Sound Financial Decisions Research Articles

Improving Financial Literacy among Millennials: A Financial Management Perspective

Financial literacy is a crucial skill for navigating today’s complex economic environment, yet it remains a significant challenge among millennials. As a generation facing increasing financial pressures, understanding key financial principles is essential for making informed decisions and achieving financial well-being. This paper explores the importance of enhancing financial literacy among millennials from a financial management perspective, highlighting the challenges they face and the potential strategies for improvement. By examining existing literature and trends, this study aims to provide insights into the role of financial education and practical steps that can help millennials improve their financial capabilities and make sound financial decisions in an ever-changing world.

The impact of financial literacy on SMEs lending conditions

This study investigates the influence of entrepreneurs' financial literacy on the banking-lending terms extended to small and medium-sized enterprises (SMEs). We employed structured interviews with account managers from the second-largest bank in Brazil. The findings demonstrate that financial literacy positively impacts SME bank lending terms across three dimensions: knowledge, behavior, and attitudes. Entrepreneurs with higher levels of financial knowledge are more adept at negotiating favorable credit terms, thereby reducing administrative costs. Financial attitudes serve as a signal to banks of entrepreneurs' confidence and professional management capabilities. Additionally, heightened financial behavior enables entrepreneurs to advocate for more sophisticated financial products. Results achieved are further evidence of the positive impact that financial literacy can bring to SMEs by providing a basis for making sound financial decisions. This research provides valuable insights into how assessing lending practices through the lens of financial literacy can inform policy design, aiming to transform regions with low economic development by leveraging credit as a tool for poverty alleviation. The research aimed to analyze the influence of financial literacy on the lending conditions of SMEs from the perspective of financial institution agents involved in credit provision.

Personal Financial Management Training for Indonesian Migrant Workers in Hongkong

Hong Kong became the country most frequently chosen by Indonesian Migrant Workers (IMW) in 2021. The reasons that motivate IMWs to work in Hong Kong are the relatively high wages offered and the atmosphere of freedom. However, the departure of IMWs abroad has not significantly contributed to improving their quality of life. Observations made through various mass media sources (Dewi et al., 2022) concluded that many Indonesian Migrant Workers (IMW) still lack sufficient knowledge and understanding of financial dimensions or aspects. Therefore, education on the importance of financial management for IMWs is crucial. This is because the majority of IMWs do not yet possess adequate knowledge regarding financial management. The form of education is delivered through training aimed at teaching IMWs about the importance of financial planning. The materials provided include budgeting, saving, budget tracking, and investment, which are essential for effective personal financial management. It is hoped that this training will equip IMWs with the necessary knowledge to make sound financial decisions. After the training sessions, a post-test was conducted using the same procedure as before, where participants were given a questionnaire with 10 multiple-choice questions. The post-test results showed that, compared to the pre-test, the proportion of correct answers for each question was significantly higher. On average, the proportion of correct answers for all questions was above 90%. Thus, it can be concluded that the provision of training and assistance on investment and personal financial management was effective in improving the financial literacy of IMWs in Hong Kong.

Gamification as an Educational Tool for Retirement Planning

Many individuals worldwide retire financially unprepared. The most evident factor for low retirement savings is due to a lack of retirement planning, especially from an early age. Financial literacy is a key element in navigating the current complex financial landscape, as it enables the individual to effectively manage personal finances and make sound financial decisions regarding earning, consuming, saving, investing, debt management, insurance, mitigating risk, identifying suitable financial sources when needed, and also ultimately saving enough for retirement. Financial education provided by employers is usually voluntary and generally designed as a one-size-fits-all solution. The current methods used to teach financial literacy are effective in accessing financial education, but whether they change financial behaviour that results in leaving individuals better prepared for retirement is not evident. Millennials thrive in a digital environment and prefer a trial-and-error approach when learning takes place. To make financial education more practical and appealing to millennials, programme developers should consider the use of gamified applications portraying real-life events where problems need to be solved and active engagement and immediate feedback, which can promote financial literacy and might change the saving behaviour of the younger generations. Gamification is explored as a potential educational tool that can be used in teaching retirement preparedness and financial literacy in the workplace.

Representational visuals of abstract financial concepts: A means to foster financial literacy

Financial literacy is crucial for making sound financial decisions and living a better life. However, the field of finance is full of abstract concepts, such as inflation, liquidity, asset allocation and credit. Abstract concepts may be harder to comprehend than concrete concepts due to their lack of tangible referents in the physical world. In contrast, concrete concepts (e.g., car or house) have a palpable form and can be directly experienced through the senses. Against this background, the question arises of how instructional material can be designed in a way that helps people acquire knowledge about abstract financial concepts. Multimedia learning theories suggest complementing verbal information with visuals that represent the respective topic or concept. Since abstract financial concepts lack palpable, concrete forms, these representational visuals are not simply available but have to be developed. Based on grounded cognition theory, this article discusses three approaches, ‘situations’, ‘emotions’ and ‘metaphors’, which might be used to generate representational visuals of abstract financial concepts. This study aims to provide ideas and enhance our understanding of how grounded cognition theory can be utilized as a guideline to create representational visuals of abstract financial concepts and thus multimedia learning material, which in turn may support increasing people's financial literacy.

Challenges of and Opportunities for the Effective Implementation of Financial Education Policy in Selected Junior High Schools in the Philippines

Financial education is crucial for empowering individuals with the knowledge needed to make sound financial decisions, capitalize on market opportunities, and contribute to economic development. In response to Filipinos’ low financial literacy level, the government has implemented various policies, including the Department of Education’s Financial Education Policy (FEP). This policy aims to enhance financial literacy among students, teachers, and staff through capacity building and integrating financial education into the curriculum. This study focuses on assessing the challenges of and opportunities for the effective implementation of FEP in selected junior high schools in the Philippines. Interviews were conducted with experts, including the curriculum developer, schools district superintendent, curriculum and implementation division chief, education program supervisors, principals, and teachers. The results highlighted common challenges, including poor communication channels, insufficient resources, lack of a monitoring system and implementation plan, and the integration of multiple policies aside from FEP. Opportunities identified were potential collaboration with external institutions and establishing monitoring mechanisms. Thus, this study emphasizes the importance of clear communication strategies, adequate resources, implementation plans, and a monitoring system for the effective implementation of the FEP. Future research may include other key officials involved in FEP implementation for more insights and robust recommendations.

Enhancing Women's Community Organization Financial Literacy Through Personal Financial Management Training

Individual well-being is intimately tied to financial knowledge. Higher financial literacy will influence how a person manages their finances. Individuals must have knowledge and comprehension of personal finance in order to make sound financial decisions. The purpose of this community service project is to: (1) educate participants on personal financial management and financial literacy. (2) Apply participants' skills and abilities in personal financial management practice to develop financial literacy. (3) Increase participants' financial knowledge following personal financial management training. For 35 women driving groups in Ngares Village, Trenggalek District, Trenggalek Regency, the community service technique employs a participatory training method. Community service activities on personal financial management training for women who own organizations in Ngares Village, Trenggalek District were efficiently executed. Women driving the organization in Ngares Village, Trenggalek District, have improved their financial literacy. Participants learnt new things about personal financial management, whereas those who had never learned before learned more.

Unveiling Financial Literacy: Perspectives from Individuals and the Global Stage

In recent years, there has been a developing emphasis on exploring and assessing Financial literacy and its broader ramifications. However, much of this research has tended to focus on vulnerable population sub-groups, often overlooking more affluent segments of society. To establish a sustainable financial system, it's essential to extend financial literacy efforts to all individuals, including those who are educated and capable of disseminating financial information. This paper aims to offer a comprehensive perspective on the importance of financial literacy from a global standpoint and the determinants that influence an individual's level of financial education. Financial literacy is increasingly recognized as a key skill necessary for navigating today's complex financial landscape. It encompasses understanding concepts such as budgeting, saving, investing, and managing debt. Moreover, it involves the ability to critically evaluate financial products and make informed decisions about personal finances. Despite its importance, financial literacy levels vary widely among individuals and across different demographics. Factors such as education, income level, age, and cultural background can significantly influence one's financial literacy. For instance, individuals with higher levels of education generally exhibit greater financial literacy due to their exposure to financial concepts and resources. However, merely possessing a high level of education does not guarantee financial literacy. Other factors, such as personal experiences, family upbringing, and access to financial education resources, also play crucial roles. Furthermore, societal and cultural norms regarding money management can shape an individual's financial attitudes and behaviors. In light of these complexities, efforts to enhance financial education must be inclusive and holistic. This entails providing accessible and relevant financial education to individuals across all demographics, including those who may not traditionally be considered at risk. By empowering people with the knowledge and skills to make sound financial decisions, we can contribute to building a more resilient and equitable financial system for the future. KEY WORDS Financial Literacy, Importance, Determinants, Vulnerable Populations, Affluent Segments, Sustainable System, Education, Dissemination, Global Perspective, Navigating

Financial risk profiling of millennials

Purpose This study aims to assess the risk profile of millennial investors residing in the Delhi NCR region. In addition, the relationship between the risk profile and demographic traits of millennial investors was also analyzed. Design/methodology/approach Data was collected using a structured questionnaire segregated into two sections. In the first section, millennials were asked questions on socio-demographic factors, and the second section contained ten Likert-type statements to cover the multidimensionality of financial risk. Factor analysis and one-way ANOVA were used to analyze the primary data collected for this study. Findings The findings indicate that the risk profile of millennials is mainly affected by three factors: risk-taking capacity, risk attitude and risk propensity. Except for educational qualification and occupation, all other demographic features, such as age, gender, marital status, income and family size, seem to significantly influence the factors defining millennials' risk profile. Originality/value Uncertainty is inherent in any financial decision, and an investor’s willingness to deal with these variations determines their investment risk profile. To make sound financial decisions, it is mandatory to understand one’s risk profile. The awareness of millennials' distinctive risk profile will come in handy to financial stakeholders because they account for one-third of India’s population, and their financial decisions will shape the financial world for the decades to come.

Empowerment of Accounting Industry Towards Sustainable Employment

This study focuses on accounting as a crucial aspect of business, providing control, stability, and accountability to a company’s finances. However, high turnover rates and career change are evident not only in the Philippines but also abroad. The country is facing a shortage of accountants due to a drop in college enrollment and those licensed working abroad. The Philippine Institute of Certified Public Accountants (PICPA) reported that local accounting firms have hit a tipping point and begun hiring non-certified public accountants to fill the widening gap. High turnover rates can lead to lost productivity, increased costs, and a decline in morale. Accounting professionals help businesses track and manage transactions, including expenses and incomes, and make sound financial decisions. Without them, the world would be less safe and stable, resulting in increased fraud, financial instability, and overall economic inefficiency. Strategic management is necessary to improve efficiency and set goals. Understanding the strengths, weaknesses, opportunities, and threats of the profession is crucial to recognizing what needs to be built or empowered and what needs to be resolved and avoided. The worldwide shortage of accountants makes it easier for Filipino accountants to find better opportunities elsewhere. Pursuing an accounting degree and passing licensure examinations is not an easy feat, and the profession is not being recognized enough. A strategic management plan could make the accounting and auditing profession more attractive to potential employees and create a more positive and supportive work environment for accountants and auditors in the country. The accounting industry’s empowerment is crucial for sustainable employment, as businesses increasingly prioritize sustainability. Accountants play a vital role in creating resilient and stable jobs by adopting sustainable practices and embedding them into their business processes. They act as catalysts for change, leading businesses to make more responsible financial decisions and promoting sustainable long-term growth. This approach goes beyond financial matters, recognizing the value of environmental stewardship, social justice, and ethical practices. Accountants can leverage their expertise to drive positive change and create a more just and sustainable future. Future research should focus on job enlargement and enrichment, addressing issues such as work-life balance, technological skills, and sustainability variables. Future studies should re-evaluate each step and emphasize the challenges in implementing empowerment and sustainability strategies for the accounting industry. Keywords: empowerment, sustainable employment, accountancy, turnover, professional development

The Influence of Financial Literacy on Village Fund Budget Absorption

A good understanding of financial literacy will make financial planning, management, and control better. Financial literacy is the process by which individuals understand their financial situation and learn how to strengthen their finances by instilling the habit of saving, budgeting, planning, and making sound financial decisions. Not only limited to individuals, good financial literacy will also have a broad impact, for example on the absorption of village budget funds, which are provided by the government to improve existing development infrastructure in villages. This research aims to determine the effect of financial literacy on village budget absorption. This type of research uses quantitative descriptive, using regression testing via the SPSS application. The research results show that financial literacy has a significant effect on village budget absorption. The positive impact that arises is the improvement of existing infrastructure in the village so that national development can continue to move in a better direction.

Investors Perception of Financial Planning for Financial Well-Being

The present study analyses investors’ perceptions of financial planning. The purpose of this empirical investigation was to examine the role of different factors like financial behaviour, financial freedom, financial anxiety, tenure of investment, financial goals, and risk involved in personal financial planning. The study’s targeted population (425) was investors residing in the National Capital Region (NCR), India, which was approached based on purposive sampling techniques. A semi-structured set of questions was employed for collecting the information through Google Forms. SEM was adopted for analysing the primary data and finding the relationship among the factors. The results highlighted the most significant contribution of financial goals in financial planning. Tenure of investment, financial freedom, financial anxiety and risk also showed their relevance for financial planning. Risk has been found to impact financial planning negatively while other factors positively impact financial planning. The study favours financial planning to make sound financial decisions and protect themselves from fraudulent practices.

Examining the relationship between fear of COVID-19 and digital financial service usage among Pakistani SMEs

PurposeThis research aimed to find out both direct and mediating relationships between the fear of COVID-19 (FC) and the usage of digital financial services (UDFS) via mediator financial anxiety (FA). It also attempted to ascertain the moderated effect of education of small and medium-sized enterprise (SME) owners (ESO), i.e. business degree holders (BDH) vs nonbusiness degree holders (NBDH), in the relationship between FC and the UDFS.Design/methodology/approachThis research employed a simple random sampling technique. In total, 387 complete responses were collected from Pakistani SMEs. The complete analysis was performed using Statistical Package for the Social Sciences (SPSS) 23, AMOS 24, Process Marco 4.1, and Interaction 1.7.FindingsAccording to the findings, FC leads to UDFS and FA mediates this relationship. Additionally, the findings show that the ESO between FC and UDFS was moderated. However, conditional analysis shows that BDH-SME owners strengthened the moderated relationship between FC and UDFS compared to NBDH-SME owners, who did not show any relationship.Research limitations/implicationsPolicymakers might use the study's findings to promote business education, which has been recognized as essential for making sound financial decisions. Finally, because the study is cross-sectional, the authors are unable to draw definitive generalizations.Originality/valueThe key novelty of this research work lies in the inclusion of FA as a mediator and the education of SME owners as a moderator in understanding the relationship between FC and the UDFS. This study illuminated the positive aspects of the COVID-19 epidemic based on the theory of emotional finance, risk avoidance theory and theories of emotion.

The Behavioral Finance of MSME in Indonesia: Financial Literacy, Financial Technology (Fintech), and Financial Attitudes

The study investigates the critical factors affecting financial behavior in Micro, Small, and Medium Enterprises (MSMEs). It analyzes the role of financial literacy, attitudes, and financial technology (Fintech) on financial management behavior among 1.1 million DKI Jakarta MSME stakeholders in 2020 through random sampling. The study reveals that heightened financial literacy positively influences financial management behavior. A solid foundation in financial knowledge, encompassing personal and corporate finance, leads to improved financial practices. This validates theories about cognitive biases, heuristics, and practical financial decision-making. Additionally, it emphasizes the pivotal role of positive financial attitudes in shaping financial management behavior. Stakeholders with constructive attitudes, such as financial self-control and proactive financial approaches, make sound financial decisions. This aligns with theories of planned behavior, which underscore attitudes in guiding future financial actions. Conversely, the influence of financial technology (Fintech) on MSME financial behavior is limited, primarily due to a lack of awareness and understanding among small and micro-enterprise operators regarding Fintech products and services. This study underscores the importance of promoting financial literacy, nurturing positive financial attitudes, and enhancing Fintech awareness among MSMEs. It offers actionable insights for policymakers, financial institutions, and business support organizations, enabling them to bolster MSMEs’ financial knowledge and practices, thereby supporting their role as economic powerhouses.

Financial Literacy and Investment Decisions in Nepalese Share Market

This study examines the role of financial literacy on the investment decisions of investors in the Nepalese share market. Financial literacy is expressed in personal saving, risk tolerance, investment options, and financial knowledge. The data were collected through a structured questionnaire using the convenience sampling method from 384 respondents of Kathmandu Valley. Pearson correlation and multiple regression analysis have been used to analyze data. The study results revealed a positive and significant relationship between the dimensions of financial literacy and investment decisions in the Nepalese share market. Low financial literacy and lack of financial information affect the ability to save and make sound financial decisions. Ignorance of basic financial concepts results in negative behavior in saving and investment decisions. The study suggests conducting financial education programs to help improve investors’ savings and financial decisions.

Social capital, financial intelligence, and entrepreneurial financial performance: evidence from the post-pandemic challenges

ABSTRACT The convergence of social capital and financial intelligence becomes a dynamic catalyst in the realm of post-pandemic challenges, promoting entrepreneurial financial performance to unforeseen levels as businesses use networks, knowledge, and financial expertise to overcome challenges and grasp new opportunities. Hence, the study explores the factors that influence entrepreneurial financial performance of employees in Pakistan’s corporate sector. Using two theoretical frameworks, Regulatory Focus Theory and Rubicon Four-Phase Action Model in Entrepreneurship, study identifies essential traits for entrepreneurship and their direct correlation with financial success. The study utilized a survey questionnaire to gather responses from 276 employees of the corporate sector involved in entrepreneurial activities. The findings suggest that financial literacy, financial risk tolerance, entrepreneurial competency, and social capital positively impact an entrepreneur’s locus of control and financial intelligence. Financial literacy equips entrepreneurs with necessary skills and knowledge to manage finances effectively, identify potential financial risks, and increase profitability. Financial risk tolerance enables entrepreneurs to understand financial markets better and make sound financial decisions. Entrepreneurial competency leads to sound financial decision-making and control of financial outcomes. Social capital provides valuable resources, information, and support to improve financial decision-making skills.

The regulatory nexus between the promotion of financial education and financial inclusion in enhancing consumer protection in South Africa

This paper seeks to share some insights on the regulatory aspects of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa. In recent years, policymakers in different countries, including South Africa, have made various efforts to regulate financial inclusion and integrate financial consumers into the financial sector. Similarly, policymakers and other relevant stakeholders have made efforts to promote financial education to empower financial consumers to make sound financial choices and decisions. Notwithstanding these efforts, the promotion of financial education and financial inclusion has been done in isolation, overlooking the policy synergies between these objectives and/or financial sector outcomes in enhancing consumer protection in South Africa. Given the recent COVID-19 pandemic, both financial education and financial inclusion have become increasingly important policy considerations to negotiate the chasm from the challenges that financial consumers faced before the pandemic and move towards safeguarding the economic interests of financial consumers post-pandemic. Accordingly, this paper explores the interrelationship between the effective promotion of financial education and financial inclusion to enhance consumer protection. Moreover, this paper examines the adequacy of the regulation of financial education and financial inclusion under the National Credit Act 34 of 2005 (NCA); the Consumer Protection Act 68 of 2008 (CPA), the Financial Sector Regulation Act 9 of 201 7 (FSR Act) and the proposed Conduct of Financial Institutions Bill (CoFI Bill) in relation to strengthening consumer protection. Put differently, this article focuses on the regulatory nexus of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa. In the end, this article will provide some recommendations and enforcement approaches that could be incorporated into the regulatory framework of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa.

Understanding Financial Literacy Evidence from Kolkata’s Gen Z

This paper seeks to explore the state of financial literacy of Gen Z employees in Kolkata to establish the extent of their capacity to make sound financial decisions. As India has a large population of the young generation, it is equally important to understand the perception of the youth regarding financial literacy for the country’s economic advancement. The study uses primary data collected from respondents using a structured questionnaire among adults aged 18-29 years. The statistical tests used to analyze the data included ANOVA and ROC Curve, while data analysis was performed using Microsoft Excel and SPSS. These results suggest that the degree of financial literacy is not affected by age or sex but by education level and type. These findings are evidence that further supports the need for effective financial education strategies to improve financial literacy among young employees and foster more and improved financial decisions in the economy.

DEMOGRAPHIC AND SOCIO-ECONOMIC DETERMINANTS OF MULTIDIMENSIONAL FINANCIAL LITERACY AMONG YOUNG ALGERIAN UNIVERSITY STUDENTS

Financial literacy is crucial for young university students to make sound financial decisions and improve their future well-being. This study examines demographic and socio-economic determinants of multidimensional financial literacy among young Algerian university students. The study employed a cross-sectional survey research design. It broadly adheres to the OECD definition of financial by segregating it into its main dimensions: financial knowledge, behavior, and attitude. Data was gathered from a sample of 368 university students and analyzed using multiple regression analysis. The study found a significant relationship between financial literacy, gender, the field of study, and bank account ownership. Female students are 3.64 times less financially literate than male students. Students majoring in scientific (hard) disciplines are 4.65 times more financially literate than non-scientific (soft) disciplines. Students with no bank account are 4.67 times less financially literate than those who own one. The study found a non-significant relationship between financial literacy and the variables: students’ level of education, the field of specialty, work experience, family income, father’s education level and mother’s education level. What is noticed is that the financial literacy level of economics and major in business students does not differ from those students of other majors.

THE ROLE OF FINANCIAL MANAGEMENT IN MAXIMIZING SHAREHOLDER VALUE

This paper examines the principles of corporate finance and their impact on the maximization of shareholder value. Financial management plays a critical role in ensuring the success of a business and achieving the ultimate goal of maximizing shareholder wealth. The article discusses the concept of discounted cash flow analysis, which is a fundamental principle of finance that allows companies to evaluate investment opportunities and make sound financial decisions. In addition, the paper examines the importance of capital structure, including the use of debt and equity financing, and the effect of dividend policy on the value of the firm. The article also highlights the role of financial markets in providing necessary capital to businesses and enabling efficient allocation of resources. Overall, the principles of corporate finance are essential for any business to thrive, and understanding these concepts is crucial for financial managers to make informed decisions that maximize shareholder value.