scholarly journals The Smart Money is in Cash? Financial Literacy and Liquid Savings Among U.S. Families

2021 ◽  
Vol 2021 (076) ◽  
pp. 1-43
Author(s):  
Neil Bhutta ◽  
◽  
Jacqueline Blair ◽  
Lisa Dettling ◽  
◽  
...  
Keyword(s):  
Income Distribution ◽  
Portfolio Optimization ◽  
Financial Literacy ◽  
Financial Knowledge ◽  
Financial Advisors ◽  
Smart Money ◽  
Parental Resources ◽  
Income Variability ◽  
Emergency Fund

Most financial advisors recommend storing three to six months of expenses in liquid assets in case of an emergency. Yet we estimate that more than half of U.S. families do not have at least three months of their non-discretionary expenses in liquid savings. We find that financial literacy is strongly predictive of having three months of liquid savings, controlling for income, income variability, and even parental resources. We also find that financial literacy predicts liquid savings across the income distribution. These results indicate that accumulation of an emergency fund is not simply a function of income. Finally, financial literacy is predictive of liquid savings even among high illiquid wealth households. This suggests that the phenomenon of "wealthy hand-to-mouth" families may reflect financial mistakes rather than portfolio optimization. Our paper highlights the importance of financial knowledge in explaining families' preparedness to deal with unexpected expenses or disruption in their income.

scholarly journals Predicting Fraud Victimization Using Classical Machine Learning

Entropy ◽  
2021 ◽  
Vol 23 (3) ◽  
pp. 300
Author(s):  
Mark Lokanan ◽  
Susan Liu
Keyword(s):  
Machine Learning ◽  
Financial Literacy ◽  
Learning Algorithm ◽  
Demographic Characteristics ◽  
Financial Knowledge ◽  
The Past ◽  
Machine Learning Model ◽  
Long Time ◽  
Regulatory Organization ◽  
Investment Fraud

Protecting financial consumers from investment fraud has been a recurring problem in Canada. The purpose of this paper is to predict the demographic characteristics of investors who are likely to be victims of investment fraud. Data for this paper came from the Investment Industry Regulatory Organization of Canada’s (IIROC) database between January of 2009 and December of 2019. In total, 4575 investors were coded as victims of investment fraud. The study employed a machine-learning algorithm to predict the probability of fraud victimization. The machine learning model deployed in this paper predicted the typical demographic profile of fraud victims as investors who classify as female, have poor financial knowledge, know the advisor from the past, and are retired. Investors who are characterized as having limited financial literacy but a long-time relationship with their advisor have reduced probabilities of being victimized. However, male investors with low or moderate-level investment knowledge were more likely to be preyed upon by their investment advisors. While not statistically significant, older adults, in general, are at greater risk of being victimized. The findings from this paper can be used by Canadian self-regulatory organizations and securities commissions to inform their investors’ protection mandates.

Living beyond one’s means: evidence from Malaysia

2015 ◽  
Vol 43 (1) ◽  
pp. 2-18 ◽  
Author(s):  
Yiing Jia Loke
Keyword(s):  
Low Income ◽  
Financial Literacy ◽  
Financial Distress ◽  
Financial Management ◽  
Practical Knowledge ◽  
Financial Education ◽  
Financial Knowledge ◽  
Content Type ◽  
Explanatory Variables ◽  
Financial Behaviour

Purpose – The purpose of the paper is to identify the determinants of the probability of living beyond one’s means. The paper also explores the coping mechanisms of those financially distressed as well as the debt taking behaviour of consumers. Design/methodology/approach – The study uses data obtained from the OECD International Network on Financial Education pilot study on Measuring Financial Literacy in 2010 for the case of Malaysia. A logistic regression model is used to identify the main determinants of the probability that a consumer will live beyond his/her means. The analysis is carried out by using a set of socio-economic factors and the individual’s financial behaviour and attitudinal characteristics as explanatory variables. Findings – The findings indicate that low income and seasonal income earners are more vulnerable to financial distress. Furthermore, having a higher education, higher financial knowledge and prudent financial behaviour and attitude do not necessarily translate into better financial management. Family and friends provide the main source of financial assistance in times of need. Research limitations/implications – The assessment of financial knowledge should go beyond individual’s knowledge on financial concepts and theories. Practical knowledge on financial and cash flow management should be assessed. Practical implications – The study reiterates the importance of financial education. It is imperative to include financial education as part of the schools’ curriculum and also to be incorporated as part of the Continuous Professional Development modules for working adults. Originality/value – The study is based on the first nationwide study of consumer finances in Malaysia. It contributes to the literature by integrating financial behaviour and attitudinal factors into the analysis of the ability of individuals to live within their means. The findings also show the limitations of the existing self-assessment of financial behaviour and attitude and the assessment of financial knowledge.

scholarly journals Some Insights Into Financial Literacy Among Undergraduate Students: A Case of Bosnia and Herzegovina

2021 ◽  
Vol 12 (3) ◽  
pp. 103
Author(s):  
Jasmina Okicic ◽  
Meldina Kokorovic Jukan ◽  
Mensur Heric
Keyword(s):  
Undergraduate Students ◽  
Financial Literacy ◽  
Sampling Technique ◽  
Financial Education ◽  
Financial Knowledge ◽  
Financial Behavior ◽  
Financial Attitudes ◽  
Significant Difference ◽  
Financial Behaviour ◽  
The Relationship

The purpose of this research is to provide some insights into financial literacy among undergraduate students focusing primarily on the relationship between financial knowledge, financial attitudes and financial behavior and on possible gender and financial education gap in financial literacy. Using the purposive sampling technique, data collection was carried out from April to June 2020, yielding a sample of 1,046 valid responses. To gain a better understanding of the relationship between financial behaviour, financial attitudes and financial knowledge, we, primarily, use exploratory factor analysis and multiple regression model. The research findings have revealed several important issues. First, findings have suggested that financial knowledge, financial attitudes and gender may be considered as an antecedent of the financial behaviour of undergraduate students. Second, findings have also suggested a statistically - significant difference between the financial literacy of undergraduate students concerning their exposure to formal financial education.

scholarly journals Financial Literacy and the Working Women of the Unorganised Sector with Special Reference to Guwahati City

2019 ◽  
Vol 9 (2) ◽  
pp. 4350-4354
Keyword(s):  
Financial Literacy ◽  
Investment Decision ◽  
Working Women ◽  
Work Force ◽  
Financial Resource ◽  
Financial Knowledge ◽  
Economic Variable ◽  
Financial Investment ◽  
Guwahati City ◽  
Sector Work

Unorganised Work Force Constitutes A Large Portion In India. This Sector Work Force Includes Casual Labourers, Day To Day Vendors, Domestic Vendors, Maids Etc. They Form A Significant Part In Developing An Economy And Women Being A Strong Pillar In Nation Building Demands For Financial Literacy On Their Part Too. In Simplest Language Financial Literacy Is The Financial Is The Financial Knowledge Of Various Financial Instruments And Savings, The Ability To Take Sound Financial/ Investment Decision With The Available Financial Resource. Through This Paper An Attempt Has Been Done To Examine The Scenario Of Financial Literacy Of The Working Women In The Unorganised Sector And To Know If Demographic Profile And Socio Economic Variable Has Any Effect On Financial Literacy. 100 Respondents From Guwahati City Have Been Selected And With The Help Of Schedule Data Has Been Collected.

Financial Literacy

2017 ◽  
pp. 80-106
Author(s):  
Adriana Berenice Valencia Álvarez ◽  
Jaime Ricardo Valenzuela González
Keyword(s):  
High School ◽  
Middle School ◽  
High School Students ◽  
Financial Literacy ◽  
Conceptual Knowledge ◽  
Self Report ◽  
Financial Knowledge ◽  
Financial Behavior ◽  
School Students ◽  
Public And Private

Financial literacy is a combination of financial knowledge, attitudes and behaviors, key for making informed decisions and for solving financial problems. This descriptive study explored the applied, conceptual and procedural financial knowledge of 243 Mexican students via three financial knowledge tests. In addition, these students were surveyed about their financial behavior, their attitudes towards money, and their experience with money using a self-report questionnaire. The study aims to identify financial-education needs and gaps between school levels and systems. Therefore, the analysis focuses on the differences and similarities between two subgroups: (1) students in public and in private education, and between (2) middle school (ages 12 to 15) and high school students (ages 15 to 18). Middle school and high school students differed significantly only in their conceptual knowledge and in their financial experience, while public and private students showed statistical significant differences on their financial knowledge, behavior, attitudes and experience.

scholarly journals SME Managers and Financial Literacy; Does Financial Literacy Really Matter?

2018 ◽  
Vol 8 (3) ◽  
pp. 353
Author(s):  
Shamim Akhtar ◽  
Yanping Liu
Keyword(s):  
Financial Literacy ◽  
Structural Equation ◽  
Service Providers ◽  
Business Owners ◽  
Financial Knowledge ◽  
Equation Modeling ◽  
Financial Awareness ◽  
Performance Results ◽  
The Impact ◽  
Firm Owners

The purpose of this study is to examine the level of small and medium (SMEs) business owners-managers’ financial literacy and its effect on the firm’s performance. The study applied random sample and structural equation modeling approaches in measuring the impact of SME firm owners-managers’ level of financial literacy in the context of Pakistan. The findings reveal the complete influence of firm owners- manager’s financial attitude, financial knowledge and financial awareness in adapting financial literacy to upsurge in firm performance. Results indicate that financial awareness and financial knowledge of SME managers are evidently not a precondition to SMEs performance, yet entrepreneur tactics in making decisions and association to financial attitude have a contrast with financial literacy. Findings would be valuable for the SME owners, investors and service providers.

scholarly journals Financial Literacy in Japan: New Evidence Using Financial Knowledge, Behavior, and Attitude

2020 ◽  
Vol 12 (9) ◽  
pp. 3683 ◽  
Author(s):  
Yoshihiko Kadoya ◽  
Mostafa Saidur Rahim Khan
Keyword(s):  
Financial Literacy ◽  
Financial Services ◽  
Well Being ◽  
Financial Knowledge ◽  
Financial Behavior ◽  
Economic Factors ◽  
Financial Decisions ◽  
Aged People ◽  
And Behavior ◽  
Socio Economic Factors

Success in the current complex and sophisticated financial marketplaces depends on the ability of people to make sustainable financial decisions to improve their future well-being, for which financial literacy is a pathway. This study examines the relationship between the demographic and socio-economic factors and financial literacy in Japan by segregating financial literacy into financial knowledge, attitude, and behavior, and providing a deeper understanding of the relationships. The methodology included using data from the Financial Literacy Survey 2016 by the Central Council for Financial Services Information of Japan. We used a linear regression model to explain how demographic and socio-economic factors relate to financial knowledge, attitude, and behavior. Results show that education, the balance of financial assets, and the use of financial information are positively related, while the experience of financial trouble is negatively related to financial knowledge, attitude, and behavior. We show that males are more financially knowledgeable than females, but females are more positive than males with regard to financial behavior and financial attitude. Age is positively related to financial knowledge but negatively related to financial attitude, thus suggesting that middle-aged people in Japan are more financially knowledgeable, but younger and older people are more positive with regard to financial behavior and attitude. The findings have implications for policymakers.

scholarly journals Personal Finance Knowlegde and Practice: An Opinion Survey with Employed and Self-employed People in Pokhara

2012 ◽  
Vol 7 (1) ◽  
pp. 80-99
Author(s):  
Puspa Raj Sharma ◽  
Yub Raj Bohara
Keyword(s):  
Financial Literacy ◽  
Financial Planning ◽  
Sampling Method ◽  
Personal Finance ◽  
Financial Knowledge ◽  
Short Term ◽  
Business Studies ◽  
Personal Finances ◽  
Knowledge And Practice

The ability to manage personal finances has become increasingly important in today's world. People must plan for long - term investments for their retirement and children's education. They must also decide on short - term savings and borrowing for daily life like a down payment for a house, a car loan, and other big - ticket items. Additionally, they must manage their different risk and insurance needs. This is might be the first survey about 'Personal Financial Knowledge and Practice' survey was conducted in 2011 with employed and Self-Employed people in Pokhara, Nepal. The survey revealed encouraging findings about how Employed and Self-Employed people of Pokhara approach money matters. This Personal financial literacy modeling research has been attempted to measure the literacy of Personal Finance with respect to their financial knowledge of different financial instrument and their practice or investment decisions. This study is based on stratified random sampling method with the help of financial literacy related parameters. This study has the intention to explore the skills of financial literacy; hence the objective was to test the basic financial knowledge of key products that is common to current society. In general, both categories have fairly healthy attitudes towards basic money management, financial planning and investment matters. Minorities of respondents of both categories save, monitor their spending and are generally responsible in the use of credit. Most of the respondents recognize the importance of financial planning and have done some basic financial planning.The Journal of Nepalese Business Studies Vol. Vii, No. 1, 2010-2011Page : 80-99Uploaded date: July 8, 2012

Subjective financial knowledge, prudent behaviour and income

2019 ◽  
Vol 37 (4) ◽  
pp. 934-950 ◽  
Author(s):  
Leonore Riitsalu ◽  
Rein Murakas
Keyword(s):  
Financial Literacy ◽  
Financial Education ◽  
Well Being ◽  
Financial Knowledge ◽  
Future Research ◽  
Objective Knowledge ◽  
Content Type ◽  
Subjective Knowledge ◽  
Subjective Financial Knowledge ◽  
Behaviour Score

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.

The Psychology of Women Investors

2017 ◽  
Author(s):  
Margauerita M. Cheng ◽  
Sameer S. Somal
Keyword(s):  
Financial Literacy ◽  
Financial Institution ◽  
Financial Advisors ◽  
Women Clients ◽  
Business Women ◽  
Financial Decision ◽  
Mentoring Women ◽  
Female Professionals ◽  
Traditional Roles

The role of financial decision maker in a household has evolved over time. Decades ago, women held traditional roles of caregiver, housekeeper, and wife. Today, more women are pursuing higher education and female professionals and entrepreneurs are making great strides in business. Women are taking on more responsibility, such as managing family life, careers, and education. Understanding what women customers’ value helps to bridge the gap between financial literacy and application. Training and mentoring women should be a priority agenda for every financial institution. Women expect customized service and clear communication from financial experts. This chapter discusses the financial, psychological, and personal needs of women clients. It also explains how financial advisors should communicate with women to create favorable client experience.

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