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Financial education and financial satisfaction: Financial literacy, behavior, and capability as mediators

Jing Jian Xiao (Department of Human Development and Family Studies, University of Rhode Island, Kingston, Rhode Island, USA)
Nilton Porto (Department of Human Development and Family Studies, University of Rhode Island, Kingston, Rhode Island, USA)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 3 July 2017

Abstract

Purpose

The purpose of this paper is to investigate roles of financial literacy, financial behavior, and financial capability as mediating factors between financial education and financial satisfaction.

Design/methodology/approach

Data are from the 2012 National Financial Capability Study, a large national data set with detailed information on financial satisfaction, education, literacy, behavior, capability, and related variables. Mediation analyses are used to answer research questions.

Findings

Financial education may affect financial satisfaction, a subjective measure of financial well-being, through financial literacy, financial behavior, and financial capability variables. Results show that subjective financial literacy, desirable financial behavior and a financial capability index (a sum of Z-scores of objective financial literacy, subjective financial literacy, desirable financial behavior, and perceived financial capability) are strong mediators between financial education and financial satisfaction.

Research limitations/implications

The study has used cross sectional data that can only document associations between financial education and satisfaction and the mediators between them. Future research could use relevant longitudinal data to verify multiple benefits of financial education.

Practical implications

The findings have implications for financial service professionals to take advantages of multiple benefits of financial education in content acquisition, confidence in knowledge and ability, and action taking when they communicate with their clients.

Social implications

Policy makers on consumer financial education may use the information to advocate and promote effective education programs to improve consumer financial well-being.

Originality/value

This study is the first of this kind to examine the association between financial education and financial satisfaction and several financial capability variables as mediating factors.

Keywords

Citation

Xiao, J.J. and Porto, N. (2017), "Financial education and financial satisfaction: Financial literacy, behavior, and capability as mediators", International Journal of Bank Marketing, Vol. 35 No. 5, pp. 805-817. https://doi.org/10.1108/IJBM-01-2016-0009

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited