Household Investments in Structured Financial Products: Neglected Risks, Price Complexity, and Financial Literacy

Zusammenfassung: Der Beitrag analysiert sowohl Schwachstellen als auch darauf aufbauend Handlungsempfehlungen und Lösungsvorschläge im Bereich der finanziellen Bildung von privaten Haushalten. Die Analyse der Schwachstellen umfasst eine kritische Sicht auf die Methodik zur Einschätzung finanzieller Bildung, die Beurteilung der finanziellen Bildung insbesondere junger Erwachsener, den Maßnahmenkatalog zur Verbesserung finanzieller Bildung und die Verbraucherinformationen, die sowohl als Voraussetzung für die Anwendung finanzieller Bildung als auch als Grundlage für eine Verbesserung der finanziellen Bildung im Kontext eines lebenslangen Lernens eine zentrale Rolle einnehmen. Zentrale Lösungsvorschläge zielen auf eine praxisnahe Meta-Bildung, die auf ein ökonomisches Grundverständnis, wenige Faustregeln und die relevantesten finanziellen Entscheidungen im Lebenszyklus ausgelegt ist, und ein gesetzlich vorgeschriebener Zugang zu relevanten und hochwertigen Informationen, um die Vergleichbarkeit von Produkten und Dienstleistungen im Bereich der Verbraucherfinanzen für private Haushalte und Informationslotsen deutlich zu verbessern und ein lebenslanges, praxisnahes Lernen zu ermöglichen. Summary: This article analyses weaknesses in the field of private households’ financial literacy and – building upon this – provides recommendations and solutions. The analysis of the weaknesses covers a critical view on the methodology used to measure financial literacy, the assessment of the financial literacy of young adults, the package of measures for the enhancement of financial literacy and consumer information, which play a central role as precondition for the application of financial literacy and as basis for the enhancement of financial literacy through life-long learning. Main recommendations and solutions are to establish a meta-literacy that is built on understanding basic economic principles, few rules of thumb, and the most relevant decisions in the life cycle. Moreover, a statutory access for households to relevant and high-quality information to significantly enhance the comparability of financial products and services for consumers and to enable a life-long learning in step with actual practice.

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Struggling to make ends meet: can consumer financial behaviors improve?

International Journal of Bank Marketing ◽

10.1108/ijbm-12-2020-0595 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Lisa K. Meneau ◽

Janakiraman Moorthy

Keyword(s):

Financial Literacy ◽

Financial Management ◽

Group Analysis ◽

Self Control ◽

Thinking Styles ◽

Financial Health ◽

Content Type ◽

Financial Behaviors ◽

Financial Products ◽

The Impact

PurposeThe purpose of the study is to examine the following two research objectives. The first was to examine the predictive relationships that consumer characteristics of financial literacy, thinking styles and self-control have with a consumer's financial behaviors. The second goal was to ascertain financial management products' ability to aid those consumers who need it the most by weakening the predictive effects of consumer traits on financial behaviors.Design/methodology/approachThe study employed a web-based survey to gather information. The measurement and structural models were analyzed using generalized structured component analysis (GSCA), a component-based structural equation model. The mediation effect of self-control is assessed using the GSCA. The conditional mediation of demographic variables and use of personal financial management products are evaluated using multi-group analysis (MGA) in GSCA.FindingsAntecedents, financial literacy, thinking styles and self-control consumer characteristics are predictors of financial behaviors. However, self-control plays a more prominent role as a mediator between the other variables, strengthening the overall relationship. Also, financial products can have a beneficial moderation effect assisting those consumers who need them the most.Practical implicationsThese insights help in creating target specific financial literacy strategies to influence consumers' financial behaviors. Also, there is a need to develop mechanisms to influence a consumer's self-control and thinking styles to improve financial behavior. In conjunction with other initiatives, the impact of financial literacy has a greater effect on financial behaviors. Further, the insights assist financial institutions and financial technology firms in offering and creating products to help customers make better financial decisions and improve their financial behaviors.Social implicationsThe research addressed a significant global issue – consumer financial health. The Great Recession and the COVID-19 recession highlight the need to focus on the consumer and efforts to improve their financial health.Originality/valueThis research highlighted the mediating role of self-control and suggested that existing and future financial products can positively influence consumer behavior drivers.

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CDO and Structured Financial Products: A Modeling Perspective

SSRN Electronic Journal ◽

10.2139/ssrn.1639261 ◽

2010 ◽

Cited By ~ 1

Author(s):

Charles S. Tapiero ◽

Daniel Totouom

Keyword(s):

Financial Products ◽

Structured Financial Products

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Structured Finance and the Social Contract: How Tranching Challenges Contractualist Approaches to Financial Risk

Business Ethics Quarterly ◽

10.1017/beq.2018.18 ◽

2018 ◽

Vol 29 (1) ◽

pp. 1-24 ◽

Cited By ~ 1

Author(s):

Tobey Scharding

Keyword(s):

Financial Risk ◽

Contract Theory ◽

Third Parties ◽

Individual Risk ◽

Collateralized Debt Obligations ◽

Structured Finance ◽

Financial Products ◽

Systemic Risks ◽

Collateralized Debt ◽

Structured Financial Products

ABSTRACT:Many ethicists argue that contract theory offers the most promising strategy for regulating risks. I challenge the adequacy of the contractualist approach for evaluating the complicated, novel risks associated with some structured financial products, particularly focusing on risks to third parties. Structured financial products like collateralized debt obligations (CDOs) divide a pool of financial assets into risk “tranches” organized from least to most risky. Investors purchase various tranches based on their individual risk-and-return preferences. Whereas contract theory holds that investment risks are ethically permitted (roughly) when everyone—including both parties directly involved in the investments and third parties—consents to them, structured financial products like CDOs show that even risks to which everyone consents are ethically problematic when they involve systemic risks of ruin.

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Region-Wise Usage of Banking Services – A study of Gujarat

International Journal for Research in Engineering Application & Management ◽

10.35291/2454-9150.2020.0372 ◽

2020 ◽

pp. 106-109

Keyword(s):

Financial Literacy ◽

Financial Services ◽

Rural Households ◽

Primary Data ◽

Structure Questionnaire ◽

Banking Services ◽

Financial Products ◽

Substantial Progress ◽

Indian Banks ◽

Corporate Social

Financial services actively contribute to the humane & economic development of the nation. Financial services lead to social and economic safety hence, each & every individual should be provided with affordable institutional financial products/services popularly called ―Financial Inclusion‖. Despite witnessing substantial progress in financial sector reforms in India, it is overwhelming to note that nearly half of the rural households even today do not have any access to any source of funds (savings/credit) - institutional or otherwise. Hardly one-fourth of the rural households are assisted by banks. Hence the major task before banks are to bring most of those excluded, i.e. 75 percent of the rural households, under the mainstream of formal financial services. There is a need for the formal financial system to look at increasing financial literacy and financial counseling. As a part of corporate social responsibility now a day’s Indian banks and financial market players should actively look at promoting such programs. Financial products& services are identified as basic banking services like deposits accounts, institutional loans, access to payment, remittance facilities & also life & non-life insurance services. The present paper is an attempt to capture the region-wise usage of banking services. The study collected data of 900 respondents from five regions of Gujarat i.e. South Gujarat, North Gujarat, Central Gujarat, Saurashtra, and Kachchh. The study used a five-point Likert scale agreement method to understand the usage of banking services. Also, the study captured the demographic profile of respondents from. The primary data collected through a structure questionnaire.

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