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Article
Publication date: 28 June 2018

Kumar Saurabh and Tanuj Nandan

The purpose of this paper is to examine the relationships between financial knowledge, socialization and financial satisfaction with financial risk attitude and financial

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1166

Abstract

Purpose

The purpose of this paper is to examine the relationships between financial knowledge, socialization and financial satisfaction with financial risk attitude and financial behavior as a mediator after demonetization and introduction of GST.

Design/methodology/approach

The sample consisted responses of 286 individuals from the city of Allahabad, Uttar Pradesh, India and making financial decisions for the household for at least last two years. The data were analyzed using exploratory factor analysis and mediation regression analysis.

Findings

All sub-scales used to measure constructs had satisfactory reliabilities and internal consistencies. It was found that financial risk attitude and financial behavior both mediate the relationship between financial socialization and financial satisfaction as well as between financial knowledge and financial satisfaction.

Research limitations/implications

This research is based upon survey method and voluntary participation. Hence one can question generalization of findings to larger samples. Moreover, the study is limited to a restricted geographical region which could affect the generalization of findings.

Practical implications

Results provide insights into the antecedents of financial satisfaction of individuals from tier II city of India. Financial planners may utilize this study for enhancement of financial satisfaction of their clients and hence retention of the same.

Originality/value

A majority of researchers use survey without evaluation validity of instruments in the selected context and sample. This research contributed to the literature and practice by testing validation of constructs of financial satisfaction in India.

Details

South Asian Journal of Business Studies, vol. 7 no. 2
Type: Research Article
ISSN: 2398-628X

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Article
Publication date: 13 February 2019

Leonore Riitsalu and Rein Murakas

The purpose of this paper is to study how subjective and objective knowledge of finance, behaviour in managing personal finances and socio-economic status affect financial

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1481

Abstract

Purpose

The purpose of this paper is to study how subjective and objective knowledge of finance, behaviour in managing personal finances and socio-economic status affect financial well-being.

Design/methodology/approach

The financial well-being score is constructed in quantitative financial literacy survey data from Estonia as the arithmetic mean of four statements on a five-point scale. Four hypotheses are tested in multiple regression analysis.

Findings

Subjective knowledge has a stronger relation with financial well-being than objective knowledge. Financial behaviour score and income level correlate with financial well-being.

Research limitations/implications

The paper contributes to literature on financial literacy, subjective financial knowledge and financial well-being. In future research, psychological factors and future orientated financial well-being should be included, and their relationship to subjective well-being could be analysed further.

Practical implications

The results highlight the importance of subjective knowledge and sound behaviour for improving financial well-being. Providers of financial services should address these more in the design of their services and communication.

Social implications

Policymakers developing national strategies for financial education need to address subjective financial knowledge for increasing financial well-being in society.

Originality/value

Knowledge, behaviour and subjective knowledge have not been used simultaneously in the analysis of financial well-being in Europe before.

Details

International Journal of Bank Marketing, vol. 37 no. 4
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 8 January 2018

Neha Garg and Shveta Singh

The purpose of this paper is to analyse the level of financial literacy among youth in the world based on previous studies. The study, particularly, focus at how…

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15622

Abstract

Purpose

The purpose of this paper is to analyse the level of financial literacy among youth in the world based on previous studies. The study, particularly, focus at how socio-economic and demographic factors such as age, gender, marital status and income influence financial literacy level of youth and whether there is any interrelationship between financial knowledge, financial attitude and financial behaviour. Strong endeavour of the world economies to improve the financial well-being of their citizens has contributed to the rising importance of financial literacy as it equips the individuals to take quality financial decisions to enhance their financial well-being.

Design/methodology/approach

This literature review consists of seven key sections. The first section of this paper reviews the conceptual definitions of youth. Second part summarises the literature on financial literacy. Third, fourth and fifth section summarises the literature on the components of financial literacy, i.e. financial knowledge, financial attitude and financial behaviour, respectively. Sixth section reviews the empirical studies on the influence of socio-economic and demographic factors on financial literacy level. Seventh section summarises the literature on interrelationship between financial knowledge, financial attitude and financial behaviour.

Findings

The study reveals that the financial literacy level among youth is low across the most part of the world that has become a cause of concern. Also, it has been observed that various socio-economic and demographic factors such as age, gender, income, marital status and educational attainment influence the financial literacy level of youth and there exists an interrelationship between financial knowledge, financial attitude and financial behaviour.

Originality/value

Youth have to live a longer life ahead, thus, the decisions taken by them are going to affect them for a longer period of time, making it imperative for them to develop an understanding of the world of finance so as to avoid wrong choice of financial products. Thus, financial literacy is of significant relevance. This paper aims to understand the influence of various factors influencing the financial literacy as understanding the factors that contribute to or detract from the acquisition of financial literacy among youth can help in making policy interventions targeted at youth to enhance their financial well-being.

Details

International Journal of Social Economics, vol. 45 no. 1
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 30 May 2018

Suri Weisfeld-Spolter, Fiona Sussan, Cindy Rippé and Stephen Gould

Debt is at a peak and consumers purport needing help with financial planning. To better understand the antecedents of financial planning behavior, the purpose of this…

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1048

Abstract

Purpose

Debt is at a peak and consumers purport needing help with financial planning. To better understand the antecedents of financial planning behavior, the purpose of this paper is to examine the importance of cultural values in financial decision making within the context of Hispanic American consumers. A new conceptual model is proposed to integrate affect (cultural value) and cognition (financial knowledge) in financial planning.

Design/methodology/approach

To uncover respondents’ views on cultural values, financial knowledge, financial attitude, and financial planning behavior, an online survey hosted on a business school’s website was distributed to members of two Hispanic Chambers of Commerce. The survey consisted of five parts, and took each respondent an average of 15 minutes to complete. The final data set has 158 observations.

Findings

Results analyzed using structural equation modeling confirmed the hypotheses that financial knowledge, attitude, and perceived control simultaneously influence Hispanic consumers’ intentions to purchase financial planning products or services. More interestingly, these results confirm that multiple different routes coexist in the decision-making process, especially within the Hispanic financial planning context.

Originality/value

Key contributions of this paper include the conceptualization of cultural value as an antecedent to Hispanic financial behavior; detailing the different routes to financial decision making for US Hispanic consumers; and informing financial service managers on marketing strategies toward Hispanic consumers.

Details

International Journal of Bank Marketing, vol. 36 no. 4
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 13 September 2018

Fatima Akhtar and Niladri Das

The purpose of this paper is to understand investment intention of prospective individual investors in a developing country (i.e. India) by using the “Theory of Planned…

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1690

Abstract

Purpose

The purpose of this paper is to understand investment intention of prospective individual investors in a developing country (i.e. India) by using the “Theory of Planned Behaviour” (TPB) (where perceived behavioural control has been replaced with financial self-efficacy, FSE) and two additional constructs, i.e. financial knowledge and personality traits (i.e. risk-taking propensity and preference for innovation) have been introduced.

Design/methodology/approach

The study uses quantitative and cross-sectional approach wherein questionnaire based survey was done to collect responses from prospective individual investors (920 usable responses). AMOS and SPSS have been used to establish the hypothesised relationship between the constructs.

Findings

The results of the study suggested that attitude was responsible for partial mediation between the relationship of financial knowledge and investment intention, whereas financial self-efficacy was exerting a dual role on the relationship between personality traits and investment intention. Subjective norms, on the other hand, exerted a weak positive effect on investment intention.

Research limitations/implications

This study is limited to measure the investment intention in financial markets in case of prospective individual investors; it does not incorporate the actual investment behaviour, the study also fails to include demographic factors which play a vital role in investment decision making. Furthermore, the study has only considered objective dimension of financial knowledge.

Practical implications

The findings will be useful for financial service providers who need to enhance the FSE and financial knowledge and design a “behavioural portfolio” according the personality traits of their clients.

Social implications

The up-liftment of financial confidence among individuals in order to motivate them to participate in financial markets and enjoy “short-cuts” towards financial success.

Originality/value

This study is one of the initial attempts in the context of the Indian Stock Market to introduce FSE as a dual (both mediating and moderating) construct between personality traits and investment intention using TPB, moreover, this study also provides the necessary impetus to analyse the relationship between financial knowledge and investment intention with attitude as the mediating variable.

Details

International Journal of Bank Marketing, vol. 37 no. 1
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 21 March 2016

Ani Caroline Grigion Potrich, Kelmara Mendes Vieira and Wesley Mendes-Da-Silva

The purpose of this paper is to build and compare models that assess university students’ financial literacy. Financial literacy, understood as the mastery of a set of…

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6013

Abstract

Purpose

The purpose of this paper is to build and compare models that assess university students’ financial literacy. Financial literacy, understood as the mastery of a set of knowledge, attitudes and behaviors, has assumed a fundamental role in allowing and enabling people to make responsible decisions as they strive to attain financial wellbeing. To this end, models that integrate financial knowledge, behavior and attitude are integrated. The models are subsequently estimated, and many comparative tests are performed.

Design/methodology/approach

The study investigated a random sample of 534 university students attending public and private universities in southern Brazil. The choice of scale was based on consideration of the best adjustment for the Brazilian context, appropriate translation and content validation. For an analysis of the collected data, structural equation modeling was employed using two strategies.

Findings

The findings indicate that, in the model estimation stage, the scales for behavior and attitude have been reduced. Among all of the models estimated, the best adjusted model indicates that financial knowledge and financial attitude have positive impacts on financial behavior.

Research limitations/implications

The results are not generalizable to the wider population; to enable such generalization, different profiles should be researched using a larger sample. In practical terms, the financial behavior of Brazilian university students expresses the ability to establish long-term aims and saving aimed at future acquisitions and unexpected spending. This behavior is directly influenced by basic and advanced questions of financial knowledge and also by the importance attributed to attitude by establishing aims, control of spending and financial reserves.

Originality/value

This paper describes a pioneer study with respect to modeling financial literacy in Brazil. This topic can be improved as the need for rigorous evaluation of financial literacy grows at the same speed as the creation of more complex financial products.

Details

Management Research Review, vol. 39 no. 3
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 10 April 2019

John Holland

The paper aims to rethink empirical models and theory used in explaining banks and financial institutions (FIs) and to enhance the process of theory construction. This is…

Abstract

Purpose

The paper aims to rethink empirical models and theory used in explaining banks and financial institutions (FIs) and to enhance the process of theory construction. This is a provisional response to Colander et al. (2009) and Gendron and Smith-Lacroix’s (2013) call for a new approach to developing theory for finance and FIs.

Design/methodology/approach

An embryonic “behavioural theory of the financial firm” (BTFF) is outlined based on field research about banks and FI firms and relevant literature. The paper explores “conceptual connections” between BTFF and traditional finance theory ideas of financial intermediation. It does not seek to “integrate” finance theory and alternative theory in “meta theory” and has a more modest aim to improve theory content through “connections”.

Findings

The “conceptual connections” provide a means to develop ideas proposed by Scholtens and van Wensveen (2003). They are part of a “house with windows” intended to provide systematic means to “take data from the outside world” whilst continuously recognising “the complexities of the context” (Keasey and Hudson, 2007) to both challenge and build the core ideas of FT.

Research limitations/implications

The BTFF is a means to create “conversations” between academics, practitioners and regulators to aid theory construction. This can overcome the limitations of such an embryonic theory.

Practical implications

The ideas developed create new opportunities to develop finance theory, propose changes in banks and FIs and suggest changes in the focus of regulation.

Originality/value

Regulators can use the expanded conceptual framework to encourage theory development and to enhance accountability of banks and FIs to citizens.

Details

Journal of Financial Regulation and Compliance, vol. 27 no. 2
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 5 August 2019

Megan Ann McCoy, Kenneth J. White and Kim Love

There is a paucity of empirical research that explores the financial well-being of collegiate student-athletes. The purpose of this paper is to investigate the key aspects…

Abstract

Purpose

There is a paucity of empirical research that explores the financial well-being of collegiate student-athletes. The purpose of this paper is to investigate the key aspects of financial well-being (e.g. financial knowledge, financial self-efficacy and finance-related stress levels) of varsity athletes at US colleges and universities.

Design/methodology/approach

The authors used data from the National Student Financial Wellness Study. The data were analyzed using general linear regression models.

Findings

The findings suggest student-athletes have lower financial knowledge than students who are non-athletes. Despite their lower levels of financial knowledge, these student-athletes report higher levels of financial self-efficacy. Furthermore, even when controlling for scholarship funding, student-athletes reported lower levels of financial stress than their counterparts. One could interpret this as student-athletes having a false sense of confidence in their money management behaviors. This overconfidence can impact many areas of their overall financial well-being. Alternatively, non-athletes may not be as financially confident as they should be.

Research limitations/implications

This study could be replicated with stronger measures (e.g. Financial Self-Efficacy Scale), with the inclusion of subjective financial knowledge measures, comparing the impact of demographic variables. As, most financial constructs have gender differences (Farrell et al., 2016) and race differences (Amatucci and Crawley, 2011) and depend upon college major (Fosnacht and Calderone, 2017). Another limitation of this study is the small percentage of student-athletes, a common problem with research in this area. Further research is also needed to unpack the finding that self-efficacy decreases at higher levels of financial knowledge.

Practical implications

It is evident that college students (athletes/non-athletes) need financial education. For universities and college coaches, this study could be used as a rationale for providing financial education for their athletes. The addition of financial courses could be used as a recruiting tool for collegiate coaches and benefit the university. Requiring financial education could also benefit universities long term as it may potentially increase the donor possibilities by alumni. As a final note, it is important that financial courses figure out ways to improve financial self-efficacy alongside financial knowledge, as findings suggest both are integral to decreasing financial stress.

Social implications

Less than 4 percent of universities in the USA require students to take a personal finance course (Bledsoe et al., 2016). If more universities included personal finance as a graduation requirement and did more to engage student-athletes (and non-athletes) in financial planning, then the average level of financial knowledge would likely improve on campuses across the USA. In addition, increasing young adults financial self-efficacy could improve financial stress which is linked to mental health and physical health.

Originality/value

This study provides the first empirical look into the financial well-being of collegiate student-athletes across the USA. Although there are many benefits to participation in college sports, student-athletes face additional time pressures and a predisposition to clustering around certain majors. Findings suggest that collegiate athletes need additional support around their financial literacy and non-athletes may need support developing financial self-efficacy. These two findings should be used by academic institutions and athletic departments to determine how to encourage financial health in their student-athletes and general student body.

Details

Sport, Business and Management: An International Journal, vol. 9 no. 4
Type: Research Article
ISSN: 2042-678X

Keywords

Content available
Article
Publication date: 25 October 2018

Thiago Borges Ramalho and Denis Forte

People are increasingly responsible for making sound financial decisions to foster their financial satisfaction and well-being, which magnifies the importance of financial

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4291

Abstract

Purpose

People are increasingly responsible for making sound financial decisions to foster their financial satisfaction and well-being, which magnifies the importance of financial literacy, and this concept and measurement is still not yet crystallized in the literature, specifically capturing different behavior perceptions. Moreover, there is not a distinction based on different classifications of behavior, such as over or underconfidence, to understand the relation between literacy and decision process. To fill this gap, this paper aims to investigate whether the financial literacy conceptual model proposed applies similarly to every group independently of their previous self-confidence perception. For this purpose and quality control, OECD (2016) data were used with a final sample of 1,487 Brazilian citizens. Quantitative analysis technique using partial least squares structural equations path modeling and differences between groups using multi-group analysis was applied. In line with general studies, when analyzing the financial literacy usual model for the group as a whole, financial knowledge construct positively influences self-confidence, and both together positively affect financial behavior. However, for individuals with low financial knowledge and low self-confidence, as well as for those with too much or too little confidence, the model did not hold. Therefore, self-confidence perception influences the way financial knowledge is used for financial decisions and should be addressed in financial education and training to be more effective.

Design/methodology/approach

To operationalize the variables and test the paper’s hypotheses, the authors used the methodology developed in OECD (2016), based on the research instrument’s Brazilian application adapted from the questionnaire developed in OECD (2015), with data initially used and made available by Garber and Koyama (2016). Based on the recommendations of Hair Jr et al. (2017a, 2017b), the authors used partial least squares modeling PLS-PM (SmartPLS 3.2.6) to estimate the structural models.

Findings

Concerning structural relationships, the final model showed knowledge with a positive influence on self-confidence, self-confidence with a positive effect on behavior and knowledge with a positive influence on behavior, both directly and, through its relationship with self-confidence, indirectly. This underscores that, for the total sample, the greater people’s knowledge and self-confidence, the better their behavior. The unexpected absence of attitude in the final model, even allowing for potential measurement problems, brings up an important reflection on the mediating effect that the self-control variable may exert between attitude and behavior. A person may believe that saving for the future is important (attitude) but whether they actually save (behavior) may depend on self-control, which is needed to prevent immediate gains from being prioritized in practice.

Research limitations/implications

The findings reported so far concern the study’s total sample. However, as expected from the literature review that provides the basis for the sixth and the most important hypothesis, respondents were found to be heterogeneous in terms of knowledge and self-confidence levels. These differences were evaluated by means of multi-group analyses that indicated that the model does not apply to respondents with low knowledge and low self-confidence and to those who are over- and underconfident. This implies inferring that financial education programs may be of little use if they only address technical knowledge development and fail to consider behavioral aspects such as those related to self-confidence, as this paper points out, and others. This signals the importance of diagnosing people’s profiles to enable developing solutions capable of minimizing the presence of behavioral biases. This need to be studied further.

Practical implications

The results imply inferring that financial education programs may be of little use if they only address technical knowledge development and fail to consider behavioral aspects such as those related to self-confidence, as this paper points out, and others. Models must be reviewed in light of natural diferences of cognition and lead to customized financial education.

Social implications

This signals the importance of diagnosing people’s profiles to enable developing solutions capable of minimizing the presence of behavioral biases. Therefore, not only training topics in personal finance but also a deeper education program since the kindergarden must be considered.

Originality/value

Its practical contribution is to suggest the development of financial education programs that also take account of the potential presence of behavioral biases, which may prevent the misallocation of (scarce) public- and private-sector funds stemming from a limited focus on developing the population’s actual financial knowledge.

Details

RAUSP Management Journal, vol. 54 no. 1
Type: Research Article
ISSN: 2531-0488

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Article
Publication date: 19 December 2018

Mauricio Losada-Otalora, Carlos Augusto Valencia Garcés, Jorge Juliao-Rossi, Pedro Mario Donado and Efraín Ramírez F.

The purpose of this paper is to explore the role of banks in enhancing consumer knowledge aiming to increasing customer’s financial well-being.

Abstract

Purpose

The purpose of this paper is to explore the role of banks in enhancing consumer knowledge aiming to increasing customer’s financial well-being.

Design/methodology/approach

This research applied two quantitative studies with customers of banks in a Latin American country. The literature review and the results of the data analysis founded the development of a model that relates bank information transparency and subjective financial well-being through consumer financial knowledge.

Findings

By being transparent banks may transform the financial well-being of their customers. Particularly, this paper shows that consumer financial knowledge mediates the relationship between bank information transparency and the subjective financial well-being of individuals. However, the mediational effect occurs by subjective but not objective financial knowledge.

Research limitations/implications

The mediational model of this research does not take in consideration the role that individual factors play in the exposition and processing of the information provided by banks and its final impact on the subjective well-being of individuals. Also, this paper does not explore potential moderators of the theoretical relationships neither include cultural variables in the analysis.

Originality/value

Firm transparency has been related to various constructs in the marketing literature; however, its impact on consumer financial well-being is under-researched. This paper shows that companies need to aim to increase the subjective financial knowledge of their customers as a way to improve ultimate well-being of their customers.

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