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11 – 20 of over 153000Christi R. Wann, Beverly K. Brockman and Christopher M. Brockman
The purpose of this paper is to study the effect of credit record overconfidence on the use of alternative financial services (AFSs).
Abstract
Purpose
The purpose of this paper is to study the effect of credit record overconfidence on the use of alternative financial services (AFSs).
Design/methodology/approach
Using data from the 2018 National Financial Capability Study (NFCS), the authors estimate logistic regressions on the use of at least one AFS by adding a credit record confidence variable that captures deviations between self-assessments of credit record management and the number of reported behaviors that would negatively affect aspects of a Fair Isaac Corporation (FICO) score.
Findings
The authors find that respondents with credit record overconfidence have over two times higher odds (123.9%) of using AFS than the odds of respondents with financial knowledge overconfidence (46.8%), relative to their reference categories. When compared directly, those with only credit record overconfidence have 32.6% higher odds of using AFS than those with only financial knowledge overconfidence.
Practical implications
The results provide implications for education programs, not only for vulnerable groups at higher risk for AFS use but also for those with cognitive biases, such as credit record overconfidence. Potential solutions include personal financial education that includes debiasing and behavioral techniques for overconfidence.
Originality/value
This paper studies, for the first time, the effect of deviations between actual and perceived credit record management on AFS use.
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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”…
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.
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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 knowledge…
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.
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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…
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.
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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 of…
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.
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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…
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.
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Jing Jian Xiao, Jin Huang, Kirti Goyal and Satish Kumar
This study aims to examine the literature on consumer financial capability. By analyzing the research trends, theories, definitions and themes, the literature on financial…
Abstract
Purpose
This study aims to examine the literature on consumer financial capability. By analyzing the research trends, theories, definitions and themes, the literature on financial capability is synthesized, and agenda for future research is suggested. A framework is presented that portrays the antecedents as well as the outcomes of financial capability and their interlinkages.
Design/methodology/approach
Following a systematic approach, the review is based on 215 articles published during January 2007 and–March 2022, retrieved from Scopus. It presents the definitions and theories of financial capability, publication trends, influential articles, prominent authors, prolific journals and countries publishing on financial capability. Using bibliographic coupling, the intellectual structure of the topic is explored, along with offering a framework through content analysis.
Findings
The bibliographic coupling analysis identifies four major clusters of research themes and capability theory appeared to be the most prominent theory. The synthesis draws upon five conceptual definitions of financial capability. Based on the discussion, in this review, financial capability is defined as an individual ability to apply appropriate financial knowledge, perform desirable financial behaviors and take available financial opportunities for achieving financial well-being. A conceptual framework delineates the synthesized literature and propositions based on this framework and relevant research are proposed. Finally, directions for future research are discussed.
Originality/value
This paper is an attempt to offer a comprehensive synthesis of the scholarship on financial capability and its conceptualization. It further proposes an extensive future research agenda. The study has implications for financial services providers relating to retail bank marketing.
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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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Meiyu Liu, Yelin Hu, Chengyou Li and Shuo Wang
The rich financial knowledge of small and micro business owners helps to enhance the formal credit demand of small and micro enterprises and change the credit channel preference…
Abstract
Purpose
The rich financial knowledge of small and micro business owners helps to enhance the formal credit demand of small and micro enterprises and change the credit channel preference of small and micro enterprises. The purpose of this paper is to explore the relationship between financial knowledge and the credit practices of 290 small and micro enterprises in China’s Jiangsu and Shandong provinces based on their formal credit needs and preferred channels of credit.
Design/methodology/approach
To measure the degree of the credit constraints of small and micro enterprises, this study applied questionnaire surveys to obtain information on the credit demand and supply of 363 small and micro enterprises in the Jiangsu and Shandong provinces. Firstly, a probit model is used to study the influence of financial knowledge on the formal credit demand and credit acquisition possibility of small and micro enterprises, and tool variables and a biprobit model are used to deal with the possible errors of endogenesis and sample selection. Secondly, a tobit model is used to study the influence of financial knowledge on the credit access of small and micro enterprises in different channels, and tool variables and a Heckman two-stage model are used to deal with endogenesis and possible errors in sample selection. Finally, this study carried out a series of robustness tests to make the conclusions more reliable.
Findings
This study is based on the perspective of the knowledge-based view to explore the impact of financial knowledge on the credit behaviour of small and micro enterprises. This study found that financial knowledge can increase a small and micro enterprise’s formal credit needs and drive the small and micro enterprise to actively apply for loans. Furthermore, financial knowledge has a significant and positive influence on the acquisition of formal credit and approved lines of formal credit and a significant and negative influence on the acquisition of informal credit and approved lines of informal credit.
Research limitations/implications
The results indicated that increased financial knowledge can increase the likelihood of a small and micro enterprise to prefer formal credit and reduce the likelihood of it to prefer informal credit channels.
Originality/value
Financial knowledge is the ability to master basic economic knowledge and financial concepts as well as the ability to use knowledge to manage and allocate financial resources. The rich financial knowledge of small and micro business owners helps to enhance the formal credit demand of small and micro enterprises and change their credit channel preference. This paper offers a new perspective on the problems of credit constraint, low participation in formal credit markets and high participation in private credit markets among China’s small and micro enterprises and valuably supplements the research literature.
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Yimin Yang, Yuefeng Su, Lulu Yang and Xiongwang Zeng
This paper aims to establish a systematic cognition to alleviate the supply–demand contradiction in rural financial markets from an integrated perspective of knowledge management…
Abstract
Purpose
This paper aims to establish a systematic cognition to alleviate the supply–demand contradiction in rural financial markets from an integrated perspective of knowledge management and proposes the concept of rural financial knowledge ecosystem (RFKE) to encourage multifaceted solutions.
Design/methodology/approach
The authors qualitatively describe the process that the knowledge management dilemmas cause the supply–demand contradiction in the rural finance and further summarize a systematic methodology from three dimensions: the knowledge subject, the knowledge environment and the knowledge ecology.
Findings
The authors list four types of knowledge management dilemmas leading to the supply–demand contradiction in the rural finance, i.e. the weak knowledge sharing, the poor knowledge flow, the slow knowledge updating and the imperfect knowledge environment. Meanwhile, the RFKE model consisting of the ecological subject, the ecological environment and the ecological regulation is also presented.
Research limitations/implications
The role of knowledge management in improving the allocation of financial resources to various rural financial market participants (government, rural financial institutions, farmers, agricultural enterprises, etc.).
Originality/value
The authors creatively give the RFKE model, which complements and enriches the theory of knowledge management. Meanwhile, relevant management practices are urgently needed under the macro circumstance of the COVID-19 pandemic and the rural revitalization in China.
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