scholarly journals Keeping It Simple: Financial Literacy and Rules of Thumb

2014 ◽  
Vol 6 (2) ◽  
pp. 1-31 ◽  
Author(s):  
Alejandro Drexler ◽  
Greg Fischer ◽  
Antoinette Schoar
Keyword(s):  
Dominican Republic ◽  
Financial Literacy ◽  
Training Programs ◽  
Reporting Quality ◽  
Financial Decisions ◽  
Rule Of Thumb ◽  
Randomized Evaluation ◽  
Rules Of Thumb ◽  
The Impact ◽  
Financial Practices

Micro-entrepreneurs often lack the financial literacy required to make important financial decisions. We conducted a randomized evaluation with a bank in the Dominican Republic to compare the impact of two distinct programs: standard accounting training versus a simplified, rule-of-thumb training that taught basic financial heuristics. The rule-of-thumb training significantly improved firms' financial practices, objective reporting quality, and revenues. For micro-entrepreneurs with lower skills or poor initial financial practices, the impact of the rule-of-thumb training was significantly larger than that of the standard accounting training, suggesting that simplifying training programs might improve their effectiveness for less sophisticated individuals. (JEL D4, G21, J24, L25, L26, M41, O16)

scholarly journals Performance implications of financial capital availability on the financial literacy – performance nexus in South Africa

2016 ◽  
Vol 13 (2) ◽  
pp. 354-362 ◽  
Author(s):  
Neneh Brownhilder Ngek
Keyword(s):  
South Africa ◽  
Financial Literacy ◽  
Small And Medium Enterprises ◽  
Literacy Skills ◽  
Financial Capital ◽  
Financial Decisions ◽  
Literacy Performance ◽  
Entrepreneurial Activities ◽  
Medium Enterprises ◽  
The Impact

The need for making optimal financial decisions is very important in small and medium enterprises (SMEs) especially as most SMEs are always financially constrained. Consequently, there has been an increasing interest from researchers to determine how well financial literacy skills can enable entrepreneurs to make decisions that result in optimal financial outcomes and possible enhance the performance and growth of their businesses. This study had as objectives to find out the impact of financial literacy on firm performance, as well as to examine the moderating effect of financial capital availability on the financial literacy – performance relationship, amongst SME in the Free State province of South Africa. The results showed that on average SME have low levels of financial literacy and financial capital availability. It was also observed that financial literacy positively influenced SME performance, and that the relationship is positively moderated by financial capital availability. It is, therefore, necessary for SME owners to develop financial literacy skills as an essential part of entrepreneurial activities. Likewise, since businesses rely on financial capital to invest, develop and grow, policy makers should put in place measures on how to bridge the access to finance gap, and, thus, ensure that entrepreneurs are relieved from financing constraints

Patterns of people's financial and consumer behavior due to the COVID-19 pandemic as a trigger of the macroeconomic destabilization

2021 ◽  
Vol 27 (2) ◽  
pp. 417-429
Author(s):  
Denis Yu. RAZUMOVSKII
Keyword(s):  
Consumer Behavior ◽  
Financial Literacy ◽  
Task Force ◽  
Behavioral Pattern ◽  
Behavior Modeling ◽  
Stress Factors ◽  
Financial Behavior ◽  
State University ◽  
Financial Decisions ◽  
The Impact

Subject. The article discusses the financial behavior of households, and financial decisions. Objectives. I model patterns of households' financial behavior, referring the impact of stress factors on financial decisions. Methods. The financial behavior was analyzed through approaches proposed by D. Kahneman, A. Tversky and R. Thaler. However, instead of experiments, I rely upon surveys evaluating the financial literacy and behavior of people in the Sverdlovsk Oblast via social networks and conduct my research as a member of the task force of the Regions Center for Financial Literacy at the Ural State University of Economics. I took part in the preparation of questionnaires. Results. I proposed model patterns of financial behavior and substantiate what determines the behavioral pattern of people in distress. I also conclude that the impact of the COVID-19 on the financial and consumer behavior of people triggers destabilizing effects for the macroeconomic situation. Conclusions. Financial behavior modeling will help forecast financial and consumer shocks when the macroeconomic situation is destabilized, thus transforming the social policy.

scholarly journals A Conceptual Study on The Impact of Parental Influence in Improving Financial Literacy of University Students

2020 ◽  
Vol 5 (1) ◽  
Author(s):  
Gianina Putri ◽  
Raden Aswin Rahadi ◽  
Adhya Rare Tiara
Keyword(s):  
Financial Literacy ◽  
Parental Influence ◽  
Parental Socialization ◽  
Financial Socialization ◽  
Financial Decisions ◽  
Financial Communication ◽  
Parental Financial Socialization ◽  
Conceptual Study ◽  
Financial Monitoring ◽  
The Impact

Financial independence usually begins when someone starts attending university because at that time parents usually give authority to their children to manage their own finances. Financial literacy is one of the competences which people really need in current times to make various financial decisions. Parents become very critical agents in the development of children's financial literacy level and it is proven that there is a relationship between financial literacy and parental financial socialization. According to this study the factors that influence the success of parental socialization in increasing children's financial literacy are parents' experience, role modeling, financial communication, money allowance, and financial monitoring.  

scholarly journals A DETERMINANTS OF FINANCIAL BEHAVIOR ON ACCOUNTING STUDENT

2020 ◽  
Vol 5 (37) ◽  
pp. 44-55
Author(s):  
Wirawan ED Radianto ◽  
Tommy C. Effrata ◽  
Liliana Dewi
Keyword(s):  
Locus Of Control ◽  
Financial Literacy ◽  
Self Efficacy ◽  
Positive Impact ◽  
Mental Accounting ◽  
Financial Knowledge ◽  
Financial Behavior ◽  
Financial Decisions ◽  
The Impact ◽  
Accounting Student

This study examines the impact of financial literacy, financial knowledge, locus of control, financial attitude, financial self-efficacy, and mental accounting on financial behavior. The study sample is an accounting student. There are 159 questionnaires that can be processed in total out of 250 distributed to the accounting selected at random. Hypothesis testing was conducted using multiple regression analysis. The result of the study shows that locus of control, financial attitude, financial self-efficacy, and mental accounting has a positive impact on financial behavior. However, this study found that financial literacy and financial knowledge do not affect financial behavior. This study also found that mental accounting has the most influence on financial behavior. This research contributes that mental accounting enables students to manage finances and make financial decisions.

The impact of entrepreneurs’s financial literacy on innovation within small and medium-sized enterprises

2020 ◽  
pp. 026624262095907
Author(s):  
Baohua Liu ◽  
Jiancheng Wang ◽  
Kam C Chan ◽  
Anna Fung
Keyword(s):  
Financial Literacy ◽  
Risk Tolerance ◽  
Transmission Mechanism ◽  
Policy Implications ◽  
Capital Theory ◽  
Financial Decisions ◽  
Risky Investment ◽  
Large Survey ◽  
The Impact ◽  
Innovation Metrics

This article analyses the impact of an entrepreneur’s financial literacy upon innovation within small- and medium-sized enterprises (SMEs) and, in so doing, extends human capital theory to consider the effect of financial literacy on risky investment decisions. Using a large survey dataset of Chinese SMEs in 2015 and 2017, our findings suggest that financial literacy is positively associated with innovation; positive relationships are robust to different innovation metrics. In addition, we find that gender matters, as male owners appear to promote more innovations, while firm size is positively associated with innovation. Additional analysis suggests that risk tolerance is a transmission mechanism for the impact of financial literacy on innovation. Our results corroborate previous studies showing that individuals with greater financial literacy make sound personal financial decisions and so have important public policy implications.

scholarly journals An Evidence-Based Personal Finance Education Curriculum for Physicians and Medical Students

2021 ◽  
Author(s):  
Joel Akachukwu Igu ◽  
Sammy Zakaria ◽  
Yuval Bar-Or
Keyword(s):  
Medical Students ◽  
Financial Literacy ◽  
The United States ◽  
Personal Finance ◽  
Future Research ◽  
Financial Decisions ◽  
Personal Finance Education ◽  
Meta Analyses ◽  
The Impact ◽  
Finance Education

Abstract BackgroundMany physicians complete medical school and graduate medical education (GME) burdened by high debt and financial illiteracy. This places them at higher risk for ill-informed financial decisions, which can result in increased stress and anxiety and a lower quality of life. In response, medical wellness programs have increasingly sought to offer personal finance education, but there is little guidance on optimal curricula. Our objective is to systematically review the existing literature examining physician financial literacy curricula and to recommend a standardized curriculum.MethodsThis review utilized the Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) 2009 checklist to conduct literature searches in PubMed, ERIC, MedEdPortal, EBSCO, JSTOR, and Google Scholar. Three researchers used predetermined inclusion and exclusion criteria to select articles, including a focus on financial concepts applicable in the United States. Articles were assessed using modified Côté-Turgeon and Kirkpatrick qualitative analyses tools. Results38 articles met all inclusion criteria. Six specifically described personal finance literacy curricula for medical students or GME trainees, with varied criteria for selecting instructors, topics, and outcomes. All studies reported that audiences were ill-prepared for making financial decisions but strongly desired financial literacy education. Qualitative analysis revealed Strength of Findings summary scores ranging from 2-4, while applicable Kirkpatrick Model scores were all 3 or greater.ConclusionsAlthough medical students and GME trainees value financial literacy, few publications report the impact of actual curricula. These efforts vary in depth, breadth, and measured impact. Future research should focus on development of valid testing instruments, content standardization, selection of credible instructors, and country-specific financial concepts.

scholarly journals Personal Finances in the Era of Modern Technological Solutions

2021 ◽  
Vol 1 (29) ◽  
pp. 155-174
Author(s):  
Anna Janina Warchewska ◽  
Alfred Janc ◽  
Rafał Iwański
Keyword(s):  
Financial Literacy ◽  
Financial Services ◽  
Financial Management ◽  
Financial Education ◽  
Personal Finance ◽  
Financial Industry ◽  
Financial Decisions ◽  
Finance Management ◽  
Self Confidence ◽  
The Impact

The purpose of the article: the aim of the article is to present the essence of personal finance management using modern financial technologies. The paper seeks to answer the question of the impact financial literacy and the growth of the fintech solutions have on personal financial management. Methodology: the analysis leads to an answer to the question of which determinants have an impact on consumers' financial decisions and what remote tools the market offers. The paper hypothesizes that the intensification of educational activities tailored to each age group by institutions offering financial services may influence the greater use of modern tools in the process of personal finance management. Theoretical considerations are based on an in-depth query of literature on the subject. Research and financial experimentation in the field of financial knowledge and skills are presented. The secondary empirical material is used to analyze the development of the FinTech industry. Results: The effectiveness of financial education is observed only in specific financial behaviors. The financial industry is shaped by recipients, who instead of financial education, look e.g. financial coaching for a specific problem at different stages of their lives. Changes in population structure (aging population) and a large group of customers from disadvantaged groups (e. i. seniors, disabled people) require the development of new, matched strategies by banks and financial services providers. Too much self-confidence and a low level of consumer knowledge of cybersecurity is becoming a challenge for modern financial technologies.

Examining the Level of Financial Literacy among Saudi Investors and Its Impact on Financial Decisions

2014 ◽  
Vol 1 (1) ◽  
pp. 312 ◽  
Author(s):  
Tariq Saeed Mian
Keyword(s):  
Stock Market ◽  
Financial Literacy ◽  
Financial Services ◽  
Negative Relationship ◽  
Retirement Planning ◽  
Market Participation ◽  
Financial Decisions ◽  
Stock Market Participation ◽  
Financial Decision ◽  
The Impact

Financial literacy and information requires that a person knows and understands the forms, functions and use of money and financial services. In today’s world financial literacy is important to every individual who wishes to select the best way to carry out payments and take care of banking issues. The current paper examines the impact of different demographic variables on the level of financial literacy among Saudi investors. Furthermore, the impact of financial literacy on different kinds of financial decision making is also investigated. The result of the current study confirms a significant impact from gender and age on financial literacy. Males are more financially literate than females, and older people also show a higher level of financial literacy compared with younger people. There is no significant impact from educational level and current work situation on financial literacy. Financial literacy is measured in reference to retirement planning and stock market participation.  People with a higher level of financial literacy have a greater urge to engage in retirement planning and stock market participation. However, there is a negative relationship between financial literacy and the need for financial advice. 

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