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Does Financial Literacy Affect Household Financial Behavior? The Role of Limited Attention.

ABSTRACT: Financial literacy is essential for every individual concerned with public welfare and household portfolio choices. In this study, we investigate the impact of household financial literacy on individuals' financial behavior using the China Household Financial Survey Data (CHFS) of 2015 and 2017. The results show that financial knowledge has significant current, long-term, and dynamic effects on financial behavior. This finding suggests that financial literacy is an important factor in shaping and improving financial behavior. Second, financial literacy can improve residents' limited attention, and residents with high attention tend to have formal bank accounts, participate in the stock market, and engage in financial behaviors in situations such as risky financial markets. High attention also helps to improve residents' financial behavior. This relationship suggests that financial literacy positively impacts formal bank account holding, participation in financial markets, participation in commercial insurance, participation in pension plans, and credit card holdings through limited attention channels that facilitate access to specific financial information. In addition, heterogeneity analysis showed that the impact of financial literacy on financial behavior differs significantly between urban and rural households, between men and women, and between high and low education levels. The study provides valuable insights for policy implications to enhance financial literacy, such as carrying out financial training to improve residents' knowledge about financial aspects, which further helps to optimize household financial decision-making.

SUBMITTER: Xu S

PROVIDER: S-EPMC9252460 | biostudies-literature |

REPOSITORIES: biostudies-literature

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Project description:ObjectiveThe aim of this study is to investigate the association between financial literacy and age as well as gender differences in financial literacy.MethodsWe analyse a sample of 25,000 individuals from 'The Financial Literacy Survey 2016' conducted by the Central Council for Financial Services Information (Bank of Japan). The analysis focuses on the relationship of age and financial literacy as well as that of age and self-rated financial knowledge. To consider factors accounting for gender differences in financial literacy, we use the Blinder-Oaxaca decomposition method. To further our understanding of financial literacy, we conduct additional analyses on financial behaviour and attitude.ResultsAlthough age is associated with increased financial literacy (Men, β: 0.249, standard error [SE]: 0.030; Women, 0.354, SE: 0.026), the growth rate decreases among the older respondents (Men, β: -0.002, SE: 0.000; Women, -0.003, SE: 0.000). However, the association between age and self-rated financial knowledge among men moves in the opposite direction (Age, β: -0.021, SE: 0.009, Age2, β: 0.000, SE: 0.000). Furthermore, female respondents are likely to be less financially literate than their male counterparts (β: -0.586, SE: 0.095) due to gender differences in the distribution of the factors that affect financial literacy (specifically education), their responses to financial literacy, and the interactions of these effects. In contrast to knowledge-based financial literacy, financial behaviour and attitudes among women are more preferable to those among men, namely, more premeditated.ConclusionFinancial literacy increases until about one's early 60s, after which it declines, while confidence in financial literacy reflects the inverse trend, especially among men. Additionally, men are more financially literate than women; however, these differences could be mitigated through education. Meanwhile, financial behaviour and attitudes among men are less premeditated. Thus, policies are needed that can help older adults with their financial decision-making, enhance women's financial literacy, and improve men's financial behaviours and attitudes.

Project description:Background:Financial capability is an essential feature of the organisation of one's personal life and engagement with society. Very little is known of how adequately individuals with developmental language disorder handle financial matters. It is known that language difficulties place them at a disadvantage in many aspects of their development and during their transition into adulthood, leading to the possibility that financial issues may prove burdensome for them. This study examines the financial capability and functional financial literacy of young adults with developmental language disorder and compares them to those of age matched peers. We tested the expectation that those with developmental language disorder would find financial management more challenging than would their peers, and that they would need to seek greater support from family members or other people. Methods:Participants completed a detailed individual interview, which included items drawn from the British Household Panel Survey and additional measures of financial capability, functional financial literacy and of perceived support. Nonverbal IQ, language, reading and numeracy measures were also collected. Results:Compared to typically developing age matched peers, young people with developmental language disorder report less extensive engagement with financial products and lower competence in functional financial literacy. A considerably higher proportion of those with developmental language disorder (48% vs. 16% of age matched peers) report that they draw on support, primarily from parents, in various financial tasks, including paying bills, choosing financial products, and taking loans from family or friends. Conclusions:This is the first study to consider the financial capability skills and functional financial literacy of young adults with developmental language disorder. We provide novel evidence that some young adults with developmental language disorder lack functional financial skills and require support to successfully manage their finances. This has policy implications that relate not only to engaging affected individuals in discussions about financial management but also to wider familial support.

Project description:IntroductionPhysician finances are linked to wellness and burnout. However, few physicians receive financial management education. We sought to determine the financial literacy and educational need of attending and resident physician at an academic emergency medicine (EM) residency.MethodsWe performed a cross-sectional, survey study at an academic EM residency. We devised a 49-question survey with four major domains: demographics (16 questions); Likert-scale questions evaluating value placed on personal finances (3 questions); Likert-scale questions evaluating perceived financial literacy (11 questions); and a financial literacy test based on previously developed and widely used financial literacy questions (19 questions). We administered the survey to EM attendings and residents. We analyzed the data using descriptive statistics and compared attending and resident test question responses.ResultsA total of 44 residents and 24 attendings responded to the survey. Few (9.0% of residents, 12.5% of attendings) reported prior formal financial education. However, most respondents (70.5% of residents and 79.2% of attendings) participated in financial self-learning. On a five-point Likert scale (not at all important: very important), respondents felt that financial independence (4.7 ± 0.8) and their finances (4.7±0.8) were important for their well-being. Additionally, they valued being prepared for retirement (4.7±0.9). Regarding perceived financial literacy (very uncomfortable: very comfortable), respondents had the lowest comfort level with investing in the stock market (2.7±1.5), applying for a mortgage (2.8±1.6), and managing their retirement (3.0±1.4). Residents scored significantly lower than attendings on the financial literacy test (70.8% vs 79.6%, P<0.01), and residents scored lower on questions pertaining to investment (78.8% v 88.9%, P<0.01) and insurance and taxes (47.0% v 70.8%, P<0.01). Overall, respondents scored lower on questions about retirement (58.8%, P<0.01) and insurance and taxes (54.7%, P<0.01).ConclusionEmergency physicians' value of financial literacy exceeded confidence in financial literacy, and residents reported poorer confidence than attendings. We identified deficiencies in emergency physicians' financial literacy for retirement, insurance, and taxes.

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Does Financial Literacy Affect Household Financial Behavior? The Role of Limited Attention.

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