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This study examines the relationship between financial literacy and risk-taking behavior in the stock market for both graduates and undergraduates.
Abstract
Purpose
This study examines the relationship between financial literacy and risk-taking behavior in the stock market for both graduates and undergraduates.
Design/methodology/approach
This study conducted two surveys on two groups: graduates and undergraduates. The questionnaires were sent to the two groups via “Google Form”. The surveys were undertaken from March to October 2021, with final data on 500 undergraduates and 400 graduates. The three techniques used are multiple linear regression (MLR), structural equation model (SEM) and ordinal logit regression (OLR) to examine the causal relationships.
Findings
Based on survey data on 400 graduate and 500 undergraduate students, our results show that financial literacy is positively associated with risk-taking behavior (i.e. use of debt and willingness to use debt) after controlling for demographics. Graduates with higher levels of financial literacy are more likely to use debt. Undergraduates with higher levels of financial literacy are more willing to use debt. In addition, parental education has a significant moderating effect on the association between financial literacy and debt use among undergraduate students. The results are robust compared to the alternatives.
Research limitations/implications
Although this study finds a positive association between financial literacy and risk-taking behavior among graduates and undergraduates, and these results are robust to the alternatives, the scope of this study is limited and only focuses on Vietnam. Hence, it needs to be expanded overseas. Next, graduates may make investment decisions based on stock prices or valuations, and as a result, the link between financial literacy and stock valuations should be investigated in subsequent research. Last but not least, further studies should also examine the digital financial literacy level of the younger generation, as it plays an important role in the digital age.
Practical implications
First, this study finds that higher financial literacy tends to use more debt, implying that financially literate people know how to use debt smartly to earn more profits. Second, students with higher-educated parents are less likely to use debt for stock investment, meaning that parents help students avoid possible risks while in the university. Finally, female graduates and college students all perform lower in financial literacy than their male counterparts. This can create a larger gender gap in financial literacy between women and men, particularly, in a society in which men often play the leading role in the family. As a result, it calls for policymakers, educators and parents to pay more attention to improving financial literacy among girls and women in general.
Originality/value
This study has three contributions. First, this is the first study to examine the impact of financial literacy on risk-taking behavior between two groups of graduates and undergraduates. The results show that individuals with a higher level of financial literacy are more likely to engage in risk-taking behavior (i.e. debt use) in terms of the stock market. Recent research, for example, Phung et al. (2022), examines investors’ informal debt (from families and friends), while this study investigates graduates’ debt use (from brokerage firms). Second, parental education is a significant mediator between college students’ financial literacy and debt use. The literature on parental socialization mainly documents parents’ direct influence on children’s financial knowledge and performance (Shim et al., 2010; Phung, 2023). Unlike previous research, this study finds that parental education plays a moderating role between college students’ financial literacy and their risk-taking behavior. Finally, three methods and multiple models are used to test causal relationships. The results are robust compared to the alternatives.
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Kristjan Pulk and Leonore Riitsalu
Consumer culture is promoting immediate gratification, and the rise of digital financial services is increasing the risk of indebtedness while debt reduces well-being and affects…
Abstract
Purpose
Consumer culture is promoting immediate gratification, and the rise of digital financial services is increasing the risk of indebtedness while debt reduces well-being and affects mental health. The authors assess the effects of consumer information provision, debt literacy, chronic debt and attitudes toward debt on the intent to purchase on credit.
Design/methodology/approach
An online survey including an experiment with a credit offer vignette was conducted in a representative sample of Estonia (n = 1204). Treatment conditions depicted either the total cost and duration of the credit agreement or the annual percentage rate.
Findings
Receiving modified information resulted in a 26 to 30 percentage points decrease in propensity to purchase on credit. Purchasing on credit was associated with attitudes towards credit and chronic debt, but not with debt literacy.
Research limitations/implications
The findings reveal large effects of information provision and highlight the limited effects of debt literacy on credit decisions. Limitations may emerge from differences in financial regulation across countries.
Practical implications
The authors' results highlight the importance of applying behavioural insights in consumer credit information provision, both in the financial sector and policy. Testing the messages allows having evidence-based solutions that promote responsible purchasing on credit.
Originality/value
The findings call for changes in credit information provision requirements. Their effect is significantly larger compared to the literature, emphasizing the role of credit information provision in less regulated online markets.
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This study aims to gain insight into the motivations behind the decision to use high-cost payday loans by households who possess mainstream credit and to determine whether this…
Abstract
Purpose
This study aims to gain insight into the motivations behind the decision to use high-cost payday loans by households who possess mainstream credit and to determine whether this behavior has changed over time.
Design/methodology/approach
Using data from Statistics Canada’s Surveys of Financial Security, probit models are used to examine the sociodemographic and financial indicators associated with payday loan use.
Findings
The analysis uncovers the sociodemographic and financial characteristics of payday loan-user households with access to lower-cost short-term loans. The findings indicate that the likelihood of payday loan use has risen over time. Additional analysis reveals that indicators of financial instability are positively associated with payday loan use among this group.
Research limitations/implications
This research highlights the dichotomy of payday loan users and recommends policymakers tailor solutions to the specific needs of different types of payday loan users.
Practical implications
This research highlights the distinguishing sociodemographic and financial characteristics of payday loan user households and recommends policymakers tailor solutions to the specific needs of different types of payday loan users.
Originality/value
This is the first study, to our knowledge, to focus analysis on payday loan use of those with access to lower-cost short-term credit alternatives in Canada and to include measures of financial instability in the analysis. This research is timely given the current economic environment of high interest rates and high levels of household debt.
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This paper aims to provide a historical overview of AA, its purpose and benefits, the legal rationale for the SCOTUS ruling and what it means for colleges and the workplace…
Abstract
Purpose
This paper aims to provide a historical overview of AA, its purpose and benefits, the legal rationale for the SCOTUS ruling and what it means for colleges and the workplace regarding equitable opportunities for minority groups (which include women, Blacks, Hispanics, Asians and other low-income populations), as they aim for the “American dream”.
Design/methodology/approach
SCOTUS decision and rationale, along with literature.
Findings
The race-based affirmative action (AA) precedent was recently overturned by the Supreme Court of the United States (SCOTUS) in the case of Students for Fair Admission (SFFA), Inc. vs President and Fellows of Harvard College/University of North Carolina. SCOTUS ruled that race cannot be a specific basis for college admission. In other words, public and private colleges and universities will no longer be able to consider “race” as a factor in deciding which qualified applicants should be admitted to enhance the diversity of their student body.
Originality/value
This is an original analysis.
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Drawing from socialization theory this study investigates the effect of financial socialization and mediating role of “attitude toward money” (ATM) and financial literacy on the…
Abstract
Purpose
Drawing from socialization theory this study investigates the effect of financial socialization and mediating role of “attitude toward money” (ATM) and financial literacy on the financial behavior of young adults in an emerging economy.
Design/methodology/approach
A cross-sectional survey of 302 young adults was conducted and responses were analyzed to determine the key antecedents of financial behavior. The model was tested using OLS regression. Parallel mediation was tested using Process Macro in SPSS.
Findings
ATM, subjective financial literacy, objective financial literacy are positively associated with financial behavior. Furthermore, parallel mediation analysis establishes the role of ATM and subjective financial literacy as a mediator between financial socialization and financial behavior.
Research limitations/implications
These findings have implications for both financial and academic institutions and policymakers. Academic institutions should introduce personal wealth management courses at early stages in their courses to help young adults make appropriate financial decisions. Policymakers should emphasize creating a habit of budgeting and managing expenses among young adults in addition to promoting financial literacy.
Originality/value
This study focuses on determinants of financial behavior in young adults and specifically, argues that involving parents to financially socialize their children have a crucial impact on subjective financial literacy and ATM which has not been explored in previous literature.
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Jennifer M. Blaney, David F. Feldon and Kaylee Litson
Supporting community college transfer students represents a critical strategy for broadening participation in STEM. In addition to being a racially diverse group, students who…
Abstract
Purpose
Supporting community college transfer students represents a critical strategy for broadening participation in STEM. In addition to being a racially diverse group, students who pursue STEM degrees by way of community college report frequent interests in graduate study and academic careers. Thus, supporting and expanding transfer students’ PhD interests can help to diversify the STEM professoriate. This study aims to identify the experiences that predict PhD interests among students who transferred into the computer science major from a community college.
Design/methodology/approach
Relying on longitudinal survey data from over 150 community college transfer students throughout their first year at their receiving four-year university, we used regression analysis to identify the post-transfer college experiences that predict early interest in PhDs.
Findings
We found that receiving information about PhDs from a professor strongly predicted PhD interest among transfer students. Relationships with other variables indicate that the provision of information about graduate school was more likely to occur for students who participated in undergraduate research experiences than for those participating in internships. Descriptive data document inequities in who has access to these types of experiences.
Originality/value
This paper provides new insight into how STEM departments can develop targeted efforts to ensure that information about PhD training is equitably available to all transfer students. Working to ensure that faculty equitably communicate with students about PhD opportunities may go a long way in countering potential deterrents among transfer students who may be interested in such pathways.
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Gender disparity is a global phenomenon where females outnumber male participants. It has been observed that males are the early leaver from higher education, thus reflecting a…
Abstract
Purpose
Gender disparity is a global phenomenon where females outnumber male participants. It has been observed that males are the early leaver from higher education, thus reflecting a severe concern about social instability. Malaysia is a prominent example where females outnumber males in higher education. In this context, this paper aims to examine the effect of individual, social and financial factors on the higher education self-efficacy of male and female students. It develops a comprehensive understanding of gender-based decision factors in pursuing higher education.
Design/methodology/approach
The hypothesis was formed based on a comprehensive literature review following the hypothetico-deductive positivist approach. These hypotheses were tested based on a sample of 250 respondents. A multiple regression analysis was deployed to test the relationship between the dependent variable and its predictors.
Findings
The results suggest that male and female students’ self-efficacy depends on five determinants, i.e. family influence, peer influence, career expectancy outcome, gender roles and institutional factors. Male students tend to be influenced more by these five determinants than females. Additionally, male students with better financial backgrounds are more likely to have higher self-efficacy, whereas gender roles negatively affect male and female students’ self-efficacy for higher education.
Research limitations/implications
The breakout of COVID-19 resulted in the selection of limited students in Malaysia. Due to restricted movement orders, it was impossible to reach out to the students for data collection. Future research could include a broader area to include multiple other regions of Malaysia. For a broader aspect, the study could be conducted in other areas/countries where the problem of less male participation exists.
Practical implications
The relationship between higher education self-efficacy is assessed with social, financial and institutional factors for male and female students. It will enable the stakeholders and policymakers to make better decisions in increasing the self-efficacy of students to attain equity in higher education institutions.
Social implications
The finding of this paper will assist in increasing male participation in higher education institutions to avoid any social instability.
Originality/value
This paper contributes to the literature in understanding the causes of gender gap reversal, focusing on Malaysian higher education institutions. It also provides empirical evidence to look at potential factors that affect the higher education self-efficacy of male and female students.
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Evangelia Avgeri and Maria Psillaki
The research documented in this paper aims to examine multiple factors related to borrowers' default in peer-to-peer (P2P) lending in the USA. This study is motivated by the…
Abstract
Purpose
The research documented in this paper aims to examine multiple factors related to borrowers' default in peer-to-peer (P2P) lending in the USA. This study is motivated by the hypothesis that both P2P loan characteristics and macroeconomic variables have influence on loan performance. The authors define a set of loan characteristics, borrower characteristics and macroeconomic variables that are significant in determining the probability of default and should be taken into consideration when assessing credit risk.
Design/methodology/approach
The research question in this study is to find the significant explanatory variables that are essential in determining the probability of default for LendingClub loans. The empirical study is based on a total number of 1,863,491 loan records issued through LendingClub from 2007 to 2020Q3 and a logistic regression model is developed to predict loan defaults.
Findings
The results, in line with prior research, show that a number of borrower and contractual loan characteristics predict loan defaults. The innovation of this study is the introduction of specific macroeconomic indicators. The study indicates that macroeconomic variables assessed alongside loan data can significantly improve the forecasting performance of default model. The general finding demonstrates that higher percentage change in House Price Index, Consumer Sentiment Index and S&P500 Index is associated with a lower probability of delinquency. The empirical results also exhibit significant positive effect of unemployment rate and GDP growth rate on P2P loan default rates.
Practical implications
The results have important implications for investors for whom it is of great importance to know the determinants of borrowers' creditworthiness and loan performance when estimating the investment in a certain P2P loan. In addition, the forecasting performance of the model could be applied by authorities in order to deal with the credit risk in P2P lending and to prevent the effects of increasing defaults on the economy.
Originality/value
This paper fulfills an identified need to shed light on the association between specific macroeconomic indicators and the default risk from P2P lending within an economy, while the majority of the existing literature investigate loan and borrower information to evaluate credit risk of P2P loans and predict the likelihood of default.
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This paper aims to conduct a meta-analysis regarding the association between political connections and the cost of debt and tests for the moderating effect of the level of…
Abstract
Purpose
This paper aims to conduct a meta-analysis regarding the association between political connections and the cost of debt and tests for the moderating effect of the level of creditor protection on this relationship.
Design/methodology/approach
Keywords used to collect relevant empirical papers include “political connections, political ties, and political connectedness” from the one side, and “cost of loan finance, and cost of debt” from the other side. The search yields 24 published empirical papers from 2005 to 2022.
Findings
Findings show that there is a significant negative association between political connections and the cost of debt; this relationship is more pronounced only for countries characterized by a strong level of creditor protection. This moderating effect is further confirmed using meta-regression.
Originality/value
Findings are relevant for policymakers and managers in settings where relationship-based capitalism represents a prevailing feature as they highlight the important legal and institutional characteristics when considering the impact of political connections on the cost of debt. The paper also discusses some limitations inherent to this stream of research and proposes future research perspectives.
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Laura Hedin, Lydia Gerzel-Short, Lisa Liberty and Jason Pope
District-university partners increasingly rely on “grow-your-own” licensure programs to address teacher shortages. Because vacancies in special education represent a chronic…
Abstract
Purpose
District-university partners increasingly rely on “grow-your-own” licensure programs to address teacher shortages. Because vacancies in special education represent a chronic issue, our district-university partnership developed LEAP – the Licensed Educators’ Accelerated Pathway, successfully preparing 26 paraprofessionals as special education teachers (SEs). We describe a model university-district partnership in which we collaborated to design and implement paraprofessionals’ SE licensure program.
Design/methodology/approach
In this general review, we describe a district-university partnership collaboration that resolved barriers experienced by paraprofessionals working toward licensure in special education (Essential #4, Reflection and Innovation). The specialized design and partnership solutions were grounded in SE preparation research literature.
Findings
25 (28 entered the program and 25 completed) paraprofessionals from one large urban and several regional districts completed special education licensure through LEAP. Slightly more than half of LEAP participants were Black or Hispanic (see Table 1), contributing to the diversification of SE workforce. University-district partnership was successful in designing and delivering a program that allowed participants: a) to remain employed, b) attend evening classes in their geographic region or online, c) complete all field experiences in sponsoring districts (Essential #2) and d) receive concierge advising from a “completion coach.” We describe solutions to barriers experienced by paraprofessionals and advocate for district-university collaboration to address chronic teacher shortages.
Research limitations/implications
Limitations include lack of data on success of program completers during their first year of teaching as they began this work in Fall 2023. Further, because the participating district was large and urban, generalization of program details for small and rural districts is difficult.
Practical implications
Practical tips for developing grow-your-own special education licensure programs are providing. Detailed descriptions of barriers candidates experienced and ways the district-university partners resolved these issues are included. Programs like the one described has the potential to positively impact teacher pipeline issues.
Social implications
The program described provided highly-trained teachers to fill chronic vacancies in special education in three participating districts/agencies. Because students receiving special education services are at risk for school failure and are disproportionately impacted by teacher turnover, addressing this area through grow-your-own licensure programs represents a diversity, equity and inclusion initiative. Further, upskilling diverse paraprofessionals to licensed teacher roles represent an economic boost, which they might not otherwise have achieved.
Originality/value
Available research literature signals alarm over persistent teacher shortages in hard-to-staff districts and lack of diversity in the teacher workforce, but few published accounts describe successful programs. Partner collaboration fostered a re-imagining of course formatting and delivery to accommodate adult learners, avoiding problems often reported with alternative programs.
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