Journal of Risk and Financial Management

Research

20 pages, 2665 KiB

Open AccessArticle

Determinants of Financial Literacy: Analysis of the Impact of Family and Socioeconomic Variables on Undergraduate Students in the Slovak Republic

by Patrik Böhm, Gabriela Böhmová, Jana Gazdíková and Viktória Šimková

J. Risk Financial Manag. 2023, 16(4), 252; https://doi.org/10.3390/jrfm16040252 - 21 Apr 2023

Cited by 10 | Viewed by 7324

Abstract

Technological progress and the development of electronic services make financial services one of the fastest-growing sectors. The role of the current education system is to ensure that all users of an ever-increasing variety of products and services understand them and are able to [...] Read more.

Technological progress and the development of electronic services make financial services one of the fastest-growing sectors. The role of the current education system is to ensure that all users of an ever-increasing variety of products and services understand them and are able to use them efficiently. However, in terms of gender, socioeconomic, and demographic factors, the existing system of financial literacy education exhibits considerable disparity. The main goal of this research was to identify which factors had the greatest impact on the level of financial literacy and to analyse the magnitude of that impact. The study involved 363 first-year undergraduate students at the University of Žilina, Slovakia, and consisted of two parts—a questionnaire and a test that evaluated the impact of five groups of factors on the level of financial literacy. The research results suggest that the student’s gender, father’s education, family’s financial background, and student’s part-time work experience were among the most important determinants of financial literacy. Identifying these factors can aid in the adjustment of financial literacy education to reduce identified inequalities. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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10 pages, 678 KiB

Open AccessArticle

Is More Financial Literacy Always Beneficial? An Investigation through a Mediator

by Biwei Chen, Christos I. Giannikos and Jun Lou

J. Risk Financial Manag. 2023, 16(1), 53; https://doi.org/10.3390/jrfm16010053 - 16 Jan 2023

Cited by 2 | Viewed by 2833

Abstract

We study the impact of financial literacy on financial risk preference. When financial literacy is measured jointly by actual and self-assessed scores, we find compelling evidence of a valley-shaped relationship between actual financial literacy and risk preference. At a given level of self-assessment, [...] Read more.

We study the impact of financial literacy on financial risk preference. When financial literacy is measured jointly by actual and self-assessed scores, we find compelling evidence of a valley-shaped relationship between actual financial literacy and risk preference. At a given level of self-assessment, as actual financial literacy increases, the willingness to take risks initially decreases and then rises. Actual financial literacy is modeled to impact risk preference through self-assessed financial literacy, the mediator; this mediation effect is significant. Furthermore, increasing actual financial literacy has a positive (negative) effect in underconfident (overconfident) individuals on several financial behaviors. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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14 pages, 647 KiB

Open AccessArticle

Financial Inclusion and Intersectionality: A Case of Business Funding in the South African Informal Sector

by Munacinga Simatele and Martin Kabange

J. Risk Financial Manag. 2022, 15(9), 380; https://doi.org/10.3390/jrfm15090380 - 26 Aug 2022

Cited by 4 | Viewed by 2916

Abstract

Financial inclusion is a critical tool in the fight against poverty. This is especially important in economies where informal markets are prevalent due to the pervasion of market failures. Marginal identities such as gender, income and race are generally noted in the literature [...] Read more.

Financial inclusion is a critical tool in the fight against poverty. This is especially important in economies where informal markets are prevalent due to the pervasion of market failures. Marginal identities such as gender, income and race are generally noted in the literature as factors influencing access to finance. However, these marginalities are often investigated linearly, with little attention paid to the fact that they interact to compound financial exclusion. Using a survey of informal traders, the paper investigates how having multiple marginalities influences the choice of start-up capital. A sample is drawn from three different provinces in South Africa. A multinomial logit model is estimated. Using a simulation of representative groups, the paper shows that multiple marginalities matter in accessing finance. Education emerges as the most important factor that can temper the effect of other marginalities in the financial sector. Both females and blacks with higher levels of education have better access to more stable sources of start-up capital. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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22 pages, 2995 KiB

Open AccessArticle

Financial Inclusion in Rural South Africa: A Qualitative Approach

by Munacinga Simatele and Loyiso Maciko

J. Risk Financial Manag. 2022, 15(9), 376; https://doi.org/10.3390/jrfm15090376 - 25 Aug 2022

Cited by 10 | Viewed by 6262

Abstract

Financial inclusion efforts have resulted in a rapid increase in access to financial services. However, the usage of these financial services has not expanded at the same pace, especially in rural areas. The paper explores the factors that have caused usage to lag [...] Read more.

Financial inclusion efforts have resulted in a rapid increase in access to financial services. However, the usage of these financial services has not expanded at the same pace, especially in rural areas. The paper explores the factors that have caused usage to lag behind access using a qualitative approach. Data is collected from two predominantly rural provinces in South Africa using focus group discussions. While supply-side factors of distance and transaction costs are important, demand-side factors, including lack of employment, low and irregular incomes, financial illiteracy, and risk and trust perceptions, play a more significant role. We suggest that creating an enabling environment for the development of mobile money could overcome proximity barriers and result in better inclusion of rural communities. There is a need to invest in technology to improve network and Internet reception in rural areas. In addition, the government needs to reconsider the exclusive issuance of e-money by banks. Partnerships with supermarket money markets also have the potential to expand financial inclusion. Moreover, post-adoption financial education should complement efforts to expand financial inclusion. Simplified and transparent cost structures could help resolve the mistrust of banks. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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13 pages, 253 KiB

Open AccessArticle

Financial Literacy as a Driver of Financial Inclusion in Kenya and Tanzania

by Ashenafi Fanta and Kingstone Mutsonziwa

J. Risk Financial Manag. 2021, 14(11), 561; https://doi.org/10.3390/jrfm14110561 - 22 Nov 2021

Cited by 11 | Viewed by 6352

Abstract

Efforts are being exerted in many developing countries to promote financial inclusion by increasing individuals’ access to financial products and services. However, literature suggests that increasing the supply of financial products and services per se may not help in expanding financial inclusion unless [...] Read more.

Efforts are being exerted in many developing countries to promote financial inclusion by increasing individuals’ access to financial products and services. However, literature suggests that increasing the supply of financial products and services per se may not help in expanding financial inclusion unless concerted efforts are exerted in enhancing financial literacy. This is because financially literate individuals are more likely to appreciate the value of financial services and hence take up financial products. This paper reports the link between financial literacy and inclusion using data from a demand side financial inclusion survey conducted in Kenya and Tanzania in 2016 covering a total of 6029 individuals. Results from our instrumental variable regression analysis confirmed that financial literacy is a strong driver of financial inclusion. This implies that efforts to promote financial inclusion need to be accompanied with financial literacy campaigns in both countries. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

16 pages, 2330 KiB

Open AccessArticle

The Behavioural Aspects of Financial Literacy

by Florian Gerth, Katia Lopez, Krishna Reddy, Vikash Ramiah, Damien Wallace, Glenn Muschert, Alex Frino and Leonie Jooste

J. Risk Financial Manag. 2021, 14(9), 395; https://doi.org/10.3390/jrfm14090395 - 25 Aug 2021

Cited by 7 | Viewed by 7174

Abstract

In this paper, we investigate the contribution of behavioural characteristics to the financial literacy of UAE residents after controlling for demographic factors. Specifically, we test the relationship between financial literacy and behavioural biases such as representativeness, self-serving, overconfidence, loss aversion, and hindsight bias. [...] Read more.

In this paper, we investigate the contribution of behavioural characteristics to the financial literacy of UAE residents after controlling for demographic factors. Specifically, we test the relationship between financial literacy and behavioural biases such as representativeness, self-serving, overconfidence, loss aversion, and hindsight bias. Using data collected through survey questionnaires, we apply the methodology developed by the Organization of Economic Co-operation and Development (OECD) to compute financial literacy scores. Our overall results show that all behavioural biases except for overconfidence bias are positively related to financial literacy. Furthermore, some biases exhibit a stronger quantitative relationship with financial literacy than others. For example, hindsight bias displays the strongest link to financial literacy, followed by self-serving bias. The weakest but still statistically significant effect is loss aversion bias. Although biases, in general, have negative connotations, behavioural biases appear to be related to higher levels of financial literacy. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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16 pages, 327 KiB

Open AccessArticle

‘My Sport Won’t Pay the Bills Forever’: High-Performance Athletes’ Need for Financial Literacy and Self-Management

by Hee Jung Hong and Ian Fraser

J. Risk Financial Manag. 2021, 14(7), 324; https://doi.org/10.3390/jrfm14070324 - 13 Jul 2021

Cited by 9 | Viewed by 11701

Abstract

This paper investigates high-performance athletes’ development of their financial literacy and self-management skills and the related organisational support available to them during their athletic careers. The data were collected from 20 retired high-performance athletes (10 male and 10 female) representing six different countries [...] Read more.

This paper investigates high-performance athletes’ development of their financial literacy and self-management skills and the related organisational support available to them during their athletic careers. The data were collected from 20 retired high-performance athletes (10 male and 10 female) representing six different countries (Japan, Mexico, Portugal, Singapore, South Korea, and the UK). Thematic analysis was applied to the processing of the data and five themes emerged: (1) Funding battles: financial challenges and misjudgements; (2) Coping Strategies; (3) Support from sponsors, parents, and sport organisations; (4) Development of Financial Literacy; and (5) Life After Sport. The data indicates that athletes experienced financial challenges due to a lack of organisational support, reduced or terminated funding, and limited opportunities to access sponsorship. Typically, athletes developed their financial literacy and self-management skills by ‘self-help’ or ‘trial and error’. The findings contribute to both literature and practice by providing empirical evidence on the coping strategies adopted by athletes in order to overcome financial challenges and on the methods used in order to develop their financial literacy and self-management skills. These findings inform sport organisations and governing bodies to develop support schemes for high-performance athletes as well as deepen our knowledge of athletes’ career development and transitions focusing on the financial aspect. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

25 pages, 427 KiB

Open AccessArticle

Collaborative Curriculum Design in the Context of Financial Literacy Education

by Boukje Compen and Wouter Schelfhout

J. Risk Financial Manag. 2021, 14(6), 234; https://doi.org/10.3390/jrfm14060234 - 23 May 2021

Cited by 4 | Viewed by 3470

Abstract

Financial literacy education is being integrated into school curricula at an increasing frequency. However, the majority of teachers lack the required competencies and teacher self-efficacy to effectively teach financial topics. In this study, we evaluated whether participation in teacher design teams (TDTs) results [...] Read more.

Financial literacy education is being integrated into school curricula at an increasing frequency. However, the majority of teachers lack the required competencies and teacher self-efficacy to effectively teach financial topics. In this study, we evaluated whether participation in teacher design teams (TDTs) results in high-quality educational materials, encouragement of professional learning, and ultimately, enhanced teacher self-efficacy in the face of pending curriculum reform. We conducted an exploratory multiple-case study in Flanders, Belgium. Data were collected from two TDTs that developed materials aligning with the financial literacy learning standards. We observed the team meetings and conducted interviews with the participating teachers and the team coach. Our results suggest that participation in TDTs supports the three outcome variables that we examined. However, they also revealed that each outcome shows room for improvement. Furthermore, the data provided additional evidence for the importance of meeting several input and process factors that had been previously shown to be essential for effective TDT function. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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21 pages, 2896 KiB

Open AccessArticle

Machine Learning and Financial Literacy: An Exploration of Factors Influencing Financial Knowledge in Italy

by Susanna Levantesi and Giulia Zacchia

J. Risk Financial Manag. 2021, 14(3), 120; https://doi.org/10.3390/jrfm14030120 - 13 Mar 2021

Cited by 14 | Viewed by 6930

Abstract

In recent years, machine learning techniques have assumed an increasingly central role in many areas of research, from computer science to medicine, including finance. In the current study, we applied it to financial literacy to test its accuracy, compared to a standard parametric [...] Read more.

In recent years, machine learning techniques have assumed an increasingly central role in many areas of research, from computer science to medicine, including finance. In the current study, we applied it to financial literacy to test its accuracy, compared to a standard parametric model, in the estimation of the main determinants of financial knowledge. Using recent data on financial literacy and inclusion among Italian adults, we empirically tested how tree-based machine learning methods, such as decision trees, random, forest and gradient boosting techniques, can be a valuable complement to standard models (generalized linear models) for the identification of the groups in the population in most need of improving their financial knowledge. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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22 pages, 938 KiB

Open AccessArticle

Empowering Financial Education by Banks—Social Media as a Modern Channel

by Iwa Kuchciak and Justyna Wiktorowicz

J. Risk Financial Manag. 2021, 14(3), 118; https://doi.org/10.3390/jrfm14030118 - 12 Mar 2021

Cited by 13 | Viewed by 7968

Abstract

Financial literacy is extremely important, both from the perspective of the financial well-being of individuals and the stability of the financial market and the whole economy. The more financially literate a bank’s customers are, the more frequently and consciously they use financial products [...] Read more.

Financial literacy is extremely important, both from the perspective of the financial well-being of individuals and the stability of the financial market and the whole economy. The more financially literate a bank’s customers are, the more frequently and consciously they use financial products and services. Thus, banks are potentially significant stakeholders in the financial education process. Considering that social media have become the leading channel for communication and relationship building, especially regarding young clients, this channel should also be used by banks to increase financial literacy. The aim of this paper is to assess banks’ involvement in financial education activities through social media. We assume that banks use social media as a modern and attractive channel for improving financial education among social media users. The empirical analysis was conducted using several data sources, including non-financial statements and a unique self-collected dataset that describes the specifics of the most popular social media platforms (like Facebook, Twitter, YouTube, Instagram, GoldenLine, and LinkedIn) in the activities of commercial and cooperative banks in Poland between 2010 and 2019. Descriptive statistical methods and cluster analysis were used. The results show that educational activities provided by banks in Poland differ for each social media channel. Additionally, although financial education topics have become more popular among content published by banks, there is a huge disproportion between cooperative and commercial banks. Generally, banks that are more active on social media (mostly commercial banks) also pay more attention to the financial education context. Full article

(This article belongs to the Special Issue Financial Literacy and Financial Inclusion)

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