Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data

This study investigates the role of financial knowledge in various short-term and long-term financial behaviors among Millennials in the United States. Results from the 2015 National Financial Capability Study (NFCS) indicate that Millennials have lower levels of objective financial knowledge and similar levels of perceived financial knowledge as compared to all households. Consistent multivariate results find financial knowledge to be positively associated with performing positive short-term and long-term financial behaviors. Results are found to be robust across different measurements of financial knowledge and behavior, and the issue of the potential for reverse causality is specifically addressed. This study provides a comprehensive financial profile of Millennials with important insight for policymakers as well as financial practitioners.

Financial Knowledge and Short-Term and Long-Term Financial Behaviors of Millennials in the United States

Consumer’s subjective financial well-being: A systematic review and research agenda

Focusing on different facades of financial well-being such as wealth accumulation and retirement planning, various determinants of financial well-being have been unearthed, and financial literacy has emerged as a crucial factor that increases financial well-being. Hence, financial literacy has been an important policy instrument to increase the financial well-being of individuals, particularly given that it is relatively easy to implement. This paper is an attempt to pave the way for such policies in a group of middle income countries, namely Mexico, Lebanon, Uruguay, Colombia and Turkey. After establishing financial literacy levels, we identify the least financially literate groups in each country to facilitate targeting of public policy. We find that women, younger adults and individuals who cannot read or write in the official language of their country of residence have lower financial literacy scores. In line with the previous findings in the literature on the developed countries, our results indicate that financial literacy increases with education. We also show that it is not only the years of education, but also the quality. In Mexico and Turkey, there are large regional differences that must be addressed. We also find that differences in financial literacy across countries persist even when differences in structural characteristics are taken into account. A partial explanation may be provided by differences in financial inclusion.

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Financial Literacy in Developing Countries

The purpose of this paper is to determine the antecedents and consequences of financial literacy by using meta-analytic techniques.,The authors conducted a meta-analysis of 44 valid studies, which generated a total of 690 observations (effect sizes).,The findings showed that the factors influencing financial literacy were as follows: educational level, financial attitude, financial knowledge, financial behaviour, gender, household income and investments. The consequences of financial literacy were the behaviour of incurring avoidable credit and checking fees, credit score, and the willingness to take investment risks. The authors also find some methodological, cultural, economic and theoretical moderations effects between financial literacy and antecedent/consequent constructs.,This meta-analysis reviewed the relationships found worldwide in the literature on financial literacy. The authors also identified new avenues for future research. Some specific limitations, such as the non-use of qualitative studies, are registered.,This research tested the impact of the antecedents, consequences and moderators of financial literacy via a meta-analytical review. This meta-analysis contributes to the marketing and financial literature by offering a set of empirical generalisations about the direct and moderation effects investigated.

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The antecedents and consequences of financial literacy: a meta-analysis

This study examined potential effects of financial literacy on household portfolio choice and investment return, an indicator of financial wellbeing. Using data from the 2014 Chinese Survey of Consumer Finance, financial literacy was measured and further categorized into basic financial literacy and advanced financial literacy. This study tested the hypothesis that financial literacy affects household choice between stock and mutual fund. The results indicated that households with higher financial literacy, especially those with higher level of advanced financial literacy tended to delegate at least part of their portfolio to experts and invest in mutual fund. However, households who were overconfident about their financial literacy tended to invest by themselves and were more likely to hold only stocks in their portfolios. The findings also indicated that households with higher financial literacy had a better chance of receiving a positive investment return, suggesting that higher financial literacy may result in a better financial outcome.

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Zhong Chu

Papers

Financial Literacy, Portfolio Choice, and Financial Well-Being