Financial Literacy and the Limits of Financial Decision-Making

2016 ◽  
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Financial Decision Making ◽  
Financial Decision

scholarly journals Gender Differences in Financial Decisions

2018 ◽  
Vol 11 (1) ◽  
pp. 21-27
Author(s):  
Jeetendra Dangol
Keyword(s):  
Gender Differences ◽  
Decision Making ◽  
Financial Literacy ◽  
Sampling Technique ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Financial Decision ◽  
Convenience Sampling ◽  
Risk Taker ◽  
Survey Questionnaires

This paper examines the gender differences in financial decision-making of university students who are young, single, childless individuals that have at least average financial literacy and very small or no income. This paper is based on the survey questionnaires developed by Grable and Lytton (2003), distributed and collected from 100 students (50 men and 50 women) by using convenience sampling technique. The study finds that men and women differ in their financial decision. Women are less risk taker than men in financial decision-making; it indicates that women prefer to safer investment.

Modelling the Effects of Financial Services Advertising on Financial Product Purchase: An Empirical Validation

2019 ◽  
Vol 23 (4) ◽  
pp. 418-431
Author(s):  
Pallavi Dogra ◽  
Rishi Raj Sharma
Keyword(s):  
Decision Making ◽  
Factor Analysis ◽  
Financial Literacy ◽  
Financial Services ◽  
Service Providers ◽  
Decision Making Process ◽  
Celebrity Endorsement ◽  
Financial Decision Making ◽  
Perceived Reality ◽  
Financial Decision

The main aim of the study is to find the effect of the financial advertisement on the respondent’s information selection, processing and analysing it while making the financial purchase decisions. The study identified the important factors that affect the investment decision-making process and explored them by using the exploratory factor analysis. The conceptual model has been tested using the AMOS SEM software. The factor analysis identified the four important factors that are affecting the financial decision-making, that is, financial literacy, celebrity endorsement, perceived reality and entertainment. The hypothesis testing reveals that advertisement, perceived reality and entertainment are affecting the information processing and financial decision-making process, whereas financial literacy and celebrity endorsement do not have significant effects on the financial product purchase. The results are useful for the advertisers, policy makers and the financial service providers so as to increase the sale of financial products by focusing on the variables extracted by the research.

scholarly journals Why Do Financial Literacy Programmes Fail?

2013 ◽  
Vol 2 (1) ◽  
pp. 18
Author(s):  
Bart Frijns ◽  
Aaron Gilbert ◽  
Alireza Tourani-Rad
Keyword(s):  
Decision Making ◽  
Causal Relationship ◽  
Financial Literacy ◽  
Positive Relationship ◽  
Financial Knowledge ◽  
Financial Decision Making ◽  
Financial Decision

Numerous studies have found a positive relationship between financial literacy andfinancial experience. Typically, this relationship is interpreted as being a causal relationship,i.e. an increase in financial literacy leads to better financial decision making. However, asimple relationship cannot be interpreted in a causal way. In this paper, we show evidencefor a causal relationship running the opposite way, i.e. people with more financial experienceseem to acquire more financial knowledge and become more financially literate. Thisfinding has important implications as it suggests that programmes targeted at improvingfinancial literacy could be more effective if they incorporate experiential components.

Skills and household financial decision-making in Indonesia

2020 ◽  
Vol 47 (11) ◽  
pp. 1433-1450
Author(s):  
Arief Wibisono Lubis
Keyword(s):  
Decision Making ◽  
Cognitive Ability ◽  
Financial Literacy ◽  
Well Being ◽  
Microfinance Institutions ◽  
Content Type ◽  
Household Decision ◽  
Financial Decision Making ◽  
Household Decision Making ◽  
Financial Decision

PurposeThis study examines whether financial literacy is a relevant factor that determines authority in household financial decision-making, an area that is often viewed as boring, difficult and full of uncertainties. Cognitive ability and personality traits are also included as additional explanatory variables.Design/methodology/approachThe logistic regression technique was applied using a sample of more than 2,300 microfinance institutions' clients in three provinces in Indonesia.FindingsThis study finds that financial literacy correlates positively with authority in household financial decision-making only among men. This does not mean that financial literacy is irrelevant for women's agency, since the skill might be important for authorities in other decision-making areas, including those outside households. Meanwhile, the relationship between cognitive ability and household financial decision-making authority is more universal.Research limitations/implicationsThis study does not collect information on the levels of financial literacy of other household members and does not capture respondents' perceptions of household financial decision-making.Social implicationsThe overall low level of financial literacy calls for the need for more targeted efforts to address this issue by policymakers. Education policy should also be designed to improve cognitive ability, as this ability is important for human agency and well-being.Originality/valueHousehold decision-making has received significant attention in the literature. Authority in household decision-making is important because it represents a person's agency and has a profound impact on well-being. To the best of author's knowledge, studies on the importance of skills in household financial decision-making are very limited.

Entrepreneurship development and financial literacy in Africa

2015 ◽  
Vol 11 (4) ◽  
pp. 281-294 ◽  
Author(s):  
Habib Auwal Abubakar
Keyword(s):  
Decision Making ◽  
Gender Gap ◽  
Financial Literacy ◽  
Business Environment ◽  
Literacy Skills ◽  
Access To Finance ◽  
Content Type ◽  
Entrepreneurship Development ◽  
Financial Decision Making ◽  
Financial Decision

Purpose – The purpose of this paper is to analyse the level of financial literacy in Africa based on previous studies and evidence from financial literacy surveys, with the aim of establishing how financial literacy impacts entrepreneurship development in Africa. The study specifically looks at how financial literacy affects the household behaviour regarding financial decision making, as well as the gender gap in financial literacy. As financial literacy is gaining momentum both in developed economies with sophisticated financial systems and developing countries with low levels of financial services, this research seeks to establish a formal relationship between financial literacy and access to finance and what impact both have for developing an entrepreneurship society in Africa. It also focuses on the relationship between financial decision making and gender as well as access to finance with the aim of carefully examining the implications on entrepreneurship development. Design/methodology/approach – To attain the above objective, the study employed a mixed methodology research design where both quantitative and qualitative methods were used. A survey method on financial literacy, conducted by: (Finscope, OECD) was thoroughly analysed in addition to previous work on entrepreneurship development, financial literacy, access to finance and poverty reduction in Africa. Findings – The results show that the difficulties in access to finance, access to market, policy support and entrepreneurship culture are the main problems and constraints on entrepreneurship development in Africa which has a very strong implication for financial literacy on the continent particularly on micro, small and medium enterprises. Other important problems include unfavorable investment climate, absence of entrepreneurship training programmes, unfriendly investment business environment, gender gap and lack of value chain in the entrepreneurship ecosystem. Research limitations/implications – The paper is limited to the established survey and mainly concentrates on Africa. Practical implications – African governments and other development partners should re-evaluate their intervention programmes to strengthen financial literacy skills while simultaneously supporting entrepreneurship development by promoting an entrepreneurship culture through the right policy that will actively stimulate the development of entrepreneurs that will contribute to entrepreneurship ecosystems and ultimately enhance Africa’s economic development. Originality/value – This paper aims at enhancing understanding of entrepreneurship development and financial literacy in Africa and will help policy makers and researcher fill the missing gap between financial literacy and entrepreneurship education. The recommendations made could significantly boost entrepreneurship activities as well as enhance financial literacy skills in the region, which can as well help increase access to finance on the continent.

scholarly journals MILLENNIALS: THEIR FINANCIAL LITERACY AND DECISION MAKING

2020 ◽  
Vol 1 (3) ◽  
pp. 326-340
Author(s):  
Arie Widyastuti ◽  
Ratna Komara ◽  
Layyinaturrobaniyah Layyinaturrobaniyah
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Credit Card ◽  
Significance Level ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Demographic Profiles ◽  
Gender Education ◽  
Financial Decision ◽  
Mother Education

Millennials are now the largest population groupings in Indonesia, therefore their decisions in financial matters have significant implications for themselves as well as the country’s economy. This paper is aimed to evaluate the level of financial literacy possessed by the Millennials and their attitudes towards making key financial decisions. Data were collected through questionnaire of 30 questions with 15 questions regarding financial literacy and 15 questions related to financial decision making, with the participants in the study consists of 446 individuals who were born from 1980s to 2000s. The result reveals that better financial literacy leads to better financial decision at 1% significance level. This study also indicates that, although demographic profiles such as gender, education, length of working experience, income, number of credit card ownership and mother education have positive correlation with the level of financial literacy, they do not have moderating effect to the financial literacy and financial decision making of the millennials

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