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Article
Publication date: 1 October 2009

B. de Clercq and J.M.P. Venter

Using exploratory research, this study analysed some of the factors that have an impact on the level of financial literacy of undergraduate students studying to become…

Abstract

Using exploratory research, this study analysed some of the factors that have an impact on the level of financial literacy of undergraduate students studying to become chartered accountants. The study utilised an internationally developed instrument to measure financial literacy. It investigated whether some of the factors that were identified in international studies also influence the financial literacy levels of chartered accountant students in South Africa. In line with previous international studies, the study concluded that gender, age, language, race and income levels do have an impact on the level of financial literacy. This information should enable chartered accountant firms to identify trainee accountants who might require special training in the field of financial literacy.

Details

Meditari Accountancy Research, vol. 17 no. 2
Type: Research Article
ISSN: 1022-2529

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Book part
Publication date: 9 June 2020

Marcellia Susan

Micro, small, and medium enterprises (MSMEs) are important assets for the economic sustainability in Indonesia. The sector has an important role in encouraging economic…

Abstract

Micro, small, and medium enterprises (MSMEs) are important assets for the economic sustainability in Indonesia. The sector has an important role in encouraging economic growth and supporting the creation of new jobs for the Indonesian population. When Indonesia was facing the economic crisis situation, MSMEs remained and stood strong. In fact, the data shows an increasing number of MSMEs. Despite their contribution to Indonesia’s economies, it turns out that MSMEs still have very basic problems. The results of previous research indicate that MSMEs still face various problems related to financial management caused by a lack of managerial and financial knowledge. There are many cash flow problems faced by MSMEs that are in line with the lack of knowledge and understanding of financial management by MSME actors. This indicates that owners or managers of MSMEs need to have sufficient financial literacy. Understanding of financial literacy is paramount for business actors and can be utilized for instance to prepare financial statements that can be used to obtain funds. In the context of MSMEs, owners or managers need to have financial knowledge related to financial access and also for a company business to grow well. This study aims to analyze the financial literacy of owners or managers and its impact on access to finance and growth of the MSMEs in West Java, Indonesia. The samples of this research are MSMEs’ owners or managers of various business types. Data concerning Financial Literacy, Access to Finance, and Growth of the MSMEs are obtained through questionnaires. The obtained data were processed using Structural Equation Modeling to ensure the relationships between research variables. The results of the research analysis show depictions of the financial literacy, financial access, and growth of MSMEs in West Java, Indonesia. The results of the study support the previous studies and theories that Financial Literacy has a positive effect on Access to Finance and Growth of MSMEs, and Access to Finance also has a positive effect on Growth of MSMEs.

Details

Advanced Issues in the Economics of Emerging Markets
Type: Book
ISBN: 978-1-78973-578-9

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Article
Publication date: 1 June 2021

Ümmühan Mutlu and Gökhan Özer

This study examines the effects of variables such as financial literacy and locus of control on the financial behavior of individual investors. Additionally, this article…

Abstract

Purpose

This study examines the effects of variables such as financial literacy and locus of control on the financial behavior of individual investors. Additionally, this article aims to reveal the moderator effect of financial literacy on locus of control and financial behavior.

Design/methodology/approach

Responses were collected from a questionnaire given to a convenience sample of 1,347 individual investors. Exploratory factor analysis (EFA), which reveals the factor structure of the scale, was used at the beginning of the study, and then confirmatory factor analysis (CFA) was performed to confirm this new factor structure. Hypothetical relationships were examined using structural equation modeling.

Findings

The study provides statistical support for the validity and reliability of the scales. The statistical results of the analysis reveal that financial literacy and locus of control have a positive effect on financial behavior. Moreover, the authors prove that financial literacy changes the relationship between internal locus of control and financial behavior. In conclusion, financial literacy plays a significant role as a moderator variable that interacts with locus of control.

Originality/value

The findings of the research are important in demonstrating empirical evidence for the theoretical correlations. In support of the current literature, this study has confirmed the positive effects of internal locus of control and financial literacy on the financial behavior of individual investors. In addition, it has been determined that the relationship between an individual's financial behavior and internal locus of control varies according to their level of financial literacy.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

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Article
Publication date: 3 June 2021

Malvika Chhatwani and Sushanta Kumar Mishra

The present study examines the linkage between financial literacy and financial fragility during COVID-19. It further examines if financial literacy has a differential…

Abstract

Purpose

The present study examines the linkage between financial literacy and financial fragility during COVID-19. It further examines if financial literacy has a differential impact on financial fragility based on psychological (financial confidence), economic (wealth) and social (race) factors.

Design/methodology/approach

The authors used nationally representative data of the American working age-group. They collated six different datasets collected at different time-periods to conduct the present study. Based on 2,202 observations, they conducted logistic regression analyses to test the proposed relationships.

Findings

The authors find that financial literacy reduces the odds of being financially fragile by 9.1%. Furthermore, they find that financially literate consumers having high financial confidence are less financially fragile during COVID-19. Besides, the adverse impact of financial literacy on financial fragility is more for consumers having more than less wealth. The interaction with race is not significant, suggesting that financial literacy cuts across racial boundaries.

Practical implications

Financial fragility is an important factor having numerous deleterious consequences. The authors’ study found that financial confidence, psychological factor and wealth economic factor enhances the negative effect of financial literacy on financial fragility. Banks and financial institutes can develop mechanisms to infuse confidence in individuals during the pandemic to reduce their financial fragility. Policymakers and governments may increase awareness related to debt management practices and design financial literacy interventions to reduce financial fragility among individuals.

Originality/value

The study is one of the initial studies to examine the antecedents of financial fragility. Based on a time-lagged data, the authors’ study examines the linkage between financial literacy and financial fragility. Though scholars have investigated financial literacy and its implications, scholarly work in this domain during COVID-19 is at best limited. The study contributes to the literature by testing the effects of boundary conditions that can change financial literacy's impact on financial fragility.

Details

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

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Article
Publication date: 6 April 2021

Tinashe Munyuki and Coretta Maame Panyin Jonah

This paper aims to explore the association between financial literacy and entrepreneurial success among young entrepreneurs within an economically disadvantaged community…

Abstract

Purpose

This paper aims to explore the association between financial literacy and entrepreneurial success among young entrepreneurs within an economically disadvantaged community in Cape Town, South Africa.

Design/methodology/approach

The mixed-method approach was adopted for the study. In-depth interviews were used in collecting the qualitative data while structured interviews using questionnaires were administered in collecting the quantitative data. The participants for the study were strictly young entrepreneurs.

Findings

The study found that entrepreneurs understood the concept of financial literacy and this was corroborated by their financial literacy average score of 59.03, which is above the national financial literacy average score of 54.00. The study further revealed that a positive association exists between financial literacy and entrepreneurial success. Hence, high levels of financial literacy result in increased business success.

Research limitations/implications

The sample size of the study was relatively small, for which reason, a mixed-method approach was adopted to strengthen the research findings. The research also considered only one disadvantaged community in South Africa (Khayelitsha).

Originality/value

To the best of the knowledge, the influences of financial literacy on the success of small and medium enterprises (SMEs) among young entrepreneurs have not been well-explored in economically disadvantaged areas within the South African context. As a result, this study sheds light by assessing the level of financial literacy among young entrepreneurs in economically disadvantaged communities and by determining the relationship between financial literacy and entrepreneurial success. The study further provides recommendations on policy-making to ensure that through successful entrepreneurship, developmental challenges such as unemployment can be reduced.

Details

Journal of Entrepreneurship in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2053-4604

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Book part
Publication date: 9 June 2020

Subiakto Soekarno and Shirley Pranoto

This research focuses on the financial literacy level, stock participation, and financial behavior among millennials in Indonesia.Logit regression analysis is performed to…

Abstract

This research focuses on the financial literacy level, stock participation, and financial behavior among millennials in Indonesia.

Logit regression analysis is performed to analyze the relationship among tested variables. The weighted percentage analysis is also used to portray a response in relation to the sample of respondents. Such an analysis is widely used in Indonesia.

Findings suggest that for basic and advanced financial literacy level topics, millennials with higher education level and profession related to economy are the ones who have high basic financial literacy level. However, as respondents become older and/or get married, the basic financial literacy level tends to decrease. When the questions are advanced, the education level is statistically significant. If they have more available money to spend than others, then they tend to have a higher advanced financial literacy level. However, the advanced financial literacy level of female respondents who are older and/or have children tends to decrease. Subsequently, the relationship between financial literacy level and stock market participation is evident when millennials have a high basic and/or advanced financial literacy level, suggesting that they tend to participate in the stock market. Overconfident millennials or those who focus on learning economics also likely participate in the stock market.

Details

Advanced Issues in the Economics of Emerging Markets
Type: Book
ISBN: 978-1-78973-578-9

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Book part
Publication date: 25 May 2021

Evija Dundure and Biruta Sloka

Every citizen can be financially and economically active in certain circumstances if he or she has competencies, such as financial literacy. Current academic research…

Abstract

Every citizen can be financially and economically active in certain circumstances if he or she has competencies, such as financial literacy. Current academic research suggests that financial literacy may be more important than income level and professional qualifications, as the decisive factor in the future will not be the amount of financial resources available to a person but the ability to manage them effectively and achieve their goals. Financial literacy competencies help different social groups to achieve private financial stability, acquire skills such as private financial planning, savings (including the third pillar of pensions), and their diversification, private capital multiplication, and openness to new business initiatives. The study aims to find out how financial literacy has developed in Estonia, Latvia, and Lithuania. Particular attention is paid to factors influencing the level of financial literacy. Research methods used are analysis of scientific publications and previously conducted research, analysis of surveys’ data on financial literacy and their factors, comparative time-scale analysis using regression trendline calculations of Estonia, Latvia, and Lithuania. The research results proved the impact and interconnection of main financial inclusion aspects such as account ownership, use of the Internet, availability of ATMs, and bank offices on financial literacy level. The main factor influencing the demand side of financial services is numeracy knowledge; a strong correlation has been found between PISA mathematics average scores for countries and their literacy level. The analyzed savings factor (voluntary savings for pension, life insurance, and investments in mutual funds) showed a heterogeneous situation – the ranks of countries differed from the financial literacy levels. It draws the attention of government policy-makers to attract citizens to these long-term investment and social security products by strengthening the supply side of the financial services.

Details

Contemporary Issues in Social Science
Type: Book
ISBN: 978-1-80043-931-3

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Book part
Publication date: 26 October 2020

Sebastian Bauhoff, Katherine Grace Carman and Amelie Wuppermann

Under the Patient Protection and Affordable Care Act (ACA), many low-income consumers have become eligible for government support to buy health insurance. Whether these…

Abstract

Under the Patient Protection and Affordable Care Act (ACA), many low-income consumers have become eligible for government support to buy health insurance. Whether these consumers are able to take advantage of the support and to make sound decisions about purchasing health insurance likely depends on their knowledge and skills in navigating complex financial products. This ability is frequently referred to as “financial literacy.” We examined the level and distribution of consumers' financial literacy across income groups, using 2012 data collected in the RAND American Life Panel, an internet panel representative of the US population. Low financial literacy was particularly prevalent among individuals with incomes between 100% and 400% of the federal poverty level, many of whom will be eligible for health insurance subsidies. In this group, people who are young, less educated, female, and have less income were more likely to have low financial literacy. Our findings suggest the need for targeted policies to support vulnerable consumers in making good choices for themselves, possibly above and beyond the support measures already part of the ACA.

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Article
Publication date: 15 December 2020

Kavita Karan Ingale and Ratna Achuta Paluri

Numerous exploratory, conceptual and empirical enquiries on financial behaviour and literacy have been conducted in the areas of economics, finance, business and…

Abstract

Purpose

Numerous exploratory, conceptual and empirical enquiries on financial behaviour and literacy have been conducted in the areas of economics, finance, business and management. However, no attempt was made to present a comprehensive science mapping of the area so far. Hence, the study intends to elicit the trend in the research field through synthesis of knowledge structures.

Design/methodology/approach

Bibliometric analysis in the field of financial literacy and financial behaviour was performed on a sample of 1,138 documents based on a scientific search strategy run on the Web of Science database for the period 1985–2020. Biblioshiny, which is a web-based application included in Bibliometrix package developed in R-language (Ariaa and Cuccurullo, 2017), was used for the study. With the help of automated workflow in the software, prominent journals, authors, countries, articles, themes were identified; and citation, co-citation and social network analysis were conducted.

Findings

Results show that the themes of financial literacy and financial behaviour have evolved over a period of time as an interdisciplinary field. In the initial stages, researchers focused on demographic and socio-economic determinants, but gradually the field embraced topics like behavioural and psychological constructs influencing financial behaviour. Along with conceptual structure, this research reveals the intellectual and social structure of the domain. This study provides important insights on areas that need further investigation.

Research limitations/implications

The current research is a bibliometric analysis and hence limitations related to such studies are applicable. For future researchers to derive a strong conceptual framework, a systematic review of literature would be helpful. Science mapping for this study is limited to the Web of Science database owing to its wider coverage of good quality journals, structured formats which are compatible with the Bibliometrix software.

Practical implications

The current study provides important insights on financial literacy and financial behaviour and their inter-linkages. It highlights the most addressed issues in the area and leads towards the prospective areas for research. It informs the future researchers about the emergent themes, contexts and possibilities of collaborations in this area by revealing social and intellectual structure of the domain.

Social implications

The paper can provide important insights for policy formulation in the areas of financial education and literacy.

Originality/value

There has been lot of conceptual and empirical work done in the past, across countries, spanning the disciplines such as economics, finance, psychology and consumer behaviour. A major contribution of this study is that it consolidates fragmented literature in the area, highlights significant sources, authors and documents, while exploring the relation between financial literacy and financial behaviour.

Details

Review of Behavioral Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1940-5979

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Article
Publication date: 24 June 2020

George Okello Candiya Bongomin, Joseph Mpeera Ntayi and Charles Akol Malinga

The main purpose of this study is to establish the mediating effect of social network in the relationship between financial literacy and financial inclusion of the poor by…

Abstract

Purpose

The main purpose of this study is to establish the mediating effect of social network in the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries.

Design/methodology/approach

The study adopted a cross-sectional research design and data were collected from the poor who resides in rural Uganda. Structural equation modelling (SEM) through analysis of moment structures (AMOS) was used to analyze the data. Bootstrap approach with 5,000 samples was run to establish the mediating effect of social network in the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries.

Findings

The results showed that social network significantly and positively mediate the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries. In addition, financial literacy also has a direct significant and positive effect on financial inclusion. Overall, the findings suggest that the presence of social network fully mediate the effect of financial literacy on financial inclusion of the poor by microfinance banks in developing countries.

Research limitations/implications

This study adopted a cross-sectional research design and data were collected using a semi-structured questionnaire. Future studies could adopt longitudinal research design to establish the dynamic characteristics of the samples under study over time. Besides, this study collected data from only poor households who were clients of microfinance banks located in rural Uganda. It ignored the other section of the population who were not the poor. Therefore, future studies could use the other section of the population who are clients of commercial banks.

Practical implications

The advocates of financial literacy and managers of microfinance banks in developing countries should ensure using existing local structures such as community and village associations to conduct financial literacy training. The village associations help in mobilizing members who are close-knit based on the existing societal ties that can be used as a channel for disseminating vital financial literacy information. Indeed, financial literacy workshops, seminars, and business clinics can be easily conducted to individuals who are members of the village associations.

Originality/value

This paper integrates social network theory in the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries. Social network acts as a conduit through which financial knowledge and skills flow to increase the scope of financial inclusion of the poor in developing countries.

Details

International Journal of Sociology and Social Policy, vol. 40 no. 11/12
Type: Research Article
ISSN: 0144-333X

Keywords

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