scholarly journals Financial Literacy Overconfidence and Consumer Financial Satisfaction: Evidence from the 2018 US National Financial Capability Study

2020 ◽  
pp. 13-26
Author(s):  
Fuzhong Chen ◽  
Yibo Wang ◽  
Di Yu
Keyword(s):  
Financial Institutions ◽  
Financial Literacy ◽  
Ordered Probit ◽  
Estimation Methods ◽  
Financial Satisfaction ◽  
Risk Awareness ◽  
Financial Capability ◽  
Perception Bias ◽  
Negative Effect ◽  
Rational Investment

An increasingly prevalent topic on the associations between financial literacy and consumer financial satisfaction has been highlighted in recent years. Utilizing the data from the 2018 US National Financial Capability Study, this study conducts ordered probit regressions to examine the effects of financial literacy on consumer financial satisfaction. To verify the robustness, this study performs a comprehensive check through replacing estimation methods, removing outliers by income, and performing regressions by various consumer cohorts. The results indicate that objective financial literacy has a significantly negative effect on consumer financial satisfaction, while subjective financial literacy has played a crucial role in improving consumer financial satisfaction. Thus, consumers are overconfident in their financial literacy. The results imply that policymakers should formulate policies to cultivate rational investment concepts and raise consumers’ risk awareness, as well as financial institutions should provide services of financial capability assessment to correct consumers’ self-perception bias.

scholarly journals Consumer Financial Knowledge and the Use of Mobile Banking: Evidence from the 2018 U. S. National Financial Capability Study

2021 ◽  
pp. 1-17
Author(s):  
Fuzhong Chen ◽  
Jian Xiang
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Ordered Probit ◽  
Financial Knowledge ◽  
Estimation Methods ◽  
Mobile Banking ◽  
Probit Regression ◽  
Financial Capability ◽  
The Relationship ◽  
Robustness Check

As a widely used technology in recent years, the use of mobile banking has been addressed by a great deal of extant research, and a large and growing body of literature has investigated its determinants as well. Utilizing data from the 2018 U.S. National Financial Capability Study, this study aims at examining the association between financial knowledge and mobile banking by using the approach of ordered probit regression. Besides, this study conducts a comprehensive robustness check by replacing estimation methods and removing outliers by income. The results indicate that the relationship between financial knowledge and mobile banking is negative. Besides, financial knowledge negatively contributes to the adoption of mobile payment as well as mobile transfer. Also, consumers with more financial knowledge are more likely to use traditional financial ways. Thus, financial institutions are encouraged to focus on the reduction of risks perceived by consumers to promote the penetration of financial services via mobile devices.

Financial education and financial satisfaction

2017 ◽  
Vol 35 (5) ◽  
pp. 805-817 ◽  
Author(s):  
Jing Jian Xiao ◽  
Nilton Porto
Keyword(s):  
Financial Literacy ◽  
Financial Education ◽  
Well Being ◽  
Financial Behavior ◽  
Future Research ◽  
Financial Satisfaction ◽  
Financial Capability ◽  
Data Set ◽  
Content Type ◽  
Mediating Factors

Purpose The purpose of this paper is to investigate roles of financial literacy, financial behavior, and financial capability as mediating factors between financial education and financial satisfaction. Design/methodology/approach Data are from the 2012 National Financial Capability Study, a large national data set with detailed information on financial satisfaction, education, literacy, behavior, capability, and related variables. Mediation analyses are used to answer research questions. Findings Financial education may affect financial satisfaction, a subjective measure of financial well-being, through financial literacy, financial behavior, and financial capability variables. Results show that subjective financial literacy, desirable financial behavior and a financial capability index (a sum of Z-scores of objective financial literacy, subjective financial literacy, desirable financial behavior, and perceived financial capability) are strong mediators between financial education and financial satisfaction. Research limitations/implications The study has used cross sectional data that can only document associations between financial education and satisfaction and the mediators between them. Future research could use relevant longitudinal data to verify multiple benefits of financial education. Practical implications The findings have implications for financial service professionals to take advantages of multiple benefits of financial education in content acquisition, confidence in knowledge and ability, and action taking when they communicate with their clients. Social implications Policy makers on consumer financial education may use the information to advocate and promote effective education programs to improve consumer financial well-being. Originality/value This study is the first of this kind to examine the association between financial education and financial satisfaction and several financial capability variables as mediating factors.

scholarly journals Analysis of the Value and Advantages of Financial Literacy and Digitalization to the Individual

2021 ◽  
Vol 2 (2) ◽  
pp. 141-152
Author(s):  
Afzal Sayed Munna ◽  
Rehana Khanam
Keyword(s):  
Financial Literacy ◽  
Digital Literacy ◽  
Teaching And Learning ◽  
Research Study ◽  
Opportunity To Learn ◽  
Financial Capability ◽  
Management Level ◽  
History Of ◽  
Digital Knowledge ◽  
The Individual

Digital literacy is the ability to analyse, evaluate and create a teaching and learning media which enables adults and youth to understand complex communication, Aufderheide (1993). Therefore, this research study has examined how digital knowledge could provide an opportunity to learn financial capability. Fintech has transformed the history of the financial sectors and places an individual at significant advantages. However, Bankers, Teachers, Information Technology (IT) professionals and university students were selected for the research study from Bangladesh and England. Interviews were conducted with management level professionals. Survey and test questionnaires were developed and randomly directed to other participants to measure their financial and ICT knowledge. The research findings have found that present financial decision making, and the growth of assets depends on an individual adult’s financial capability.

Exploring the antecedents of retail banks’ reputation in low-bankarization markets: brand equity, value co-creation and brand experience

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Luís Daniel Martillo Jeremías ◽  
Ana Isabel Polo Peña
Keyword(s):  
Financial Institutions ◽  
Brand Equity ◽  
Low Income ◽  
Financial Literacy ◽  
Structural Equation ◽  
Banking Sector ◽  
Retail Banking ◽  
Equation Modeling ◽  
Brand Experience ◽  
Content Type

PurposeThe present study aims to propose and validate a model to measure certain variables that may contribute to increasing the bankarization rate (uptake of retail banking services) among developing-economy populations characterized by poor financial literacy and low income levels.Design/methodology/approachA quantitative empirical study is carried out in the retail banking sector of a country with low-bankarization rates. Using a self-administered questionnaire distributed online, structural equation modeling is applied to analyze the relationships between value co-creation, brand experience, brand equity and reputation.FindingsThe results show that brand equity is an antecedent of reputation that values co-creation, and brand experience positively influences brand equity and that values co-creation that positively influences brand experience.Social implicationsThe bankarization rate of a developing country is generally taken as an indicator of the socioeconomic wellbeing of its population. Where there is a low-bankarization rate, this renders it more difficult for financial institutions to build their reputation to attract new customers and retain existing ones. Strategies are, therefore, proposed to improve the reputation of financial institutions in such settings and, thus, contribute to increasing the bankarization rate.Originality/valueThe findings of this study provide an original perspective that offers a deeper understanding of the mechanisms that enable banks operating in low-bankarization markets to enhance their reputation through strategies based on customer–company interaction and branding (with the variables of brand equity, brand experience and value co-creation).

What Policy for Islamic Financial Literacy?

10.26414/a148 ◽  
2021 ◽  
Author(s):  
Ahmed Tahiri Jouti
Keyword(s):  
Literature Review ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Sustainable Growth ◽  
Islamic Finance ◽  
Finance Industry ◽  
Literacy Policy ◽  
Islamic Financial Institutions ◽  
Financial Behaviour

This paper addresses the concept of financial literacy in Islamic finance and suggests a methodology to elaborate an effective Islamic financial literacy policy (IFLP). Based on a literature review, the paper summarizes the conclusions of studies and surveys conducted in the field of conventional financial literacy while identifying the specificities of the Islamic finance industry. Indeed, the paper would help financial authorities and Islamic financial institutions in elaborating Islamic financial literacy policies (IFLPs) in order to contribute to the sustainable growth of the industry. It promotes the idea that qualitative aspects are worth studying when elaborating an Islamic financial literacy policy that has to take into account many factors such as the maturity of the industry, the objectives of the policy (inclusion or migration), the degree of Shari’ah awareness, the understanding of Arabic terminologies, etc. Finally, the IFLP measurement should include quantitative (Total reach and number of people reached) as well as qualitative aspects (level of financial literacy, impact on financial behaviour).

Macroeconomic fundamentals, institutional quality and shadow economy in OIC and non-OIC countries

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shabeer Khan ◽  
Mohd Ziaur Rehman
Keyword(s):  
Shadow Economy ◽  
Random Effect ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Estimation Methods ◽  
Full Sample ◽  
Content Type ◽  
Macroeconomic Fundamentals ◽  
Negative Effect ◽  
The Relationship

PurposeThe purpose of this paper is to analyze the relationship between macroeconomic fundamentals, intuitional quality and shadow economy.Design/methodology/approachBy utilizing data setspanning from 2004 to 2015 of 141 countries, the study has employed advanced panel technique, i.e. Generalized Method of Moments (GMM) method. In order to check consistency of the results, the study also used fixed effect and random effect for robustness.FindingsThe study finds that for the full sample, institutional quality has negative effect on shadow economy while macroeconomic fundaments effect shadow economy differently. After splitting the sample into Organization of Islamic Cooperation (OIC) and non-OIC countries subsamples, it observes same influence of macroeconomic fundaments and institutional quality on shadow economy, but the effect of macroeconomic fundaments and institutional quality on shadow economy is less observed for OIC countries. The results are found consistence by using different estimation methods.Originality/valueThe current literature has focused on estimating the size of shadow economy and literature linking the macroeconomic fundaments, institutional quality and shadow economy is scarce. Additionally, this study provides the evidence for cross comparison between OIC economies and non-OIC economies.

Financial exclusion and financial capabilities in Canada

2016 ◽  
Vol 8 (2) ◽  
pp. 212-227 ◽  
Author(s):  
Laura Lamb
Keyword(s):  
Survey Data ◽  
Financial Literacy ◽  
Financial Services ◽  
Conclusive Evidence ◽  
Exploratory Research ◽  
Financial Capability ◽  
Content Type ◽  
Financial Exclusion ◽  
Canadian City ◽  
The Relationship

Purpose The financially excluded are often denied basic financial services from mainstream banking institutions, leading them to high-cost fringe finance institutions (FFIs) such as payday loan companies and pawnshops. While strategies to address financial exclusion often include financial capabilities education, there does not appear to be evidence suggesting such education is an appropriate solution. The purpose of this study is to explore the relationship between financial capability and financial exclusion with survey data collected from the Canadian city of Kamloops located in the southern interior of British Columbia. Design/methodology/approach This exploratory research addresses the objective with survey data collected on the banking habits and financial capability levels of fringe finance users in a Canadian city. Findings The results imply that fringe finance users do not have lower levels of financial capability than those who do not use fringe finance, when education and income are controlled. Research limitations/implications Limitations include the relatively small survey sample of 105 people in one urban center in Canada. Originality/value While financial literacy is acknowledged to be an important life skill for all members of society, there is no conclusive evidence suggesting it is a solution to financial exclusion. This is the first research to examine the relationship between financial exclusion and fringe finance use in Canada by collecting data on fringe finance users with face-to-face interviews.

Borrowing Decision of Households: An Examination of the Information Search Process

2017 ◽  
Vol 28 (1) ◽  
pp. 95-106 ◽  
Author(s):  
Lu Fan ◽  
Swarn Chatterjee
Keyword(s):  
Educational Attainment ◽  
Information Search ◽  
Financial Literacy ◽  
Search Behavior ◽  
Financial Knowledge ◽  
Search Process ◽  
Financial Capability ◽  
Factors Associated ◽  
Information Search Behavior ◽  
Underserved Groups

This study uses the 2009 National Financial Capability Study dataset to examine the factors associated with information search behavior by consumers when applying for a loan. The results indicate that financial literacy, perceived financial knowledge, educational attainment, and engaging the services of a financial professional are positively associated with the likelihood of information search among consumers. The results also indicate that consumers from the traditionally underserved groups, who would benefit most from better information search, were the least likely to use it. The results of this study are important to consumers, educators, and financial practitioners. A discussion of the implications addressing the association between financial literacy, information search behavior, and household financial capability within the population is also included in this study.

Financial literacy, trust and retirement planning

2015 ◽  
Vol 16 (1) ◽  
pp. 43-64 ◽  
Author(s):  
ORNELLA RICCI ◽  
MASSIMO CARATELLI
Keyword(s):  
Financial Institutions ◽  
Financial Literacy ◽  
Retirement Planning ◽  
Private Pension ◽  
Empirical Literature ◽  
Pension Scheme ◽  
Severance Pay ◽  
Endogenous Regressors ◽  
Financial Contract ◽  
The Impact

AbstractWe study the complex relationship between financial literacy, retirement planning and trust in financial institutions, using data from the 2010 Bank of Italy Survey on Household Income and Wealth. The impact of financial literacy on retirement planning is a well-established issue in the existing empirical literature; our main contribution is proving that financial knowledge not only impacts retirement planning, but also the decisions of entering a private pension scheme (or devoting the severance pay to a private pension scheme). Adding the consideration of trust poses serious econometric concerns, since both financial literacy and trust in financial institutions are likely to be endogenous and the presence of two endogenous regressors renders the identification of causality very difficult. Our solution is to keep only financial literacy as endogenous and include in our models an exogenous regional indicator of social capital (similar to the one adopted by Guisoet al., 2004), as a proxy for the level of trust between the counterparts of a financial contract in each geographical area. Our main findings show that trust has a positive influence on both the decisions to enter a private pension scheme or to devote the severance pay to a private pension scheme.

Sign in / Sign up

Export Citation Format

Share Document