Can heuristics also mediate the effect of financial education to financial literacy? On the effectiveness of financial education to reduce the negative effects of availability heuristics and gambler’s fallacy while improving financial literacy.

2021 ◽  
Author(s):  
Francisco Pitthan
Keyword(s):  
Financial Literacy ◽  
Financial Education ◽  
Negative Effects ◽  
Gambler’S Fallacy ◽  
Gambler's Fallacy

Cutting Through the Fog: Financial Literacy and Financial Investment Choices

2020 ◽  
Author(s):  
Marco Nieddu ◽  
Lorenzo Pandolfi
Keyword(s):  
Financial Literacy ◽  
Ambiguity Aversion ◽  
Financial Education ◽  
Certainty Equivalent ◽  
Financial Asset ◽  
Negative Effects ◽  
Coin Toss ◽  
Financial Investment ◽  
Average Value ◽  
The Impact

Abstract This paper examines the impact of financial literacy on the individual propensity to invest in financial assets. In a laboratory experiment with a two-by-two design, we study how the certainty equivalent of a risky lottery changes when varying the lottery framing and the participants’ financial literacy level. We find that presenting the lottery as a financial asset—whose payoffs need to be computed from a given return rate—rather than as a simple coin toss reduces the average value participants assign to the lottery by approximately 20% and lowers their understanding of the lottery’s structure. Enhancing financial literacy by explaining the basic financial concepts involved in the description of the financial-asset lottery, offsets the negative effects of the financial framing: it improves respondents’ understanding of the lottery and increases the certainty equivalent. Our results—which can be rationalized by ambiguity aversion—shed new light on the linkages between financial literacy and financial investment behavior. Additionally, they highlight the importance of promoting financial education to stimulate households’ financial market participation.

Financial literacy and its determinants: the case of rural farm households in Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Martinson Ankrah Twumasi ◽  
Yuansheng Jiang ◽  
Salina Adhikari ◽  
Caven Adu Gyamfi ◽  
Isaac Asare
Keyword(s):  
Developing Countries ◽  
Financial Literacy ◽  
Financial Education ◽  
Policy Implications ◽  
Farm Households ◽  
Community Group ◽  
Data Set ◽  
Content Type ◽  
Wide Range ◽  
Rural Dwellers

PurposeThis paper aims to examine the determinants of rural dwellers financial literacy in Ghana.Design/methodology/approachA cross-sectional primary data set was used to estimate the factors influencing rural farm households' financial literacy using the IV-Tobit model.FindingsThe findings reveal that most rural residents are financially illiterate. The econometrics model results depicted that respondents' socioeconomic and demographic characteristics such as gender, income, age and education significantly affect financial literacy. Again, respondents who are risk seekers and listen or watch education programs are more likely to be financially literate.Research limitations/implicationsThe paper examined the determinants of rural dwellers financial literacy in four regions in Ghana. Future research should consider all or many regions for an informed generalization of findings.Practical implicationsThis paper provides evidence that rural dwellers are financially illiterate and it would require the policymakers or non-governmental organizations (NGOs) to establish a village or community group that comprises a wide range of bankers and government officials to help rural dwellers acquire some financial skills. Also, the positive relationship between media (whether respondent watches or listens to educational programs) and financial literacy implies that policymakers should focus on improving individuals' financial knowledge through training programs and utilize the media as a channel to propagate financial education to the public.Originality/valueAlthough previous studies have examined the determinants of financial literacy, little is known in developing countries and, in particular, rural communities. The authors fill this gap by contributing to the scanty existing literature in developing countries in several ways. First, this is the first study to examine the financial literacy level of rural dwellers in Ghana. Second, to not undermine the credibility of the estimation results, this study addresses the potential endogeneity issue, which other researchers have not adequately recognized. Finally, the study expands the scant literature on the subject and provides critical policy implications that will help policymakers formulate financial market policies that will contribute to rural dwellers financial literacy enhancement.

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.

Sign in / Sign up

Export Citation Format

Share Document