Financial Knowledge, Confidence, Credit Use, and Financial Satisfaction

2019 ◽  
Vol 30 (2) ◽  
pp. 175-190 ◽  
Author(s):  
Stephen A. Atlas ◽  
Jialing Lu ◽  
P. Dorin Micu ◽  
Nilton Porto
Keyword(s):  
Credit Card ◽  
Well Being ◽  
Financial Knowledge ◽  
Strong Interactions ◽  
Financial Satisfaction ◽  
Financial Behaviors ◽  
Subjective Knowledge ◽  
Subjective Financial Knowledge ◽  
The Right ◽  
Credit Card Use

This article investigates associations between confidence about financial knowledge and two outcome variables, financial behaviors and financial satisfaction. On one hand, subjective financial knowledge (confidence) is necessary to make proactive decisions, yet overconfidence has been associated with a range of negative financial behaviors and outcomes. Both types of objective and subjective knowledge may be related to critical financial behaviors and choices such as credit card usage which in turn may be associated with financial satisfaction, an important component of consumer well-being. This article analyzes data from the 2015 National Financial Capability Study to examine how financial knowledge confidence relates to credit card behaviors and financial satisfaction. We use mediation and floodlight analyses to uncover relevant relationships between variables of interest. We find evidence that confidence is associated with healthy credit card use that contributes to financial satisfaction. We also observe strong interactions with knowledge to find that confidence is more strongly associated with credit card use and overall financial satisfaction as knowledge increases. Findings from this study can help financial educators and advisors to deliver the right mix of financial knowledge to better financial choices and behaviors.

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.

Seeking Financial Advice and Other Desirable Financial Behaviors

2018 ◽  
Vol 29 (2) ◽  
pp. 198-207 ◽  
Author(s):  
Keith A. Moreland
Keyword(s):  
Well Being ◽  
Study Data ◽  
Financial Knowledge ◽  
Financial Behaviors ◽  
Financial Advice ◽  
Financial Decision Making ◽  
Potential Source ◽  
Relevant Variables ◽  
Financial Decision ◽  
Two Measures

Advice from financial counselors is one potential source for improving financial behaviors and well-being among clients and within their communities. This study examined whether obtaining financial advice is associated with other personal financial behaviors. Analysis of National Financial Capability Study data showed that obtaining advice is positively associated with financial behaviors while controlling for other relevant variables, including two measures of financial knowledge. The results also indicated greater benefits from obtaining advice for those with less financial knowledge. The findings suggest that efforts by financial counselors to provide financial advice to clients and others through service activities can improve financial decision-making in their communities including by those who can benefit the most.

The Relationship Between Credit Card Use Behavior and Household Well-Being During the Great Recession: Implications for the Ethics of Credit Use

2017 ◽  
Vol 28 (2) ◽  
pp. 213-224 ◽  
Author(s):  
Jennifer L. Hunter ◽  
Claudia J. Heath
Keyword(s):  
Great Recession ◽  
Credit Card ◽  
Multinomial Logistic Regression ◽  
Economic Recession ◽  
Well Being ◽  
The Great Recession ◽  
Financial Condition ◽  
Use Behavior ◽  
The Relationship ◽  
Credit Card Use

This article uses a random digit dial probability sample (N = 328) to examine the relationship between credit card use behaviors and household well-being during a period of severe economic recession: The Great Recession. The ability to measure the role of credit card use during a period of recession provides unique insights to the study of credit behavior because of the knowledge that all respondents have the same macroeconomic constraint. Framed by the assumptions of the permanent income hypothesis and the life-cycle savings hypothesis, multinomial logistic regression was used to estimate the relationship between credit card use behaviors and three measures of household well-being: emotional well-being, financial well-being, and general household financial condition.

scholarly journals Financial Sophistication and Credit Card Behaviors Revision

2016 ◽  
Vol 1 (No. 1 Oct 2016) ◽  
pp. 21-40
Author(s):  
Robb Cliff ◽  
Patryk Babiarz
Keyword(s):  
Predictive Models ◽  
Credit Card ◽  
Credit Cards ◽  
Acquisition Phase ◽  
Financial Knowledge ◽  
Subjective Measures ◽  
Knowledge Types ◽  
Subjective Financial Knowledge

The present study explored consumers’ use of credit cards with an emphasis of the role that financial knowledge plays in behavior. Both objective and subjective measures of subjective financial knowledge were included in predictive models of seven unique credit card behaviors. Behaviors explored included comparing cards during the acquisition phase, paying off cards in full, revolving a balance, making minimum payments, paying late payment fees, paying over the limit fees, and taking cash advances. Results indicated that financial knowledge was a useful predictor of behavior, though different knowledge types were more or less effective as predictors depending on the behavior analyzed. An additional series of analyses was conducted controlling for emergency saving ownership. Implications are discussed.

Health Information Search and Retirement Planning

2015 ◽  
Vol 26 (1) ◽  
pp. 30-42 ◽  
Author(s):  
Mary Bell Carlson ◽  
Sonya L. Britt ◽  
Briana Nelson Goff
Keyword(s):  
Information Search ◽  
Credit Card ◽  
Service Providers ◽  
Primary Data ◽  
Credit Card Debt ◽  
Personal Factors ◽  
Financial Behaviors ◽  
Positive Effects ◽  
War Zone ◽  
Subjective Financial Knowledge

The purpose of this study was to examine factors associated with a composite measure of financial behaviors among soldiers. Using primary data from a sample of soldiers before deploying to a war zone, results suggest that past behaviors and some personal factors play a significant role in soldiers' financial behaviors. Personal factors, such as high levels of subjective financial knowledge, higher self-mastery, and lower levels of financial anxiety, all had positive effects on financial behaviors. Soldiers with any amount of credit card debt had worse financial behaviors compared to soldiers with no credit card debt, while soldiers with greater amounts of emergency financial savings were more likely to have better financial behaviors than those who had very little or no emergency financial savings. Understanding these financial behaviors helps service providers to reduce the stress and anxiety soldiers and their families experience before a deployment.

Risk Tolerance and the Financial Satisfaction of Credit Card Users

2019 ◽  
Vol 30 (1) ◽  
pp. 110-120 ◽  
Author(s):  
Patrick Payne ◽  
Charlene M. Kalenkoski ◽  
Christopher Browning
Keyword(s):  
Interest Rates ◽  
Credit Card ◽  
Lower Risk ◽  
Risk Tolerance ◽  
Health And Retirement Study ◽  
Financial Satisfaction ◽  
Psychic Costs ◽  
Retirement Study ◽  
Credit Card Use

This study tests whether risk tolerance mitigates the effects of credit card mismanagement on users' financial satisfaction. We used data from the Health and Retirement Study and found results showing that credit card mismanagement reduces the financial satisfaction of lower-risk-tolerance users only. The results also suggest that the psychic costs of credit card mismanagement (i.e., stress and anxiety), not the monetary costs (fees and higher interest rates), may be the biggest contributors to the dissatisfaction associated with credit card use.

Differences in Credit Card Use Between White and Hispanic Households

2016 ◽  
Vol 27 (2) ◽  
pp. 199-211 ◽  
Author(s):  
Patti J. Fisher
Keyword(s):  
Credit Card ◽  
Ethnic Disparities ◽  
Well Being ◽  
Risk Tolerance ◽  
Dummy Variable ◽  
Consumer Finances ◽  
Race Ethnicity ◽  
Racial Ethnic ◽  
White Individual ◽  
Credit Card Use

This study uses the 2013 U.S. Survey of Consumer Finances dataset to investigate differences in credit card use between Hispanic and White households. The sample includes 3,784 households, with 3,165 households headed by a White individual and 619 households headed by a Hispanic individual. The results show that the factors related to credit card use differ for the two groups. Risk tolerance, marital status, and education are significant in explaining credit card use for White, but not Hispanic, households. Income is significant in explaining credit card use among Hispanic, but not White, households. When accounting for race/ethnicity only through a dummy variable, researchers may be missing a part of the puzzle in exploring racial/ethnic disparities in financial well-being.

Enhancing customer knowledge: the role of banks in financial well-being

2018 ◽  
Vol 30 (4/5) ◽  
pp. 459-582 ◽  
Author(s):  
Mauricio Losada-Otalora ◽  
Carlos Augusto Valencia Garcés ◽  
Jorge Juliao-Rossi ◽  
Pedro Mario Donado ◽  
Efraín Ramírez F.
Keyword(s):  
Latin American ◽  
Well Being ◽  
Financial Knowledge ◽  
Subjective Well Being ◽  
Content Type ◽  
Information Transparency ◽  
Cultural Variables ◽  
Objective Financial Knowledge ◽  
Subjective Financial Knowledge

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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