAP?

In recent decades, we have seen an increase in both the complexity of financial markets and the expectation of individual responsibility with financial decision-making. Policies supporting financial literacy education are promoted as one method toward decreasing reliance on social safety nets. The assumption being that low levels of financial literacy translate to lower economic outcomes and thus an increased probability of dependence on social programs. We use the 2018 National Financial Capabilities Study to examine the relationship between high school mandated financial literacy education and social program participation and find no evidence of a relationship.

Medicaid and long‐term care: The effects of penalizing strategic asset transfers

AbstractMedicaid provides a critical source of insurance for long‐term care, and individuals may strategically offload assets (typically to children) to meet the means‐tested eligibility requirement. In this article, we quantify the extent of such behavior using variation in the penalty for improper parent‐to‐child transfers induced by the Deficit Reduction Act of 2005. We estimate difference‐in‐differences models based on the hypothesis that only individuals with high levels of nursing home risk (high risk) will alter transfers because of the Act. We find that over a 2‐year horizon, high‐risk individuals reduced transfers to children on the extensive margin by 11 percent and that the average total amount of transfers decreased by $4,860. The results hold only for coupled respondents. We also conduct a triple‐differences analysis to examine heterogeneity with financial literacy and find that even those with a low level of financial literacy responded to the penalty.

Financial literacy and student debt

ABSTRACTUsing a large sample of over 1000 students from a major, land-grant, public university in Massachusetts, we examine the financial literacy level of college students, and its implications on the repayment of student debt. We find low levels of financial literacy (39.5%), particularly among female (26%), minority (24%) and first-generation (33%) students. Based on survey responses, we show that students with a deficit in financial literacy are more likely to underestimate future student loan payments; 38.2% of low-literacy students underestimate future payments by more than $1000 annually, while high financial literacy reduces the probability of significant payment underestimation by 17–18 percentage points. Furthermore, we find evidence of a financial literacy wage gap as students with low financial literacy expect significantly lower starting salaries than their high-literacy peers. As a result, low-literacy students are more vulnerable to unexpected, adverse shocks on their payment-to-income ratios that can impair their future creditworthiness and undermine their ability to service debt post-graduation.

Was the expansion of housing credit in Japan good or bad?

This paper shows, using data from the Family Income and Expenditure Survey, that housing credit has become increasingly available over time in Japan, especially since 2000, and that this has made it easier for Japanese households to purchase housing and enabled them to do so at an earlier age. However, it also shows that the greater availability of housing credit has increased households’ housing loan repayment burden, which has resulted in their cutting back on their other consumption expenditures and created the potential for retirement insecurity. Another concern is that the increasing availability of housing credit has been accompanied by a pronounced shift from fixed-rate to variable-rate housing loans. This is cause for concern given the low level of financial literacy that prevails among the Japanese population and the likelihood that interest rates on variable-rate housing loans will be raised sooner or later as monetary policy is tightened.

Credit intermediaries’ regulation and profitability: The Italian case of D.Lgs. No. 141/2010

This work studies the effect of Italian regulation D.Lgs. No. 141/2010 (Law 141), introduced to transpose Directive 2008/48/EC of the European Parliament into the performance of credit intermediaries. Law 141’s entry into force provides an opportunity to study the effect of greater market entry barriers on sector profitability. The Italian case is particularly significant because it is characterized by strict application of the directive, a low level of financial literacy, and a distribution model that, for some kinds of personal loans, allows agents and brokers a significant role (Canales & Nanda, 2012). We study a panel of Italian agents and credit brokers, using a panel and difference-in-differences regression. The results show that, from 2009 to 2017, firm profitability was driven not by the increase in market entry requirements introduced by Law 141 but, rather, by firms’ size, efficiency, and business model.

Using Multivariate Statistical Methods for Analysing Financial Literacy, as a Possible Appearance of Social Innovation

Financial literacy is an interesting research area. In this paper my aim is to answer three important questions about financial literacy with help of statistical methods. Can it be predicted whether a country has an appropriate level of financial literacy? Can homogenous groups be identified among the observed countries? Does the income group influence the level of financial literacy? For the prediction of financial literacy I used membership logistic regression. The two independent variables were the Human Development Index and Government expenditure on education (GDP%). I was able to achieve a classification accuracy of 88.5%. To answer my second question I created clusters and used Ward’s method to create five homogeneous groups. I identified one group with an extremely low level of financial literacy. To answer my third question I used the Chi-square test for Independence. During the analysis I came to the conclusion that financial literacy and income group are not independent of each other.

Financial Literacy Education: Implication on Teachers' Economic and Social Life in Ghana

Financial literacy education is one of lifelong assets that every individual needs to function and fit well in modern-day society. It provides the financially savvy better decision making, best investment alternatives and family wellbeing. Unfortunately, consumers appear less active and less confident in participating meaningfully in the financial sector due to lack of knowledge about the complex nature of financial products and services and the risk that goes with them. This study looked at financial literacy education and its implication on the economic and social life of the teacher in the Upper East Region of Ghana. With a descriptive survey design, 118 participants responded to questionnaires. We found low levels of financial literacy among participants which can poorly affect their daily financial management. The financially literate has the advantage to undertake prudent retirement planning. Being financially illiterate adversely affects one’s life in relation to the culture of savings, expenditure pattern, investment decisions and budgeting skills, making one economically insecure. The study has policy frontier implications; policy makers, governments, non-governmental organizations and equity owners should come to the aid of teachers by way of introducing professional teacher development programmes specifically tailored at uplifting their financial literacy knowledge and skills.

Was the Expansion of Housing Credit in Japan Good or Bad?

This paper shows, using data from the Family Income and Expenditure Survey, that housing credit has become increasingly available over time in Japan, especially since 2000, and that this has made it easier for Japanese households to purchase housing and enabled them to do so at an earlier age. However, it also shows that the greater availability of housing credit has increased households’ housing loan repayment burden, which has resulted in their cutting back on their other consumption expenditures and created the potential for retirement insecurity. Another concern is that the increasing availability of housing credit has been accompanied by a pronounced shift from fixed-rate to variable-rate housing loans. This is cause for concern given the low level of financial literacy that prevails among the Japanese population and the likelihood that interest rates on variable-rate housing loans will be raised sooner or later as monetary policy is tightened.

Finanzkompetenz von Privathaushalten Ein Überblick zum aktuellen Stand der Forschung

Financial Literacy is the ability to be independent in investment and retirement planning. The general level of financial literacy has an obvious influence on the need for banks’ advisory services and could justify regulatory state intervention for illiterate people in need for protection. Therefore, insights on the status of financial literacy are highly relevant for all capital market participants. This review provides a comprehensive analysis of literature on measurements and determinants of financial literacy with a focus on western nations over the last decade. The evidence of 51 reviewed publications suggests a still alarmingly low level of financial literacy and a high heterogeneity across demographics.

Financial Education of Russians: Classification of Target Groups

The Object of the Study. The population of the Russian Federation divided into target groups. The Subject of the Study. Financial education of Russians, taking into account the characteristics of various target groups. The Purpose of the Study. Clarification of target groups of Russian citizens for the implementation of the financial education strategy. The Main Provisions of the Article. In today's reality, financial literacy is becoming a necessary skill for personal and social well-being. In the conditions of active development of the financial market, increasing financial literacy of the population provides citizens with the opportunity not only to effectively use various financial products and services, make profitable economic decisions, but also to be full participants in the entire socioeconomic system of the state. However, currently there is a fairly low level of financial literacy of Russians, and this trend is observed from year to year, due to the complexity of the financial market as a whole, an erroneous idea of the essence of certain concepts, and as a result, the construction of financial strategies in accordance with this understanding, and this may indirectly indicate the inefficiency of the current system for improving financial literacy of Russian citizens. To implement the strategy of improving financial literacy of the population, first of all, it is necessary to clearly understand who will receive the training. It is a well-thought-out classification of target groups that is the basis for building a system of financial education, forming a methodological basis, training specialists to broadcast financial knowledge and creating educational channels. According to the author, it is recommended to clarify and supplement the existing classification of target groups, approved by the current strategy for improving financial literacy in the Russian Federation for 2017-2023, by including such categories of citizens as preschoolers, citizens with disabilities, vulnerable segments of the population (orphans, children in orphanages and boarding schools), as well as to clarify the current structure of the "adult population" group, dividing it into low-income citizens and families, and citizens with medium and high incomes (including families). In addition, it is recommended to divide each target group by the level of available financial knowledge and skills, which will allow you to create a targeted, personalized, thoughtful training system that promotes financial literacy, awareness as well as evaluate the results of such training.

ASSESSING THE FINANCIAL LITERACY OF INFORMAL BUSINESSES IN SOUTH AFRICA

Informal business activities have been identified as playing a pivotal role in the growth and development of countries across the globe. However, small and medium business enterprises in the South African informal business sector are perceived to be failing due to a combination of low financial literacy levels and ineffective use of management accounting techniques such as budgets and pricing tools. The aim of this study was to assess the level of financial literacy of informal business owners in the Vaal region of the Gauteng Province of South Africa. A quantitative method was employed via administering a semi-structured questionnaire to 224 informal business owners. The study revealed that informal business owners possess low level knowledge of financial literacy. The study recommends that it is imperative that government and the non-governmental sector’s (NGO) focus training initiatives on this as a matter of importance.

Financial Literacy of Senior College Students of Liceo de Cagayan University

College is a time of new found freedom for many students. But that can spell trouble if that freedom applies to personal finances too. Students need to understand basic money management skills such as living within a budget and handling credit and debt. A solid financial foundation can lead to a lifetime of financial success. This study surveys 244 senior/graduating college students of Liceo de Cagayan University from 12 different course programs or colleges in the university to examine senior college students’ financial literacy. This study used a comprehensive questionnaire designed to cover major aspects of personal finance. It includes financial literacy on general knowledge: money management, saving and borrowing, insurance, and investments. The survey participants were asked to answer 12 multiple-choice questions. An in-depth interview with selected respondents was also conducted to gain deeper insights into the attitudes of the respondents. The overall percentage of correct scores is 6.24 or 52.06% suggesting that they have relatively low level of knowledge in personal finance, indicating only half of the survey questions are answered correctly. Results suggest that college students need to improve their knowledge of personal finance. By far, the weakest area is Insurance, where the average score is 36.36%. Nine out twelve course programs were found to be with lower level of financial literacy and most of them are young adults with less family income. The conclusion is that the senior/graduating college students are not knowledgeable about personal finance. This incompetency will limit their ability to make informed financial decisions. Thus, this illiteracy and its costly consequences will make individuals worry about their finances to the extent that their productivity in the workplaces will be affected. Keywords : financial literacy, money management, Insurance, credit, deb

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.

Features of teaching the use of information technologies when obtaining financial services

Problem and goal. In article the complex analysis of the organization of processes of training of users to work with non-cash payment system with use of means of informatization and an assessment of efficiency of the electronic educational resource which is in a special way developed allowing to organize such training is carried out. The aim was to identify the specifics of training the population to use a non-cash payment system for goods and services on the basis of the developed electronic resource, which is to consider the classification of Russian and international payment systems, the experience of their use, the possibilities of information and telecommunication technologies in the organization of such training. This made it possible to design a model of increasing the level of financial literacy, to develop an educational electronic resource, to organize and conduct training built using information technology, as well as to evaluate the effectiveness of the developed educational electronic resource in the formation of financial literacy. Methodology. During the design of a special electronic educational resource, the study of special literature and normative legal acts was carried out. The study was based on the works of A.I. Savelyev, A.V. Pukhov, D. A. Kochergin, V.A. Lopatin, S.V. Krivoruchko, V.M. Ionov, 1. Semenikhin, D. Pominov, V.A. Dadalko, P.A. Tamarov, etc. The study used: the method of direct monitoring of quality testing of the site, which allowed to determine what are the features of the website design, as well as to formulate recommendations for its change (as part of the direct observation, we measured the speed of the respondent’s navigation on the site, the emotional state, as well as a list of sections of interest to respondents to a greater extent), and method of in-depth interview, aimed to assess the compliance of the content of the developed materials with the requirements of the target group of consumers and potential users of the portal. The focus group as a method is not suitable in this study due to the fact that respondents differ too much in age and level of financial literacy. Results. The article presents a detailed analysis of the level of financial literacy of the population of the Russian Federation. The study confirmed the relevance of the problem of low level of financial literacy of the Russian population, as well as the need to develop an information tool to solve this problem. As part of the project, a prototype of the website was developed as an information tool to improve the level of financial literacy of the population. The choice of the website as a tool for effective informatization of financial literacy training was based on the statistics of growth of Internet users, as well as on the choice of the target audience aged 20 to 35 years. Conclusion. Features of informatization of training on the use of non-cash payment system are considered based on the use of a prototype website specifically for current and future users of financial services. This portal is aimed at developing users’ independent skills of comparison and selection of payment systems and e-wallets on the basis of indicators of their financial stability. The functionality of the portal is aimed at finding and mastering by the user the important principles of working with banking products, and to ensure that users of the portal are always aware of the next seminars and events to improve financial literacy in their city of residence.

Financially Competent Behaviour of Russian People: Factors of Forming

The Object of the Study. Financially competent behaviour.The Subject of the Study. Factors of forming financially competent behaviour.The Purpose of the Study. Identification of factors influencing the formation of financial literacy behaviour based on the results of empirical studies of the level of financial literacy of the Russian population, the results of an expert survey in the framework of research «Institutionalization of financial literacy of the Russian population».The main Provisions of the Article. The formation of financially competent behavior is not only a prerequisite for the effective functioning and development of the entire financial system of Russiya, but also acts as a factor of material well-being of citizens, a smoothing element of differentiation in income. Changes in economic relations, the complexity of the financial market, its structure and products, as well as the transition to digital rails have led the population to the need of developing skills in the formation of financially competent strategies. To implement such strategies, it is necessary to have a resource and intellectual base among the population, as well as opportunities for the formation of an effective ecosystem of interaction between all participants in financial relations. The study identified the main trends in the financial behavior of Russians in modern conditions, factors affecting the choice of certain strategies of financial behavior, as well as conditions for the transformation of these strategies into new forms of financially literate behavior. Among the main we can note the low level of financial literacy of Russians, if anything, this trend can be traced from year to year, due not only to psychological and cultural aspects of behavior (inherent in Russians fear, uncertainty and insecurity, laziness, stereotyping, and shifting responsibility to third parties), but with the increasing complexity of the financial market as a whole, erroneous conception of the essence of certain concepts, and as a result, the alignment of financial strategies in accordance with this interpritation, the spread of the phenomenon gaining momentum – misseling, and may also indirectly indicate the inefficiency of the current system of improving financial literacy of Russians. According to the analysis of secondary data, government statistics public confidence in financial institutions, income level also influence on forming financial literacy strategies, which is confirmed by the data of the expert survey conducted within the project «Institutionalization of financial literacy of the Russian population»

IMPROVING FINANCIAL LITERACY OF THE CHILDREN AND TEENAGERS IN THE RUSSIAN FEDERATION

The issues of improving the financial literacy of the population are currently receiving a lot of attention both at the international and national levels. Of particular relevance are financial literacy issues for the Russian Federation. Due to the peculiarities of the country's historical development, for most citizens of Russia, issues of personal financial planning, the principles of the functioning of financial markets, the possibility of investing savings remain obscure, as a result of this, the population can not fully use modern financial products and services, does not know their rights in the financial market and unable to protect them in accordance with the law. It should be noted that the problem of a low level of financial literacy of citizens is a problem at the national level, since a low level of financial literacy negatively affects the personal well-being of citizens, their financial potential, and accordingly prevents the development of the financial market, inhibiting investment processes in the economy. Under these conditions, increased interest in issues of financial education and financial literacy of citizens of the Russian Federation is logical and, since 2011, the World Bank and the Ministry of Finance of the Russian Federation have actively implemented a project “Promoting Improving the Level of Financial Literacy of the Population and Development of Financial Education in the Russian Federation”. One of the most important areas of the project is to increase the financial literacy of children and youth. Since the start of the project, a range of training materials has been developed in this area, professional development of school teachers, teachers of orphanages, college teachers is provided, and weeks of financial literacy are held. The result of the events was a significant increase in the level of financial literacy of Russian schoolchildren. In this regard, the experience of the Russian Federation in improving financial literacy of children and youth is of great interest.