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The effectiveness of smartphone apps in improving financial capability
Abstract
This study is the first to assess whether smartphone apps can be utilised to improve financially capable behaviours. In this study four smartphone apps, packaged together under the title ‘Money Matters’, were provided to working-age members (16–65 years) of the largest credit union in Northern Ireland (Derry Credit Union). The smartphone apps consisted of a loan interest comparison app, an expenditure comparison app, a cash calendar app, and a debt management app. The assessment methodology used was a Randomised Control Trial (RCT) with the U.K. Financial Capability Outcome Frameworks used to set the context for the assessment. For those receiving the apps (the treatment group) statistically significant improvements were found in a number of measures designed to gauge ‘financial knowledge, understanding and basic skills’ and ‘attitudes and motivations’. These improvements translated into better financially capable behaviours; those receiving the apps were more likely to keep track of their income and expenditure and proved to be more resilient when faced with a financial shock.
... Finally, we contribute to the growing literature on using Fintech as an intervention to attain healthier financial outcomes and wellness among households. Previous studies have highlighted how technological innovations foster desirable financial behaviors, such as responsible spending (Carlin et al., 2019), savings and expenditure tracking (French et al., 2020;Gargano and Rossi, 2020), positively contributing to financial satisfaction (Xiao and O'Neill, 2018). Our study is the first, to the best of our knowledge, to demonstrate online budget planners as an impactful technological intervention on financial satisfaction. ...
... Similarly, smartphone apps have been shown to foster behaviors that improve the financial health of households. For instance, French et al. (2020) found that users of smartphone financial apps experience significant improvements in financial capability. In line with this, Carlin et al. (2019) highlight that mobile applications facilitating easier access to information enhance consumer attention, leading to lower debts. ...
... Therefore, an intervention aimed at assisting households in cultivating healthy financial behaviors and greater confidence about managing their finances would yield positive effect on their financial satisfaction. Indeed, many studies have documented evidence that technological innovations promote users' desirable financial behaviors such as responsible spending (Carlin et al., 2019), savings and expenditure tracking (French et al., 2020), market price awareness and formal credit usage (Frisancho et al., 2023), which positively contribute to financial capacity (Xiao and O'Neill, 2018) and capability (Blanco et al., 2023). ...
Purpose
This study examines the impact of online budget planning platforms (e.g. Goodbudget, Mint) on households’ financial satisfaction. Furthermore, the authors identify the channels and the cross-sectional heterogeneity of this impact based on households’ income, financial literacy and minority groups.
Design/methodology/approach
This study utilizes data from the National Financial Capability Study (NFCS) for 2018 and 2021, which encompasses over 50,000 households. The authors apply logit and ordered logit regression techniques to examine the research questions and use propensity score matching and entropy balancing to address potential sample selection bias.
Findings
The authors find a substantial correlation between the adoption of financial budgeting tools and a notable improvement in households’ financial satisfaction, driven by the promotion of healthy financial behaviors and enhanced financial self-efficacy. The empirical findings underscore that the positive effects of online budget planners are more pronounced among low-income, financially illiterate and Black households.
Originality/value
This study is the first to examine the impact of online budget planners on household financial satisfaction. It contributes to the literature by offering valuable insights into how these tools influence financial satisfaction within households.
... Without income management, financially illiterate people with mobile phones could easily suffer from financial fraud indebtedness and have problems meeting their basic needs (Goyal & Kumar, 2021). Mobile phone users are likely to be more literate (Evans, 2018;French et al., 2020;Van Nguyen et al., 2022). ...
... Aligned with theory, the results of this paper show that the main variables determining financial literacy are associated with economic factors: income level and mobile phone ownership. The higher the level of income, the higher the degree of financial literacy, as they have more access to education and financial services, which increases their experience in income management as the authors (Antonio-Anderson et al., 2020;French et al., 2020;Kadoya & Khan, 2020;Van Nguyen et al., 2022). ...
... It seems that as income increases, so does financial literacy. (Antonio-Anderson et al., 2020;French et al., 2020;Kadoya & Khan, 2020;Van Nguyen et al., 2022) this relationship was expected and gives certainty of modelling by implicit logic in which the odds ratio increases from 1.108 at the lowest income level to 7.133 being only non-significant in the lowest decile of the surveyed population. ...
This research aims to identify the factors explaining the level of financial literacy, divided into three levels, low, medium and high, of the Mexican population over the age of 18. This study fills a gap in microeconomic studies, which essentially lack an analysis of financial literacy and the study of financial literacy as a construct defined by the ENIF 2021 and by the Organization for Economic Cooperation and Development, in which financial literacy is measured by three components, financial knowledge, behaviour and attitudes; a relevant empirical assumption for this methodology is that the variable does not fit a standard normal distribution. Due to the nature of the dependent variable, an Ordered Logistic Model is used, taking into account independent variables with economic, socio-behavioural and institutional characteristics. The number of observations used was 13,570, in which the sample has a probabilistic, three-stage, stratified, clustered design; the sample represents 90.3 million people over the age of 18. The results show that the main explanatory factors for financial literacy are income level, mobile phone tenure, gender, age and town size. Young people (aged 18-35) are more likely to be financially literate than people over 65, who are less financially literate. Females are also more likely to be financially literate than males. In terms of institutional focus, urban dwellers are more likely to be financially literate than those in rural areas. This paper provides policymakers with a valuable opportunity to understand Mexican society better and improve financial decision-making, money management and positive future behaviours.
... Studies have suggested that the adoption of DFS can potentially enhance financial capability, financial knowledge and skills (Yeo and Fisher, 2017;Panos and Wilson, 2020;French et al., 2020;Servon and Kaestner, 2008). This is because people are able to search for information to assist them in their financial planning and use financial tools that would guide them in making financial decisions more effectively (Hogarth and Anguelov, 2004). ...
... This is because people are able to search for information to assist them in their financial planning and use financial tools that would guide them in making financial decisions more effectively (Hogarth and Anguelov, 2004). Users are also more likely to plan for the future and have improved levels of self-efficacy and greater confidence in making financial decisions (French et al., 2020). The developments in DFS have had a significant impact on financial planning and financial well-being (FWB) and have succeeded in reducing income disparities across societies (Frame et al., 2018). ...
... microentrepreneurs). Similarly, in the context of Northern Ireland, French et al. (2020) found that among a specific group of employees, the use of smartphone financial apps had improved their financial capabilities. Yeo and Fisher (2017) also discovered higher levels of financial capability among those who used mobile financial services more frequently in the context of the USA Generally, the findings of these studies imply that the use of these technologies could increase financial capability and resilience towards financial shocks. ...
Purpose
The first objective of this study is to analyze whether financial behavior (FB), financial stress (FS), financial literacy (FINLIT) and the locus of control (LOC) influence subjective financial well-being (SFWB) among low-income households in Malaysia. The second objective is to investigate whether the use of digital financial services (DFS) moderates the influence of FB and FS, on SFWB.
Design/methodology/approach
Motivated by the literature on transformative service research (TRS), this study examines how the use of DFS impact SFWB among low-income households in Malaysia. Low-income households are chosen as they are more likely to be financially excluded and lack financial knowledge and skills. Using an interviewer-administered survey, trained enumerators collected data from 1,948 low-income households in Malaysia, selected using a two-stage sampling based on the National Household Sampling Frame obtained from the Department of Statistics Malaysia.
Findings
Results reveal that SFWB is positively influenced by FB and the LOC, and is negatively impacted by FS and FINLIT. The evidence shows that the use of DFS counterintuitively weakened the strength of the relationship between FB and SFWB, but effectively reduced the adverse effect of FS on SFWB.
Practical implications
To reverse the signs of relationship, financial services marketers need to identify the specific types of DFS that low-income households use in order to provide targeted marketing efforts and financial education to promote the use of DFS on a more holistic basis to increase financial well-being.
Originality/value
The findings of this study add to the body of knowledge deliberating on the opposing effects of technology on consumers' welfare and well-being. This study focuses on the lower-income stratum of Malaysian households as this group of the population is more likely to be financially excluded and have deficiencies in financial knowledge and skills. Findings of this study show that DFS use can actually diminish the positive impact of FB on SFWB while reducing the adverse effect of FS on SFWB.
... Furthermore, the development of DF can also enhance the financial literacy of seniors and their families. DF significantly enhances the dissemination of financial information, facilitating communication between traditional commercial banks and households, regardless of the geographical constraints imposed by bank branches [33]. By relying on digital platforms, DF eliminates geographical restrictions and provides elderly households with abundant financial information, thus enhancing their financial literacy [33]. ...
... DF significantly enhances the dissemination of financial information, facilitating communication between traditional commercial banks and households, regardless of the geographical constraints imposed by bank branches [33]. By relying on digital platforms, DF eliminates geographical restrictions and provides elderly households with abundant financial information, thus enhancing their financial literacy [33]. This, in turn, enables elderly households to effectively leverage the resource allocation and risk mitigation functions of DF, overcoming geographical and price-based barriers to financial inclusion, while also diversifying their income streams [31]. ...
Under the backdrop of global aging, the escalating number of elderly individuals in poor health poses a growing social burden and impacts economic development and social stability. A fundamental question arises as to whether the advancements of digital finance (DF) can effectively enhance the physical health of the elderly. This study aims to investigate the impact of DF on the physical health of the elderly by utilizing data from the China Health and Retirement Longitudinal Study (CHARLS) conducted in 2013, 2015, and 2018. The results reveal a significant positive impact of DF on enhancing the physical health of the elderly. Furthermore, the study demonstrates that this impact is particularly pronounced among the elderly with higher educational attainment, stronger intergenerational links, and those residing in central cities. A mechanism analysis further reveals that DF contributes to improving the physical health of the elderly by augmenting household disposable income, alleviating liquidity constraints, and enhancing the utilization of medical services. These findings offer valuable insights for the future development of DF and the implementation of policies promoting healthy aging and active aging.
... This can be done in several ways, such as keeping a spreadsheet, using a personal finance app, or keeping receipts. By tracking spending, students can understand spending patterns, identify areas for overspending, and make adjustments to stay within budget (French et al., 2020). ...
... As stated from the hypothesis confirmed in the second case study, there is a positive association between increased expense information and cash management app usage, and there is a positive association between the reduction of unnecessary expenses and cash management app usage. It has come to an end that basing financial decisions over budgeting skills provided or bloomed through the use of cash management applications shows an improvement of the overall financial habits of youngsters, a confirmation in accordance also with the study of French et al. (2020). ...
Financial planning evaluates a person’s financial goals by identifying the necessary steps to achieve them according to their financial resources. With the increased influence of technology on day-to-day life and the countless innovations, incorporating new opportunities into the financial planning process increases the possibilities of achieving settled purposes. Using smartphone applications to manage personal finances improves economic behaviour, knowledge, attitudes, and motivation. In this study, we will analyse the changes brought about by using cash management applications among young people and through the delivery of a survey, we could gather their feedback. The answers are then analysed through SPSS Statistics, using Pearson correlation analysis. We measure the strength and direction of the relationship between variables related to what leads to using or not using cash management applications. At the end of the analyses, we conclude a weak positive relationship between using cash management applications and improving personal finances, according to Good Things Foundation (n.d.). From analysing the ties between smartphone usage and cash management apps, resulting in a fragile negative relationship, we conclude that the weak relationship between cash management apps and improved personal finances results from a low recognition in this typology of applications.
... Servon and Kaestner (2008) identify that access to an online financial demonstration program helps low-and moderate-income individuals be more effective financial actors. French et al. (2020) further find that smartphone apps consisting of loan interest comparison, expenditure comparison, cash calendar, and debt management have explanations for higher levels of financial knowledge, basic financial skills, and attitudes, which translate into financially capable behaviors. In addition, as social interaction is the primary method through which households can obtain financial information (Hirshleifer & Teoh, 2003), the interaction between digital financial platforms and individual users contributes to financial information acquisition for households. ...
... On the other hand, digital finance helps households obtain long-distance and large-scale remittances through digital accounts, thereby helping households expand their social networks to cope with negative shocks and improving household risk-sharing with relatives and friends(Jack & Suri, 2014).In testing the channel of financial capability, we take financial knowledge, actual use of digital finance services and households' asset allocation into consideration as mediators following the theoretical analysis. In a line withServon and Kaestner (2008) andFrench et al. (2020), we find a positive association between digital finance and financial capability. Specifically, with development of digital finance, households will acquire more financial knowledge, have access to more digital financial services and realize more diversified asset portfolio. ...
The fact that financial exclusion leads to income inequality is detrimental to sustainable economic growth. Digital finance facilitates the provision of financial services to poor people and has the potential to promote income mobility so that to reduce income inequality. This study uses the Digital Financial Inclusion Index and household data from the China Household Finance Survey to examine the association between digital finance and households’ income mobility. Results show a significantly positive association between digital finance and upward income mobility. Underlying mechanism analyses suggest that digital finance is positively associated with upward mobility through the channels of equal opportunity and financial capability. Further heterogeneous analyses find that asset, education, and age can be moderators in the relationship between digital finance and income mobility. The findings demonstrate the importance of digital finance in promoting the income mobility of disadvantaged people and achieving the goal of inclusive and sustainable development.
... Their study indicates that financial literacy is negatively correlated with the use of mobile payments. Conversely, smartphone app use can also significantly improve financial knowledge (French et al., 2020). ...
... Fintech can potentially enhance financial capability because it could simplify financial planning processes and encourage financial education (Panos and Wilson, 2020). French et al. (2020) also concluded that smartphone apps could be used to improve financial capability. There is still a lack of literature on whether financial capability will influence the adoption of fintech. ...
Purpose
Emerging literature on fintech has shown that consumers have been slow to adopt fintech-based products and services. However, limited literature is available regarding the factors associated with consumers' adoption of these products and services. This study aims to investigate the factors that are associated with consumer adoption of fintech-based products and services.
Design/methodology/approach
Data on the usage and perception of smartphone financial apps by US residents ages 18–70 was collected in the fall of 2020. Based on the Extended Post-Acceptance Model (EPAM) framework, Structural Equation Modeling and Confirmatory Factor Analysis were applied to inspect how financial capability, perceived security and perceived usefulness affect fintech adoption.
Findings
Fintech proficiency, investment risk tolerance and perceived safety are positively associated with the frequency of fintech application use upon adoption. Consumers are more likely to feel safer if they are more financially capable and technologically proficient. Consumers with higher risk tolerance tend to believe fintech apps are safe to use. Consumers with higher fintech proficiency are more likely to recognize the usefulness of fintech services.
Originality/value
The study introduces a revised EPAM framework with antecedent factors, fintech proficiency and risk tolerance to investigate the factors associated with consumer adoption of fintech-based products and services. The key findings of this study validate the EPAM in the American context. Additionally, this research is among the first to have confirmed the direct relationship between perceived security and fintech adoption. The results have practical implications for existing fintech companies, banks and financial institutions, policymakers and financial advisory practices considering adopting fintech-based services for their clients.
... Nowadays, many financial behaviors are performed in digital environment in which people's behavior can be influenced through digital nudging (Weinmann, Schneider and Brocke, 2016;Benartzi, 2017;Mirsch et al., 2017;Cai, 2020). Digital nudging could be used to improve financial literacy, to influence financial behavior, and to provide financial advice (e.g., Cai, 2020;French et al., 2020;Huebner et al., 2020;Li & Meyer-Cirkel, 2019). Financial service providers have products that successfully use intervention tools to alter customer behavior and to have an effect on financial capability (Dolan et al., 2012). ...
... Some recent research has highlighted how smartphone apps can be a useful tool for improving financial literacy. French et al. (2020) demonstrated that participants who used the smartphone apps (e.g., a loan interest comparison app, an expenditure comparison app, a cash calendar app, and a debt management app) were more likely to keep track of their income and expenditure, and thus, were more resilient when faced with a financial shock, than the control group. Another example is the study by Huebner et al. (2020) that shows how smartphone app use increases individuals' salience of credit card transactions and resulted reduced spending. ...
Digital innovations are transforming financial services and resulting changes in consumer behavior and personal money management. Diffusion of pervasive digital technologies offers individuals quick and easy access to various digital services bringing opportunities and challenges into their personal money management. The study aimed to explore how digitalization affects individuals’ financial literacy and financial capability. As a result, we identified three main themes in the intersection of finance and digitalization: Fintech, Financial behavior in digital environments, and Behavioral interventions. We propose directions for measuring digital financial literacy, updates to the financial literacy curriculum, and developments of digital learning tools. Further, we highlight collaboration between the public and private sectors to create a fairer and more inclusive economic landscape. Our study contributes to existing research by proposing a framework for digital financial literacy and financial capability and a research agenda for future studies.
... Mobile personal finance apps assist and support users concerning their financial needs. They can educate and assist users with user-centric information, making the user more financially literate (Angel, 2018;French et al., 2020). In general, mobile apps are defined as "an [information technology] (IT) software artifact that is specifically developed for mobile operating systems installed on handheld devices, such as smartphones or tablet computers." ...
... Past research on mobile apps in the financial services sector is mainly concerned with acceptance and adoption factors (e.g., Schierz et al., 2010;Shaikh & Karjaluoto, 2015), especially with regards to trust (e.g., Kim et al., 2009;Sharma & Sharma, 2019) or security aspects of these apps (e.g., Khalilzadeh et al., 2017). Other researchers examined mobile apps focusing on financial inclusion, specifically for developing countries (e.g., Ky et al., 2021) or financial literacy, but did not examine the overall functions of the market of financial apps in detail (French et al., 2020). Another study investigates the impact of user ratings for mobile finance apps with a quantitative approach across different sub-categories (Huebner et al., 2018). ...
This cumulative dissertation consists of and critically discusses five peer-reviewed and co-authored publications by me about the digitalization and automation of financial advice, so-called Robo-Advice (RA). The dissertation thereby covers two main research areas. The first research area addresses the positioning of RA in science and practice providing a structure for more in-depth analyses. From a scientific perspective the relevant literature about RA is systematized in a new Organizing Framework for RA Research. The practical positioning of RA in the broader landscape of FinTech is approached in the context of mobile personal finance applications. The second research area addresses the focused analysis and design of certain RA components. One study focuses on the business model of RA, aiming at understanding their distinct elements and finding major similarities and differences. A second study focuses on RA portfolio recommendations, providing an understanding of how they differ, especially in structure, selected products, performance, and risk. Lastly, a third study presents meta-requirements and design principles for RA addressing the problem of unethical behavior that can decrease trust and the adoption of RA.
... Financial Apps is an application that can be downloaded from Playstore that provides personal financial management facilities. French et al. (2020) explained that the effectiveness of personal Financial Apps could increase the level of confidence of its users regarding future economic conditions by building financial skills using personal Financial Apps. ...
... Financial Apps help someone to be able to determine financial goals for the future so that they have an idea of how to implement the right financial plan and have spending limits through budgeting. In a previous study, French et al. (2020) evaluated that the effectiveness of digital finance helps improve financial capabilities and further explained that digital finance helps increase individual confidence in achieving their goals using Financial Apps. ...
This study aims to determine the effect of Socio-Demographic and Financial Education on Financial Capability with Financial Apps as the moderator variable. The research population is Generation Z aged 19-26 years. The research sample amounted to 100 respondents and data collection was done through the distribution of questionnaires via google form. The data analysis method used is Partial Least Square (PLS). In the industrial era 4.0, which is growing rapidly at this time, financial applications that are designed to help people manage finances have begun to appear. Digital financial management applications make people manage personal finances easily and practically. Financial management applications encourage people to further upgrade their knowledge about financial management to achieve financial goals in the future. The results showed that gender had a significant effect on financial capability and financial apps played a role in moderating the influence of gender on financial capability.
... Although some studies show that using these financial management tools can lead users to have unnecessary purchasing behaviors and potentially take on more debt or loans (Panos and Wilson, 2020), its advantages are undeniable. Recently, French et al. (2020), in their randomized trial, demonstrated that offering financial smartphone apps could significantly enhance financial knowledge and skills and establish their financial habits such as tracking income/expenditure and becoming resilient before the financial shock (French et al., 2020). Carlin et al. (2019) found that smartphone applications could be served as an external financial information source, and utilizing these apps could decrease the financial penalties among participants (Carlin et al., 2019). ...
... Although some studies show that using these financial management tools can lead users to have unnecessary purchasing behaviors and potentially take on more debt or loans (Panos and Wilson, 2020), its advantages are undeniable. Recently, French et al. (2020), in their randomized trial, demonstrated that offering financial smartphone apps could significantly enhance financial knowledge and skills and establish their financial habits such as tracking income/expenditure and becoming resilient before the financial shock (French et al., 2020). Carlin et al. (2019) found that smartphone applications could be served as an external financial information source, and utilizing these apps could decrease the financial penalties among participants (Carlin et al., 2019). ...
This study aims to identify whether demographics, socio-economic factors, the usage of the internet, smartphone and bank, and cultural facto affect Vietnamese adults' financial literacy. A sample of 669 participants participated in the online survey questionnaire (response rate of 89.92%). Multivariate general linear model regression shows that adults of younger age have better skills in cash management, credit management, savings and investment, and financial management compared to older adults. The findings suggest that participants with better income could manage savings and overall finance more effectively. Furthermore, respondents with “Uncertain avoidance” in the culture had better skills in cash management, saving, and investment. Meanwhile, preferring masculinity had higher scores in credit management, insurance, and total scale compared to those preferring femininity. The significant contribution of this study is its usefulness for economic players to have assertive financial strategies and policymakers to enhance the level of financial literacy and provide trustworthy financial guidance.
... Karlan et al., 2016;Zhang et al., 2022) and also made it easier for governments to send digital payments to households during the COVID-19 pandemic in lower-and middle-income countries (Mansour, 2022;Marin and Palacios, 2022). In higher-income countries, Fintech helped individuals manage spending and debt and thus facilitated financial saving ( French et al., 2020;Walsh and Lim, 2020). ...
Financial social work extends inclusion by providing clients access to financial products, services, and technology. We summarize evidence about how financial technology impacts economic inequality and discuss implications for social work practice, education, and policy.
... 1 Many researchers are confident that fintech will help bridge the gap in financial knowledge because the pervasiveness of digital tools might bring financial services even to remote areas. 2 Over the last years, the diffusion of digital tools has paved the way for the creation of fintech apps that promote financial culture. Some of them turned out to be effective in helping people to keep track of their income and expenditures (see French et al. 2020). Viviano and Michelangeli (2021)-using a survey of the Italian population carried out by the Bank of Italy-find that Internet banking allowed Italian households, to begin to enter into financial markets, as well as fostering better understanding of financial concepts. ...
Is the propensity to save and invest related to digital skills and financial knowledge? Do digital skills and financial knowledge affect people’s attitudes towards digital payments and digital financial services? Is there a gender gap? This paper addresses these issues by using a new dataset based on around 4000 individuals interviewed in two waves between 2019 and 2021. We find that digital and financial skills are fundamental to shaping financial behavior and attitudes, including those regarding digital financial services. However, there are qualifications to be made: digital skills complement financial ones in managing personal budgets, monitoring expenses, and saving money at the end of the month, as well as helping people realize the benefit of the diffusion of digital financial services. On the other hand, digital skills do not affect investment decisions. We also show that both digital and financial skills are positively associated with educational and income levels and are characterized by a significant gender gap.
... Although using smart devices and financial management tools can expose users to extensive materialism and lead users to adopt extravagant lifestyles, behave consumptively, and potentially draw more loans (Panos & Wilson, 2020), smart devices and financial management tools' benefits are undeniable. Financial smartphone applications could significantly establish financial attitudes such as tracking proceeds/expenses, becoming tough before the financial shock (French et al., 2020), and often updating new information to minimize financial fines (Carlin et al., 2019). Massive free training on stock investment and trading conducted by the Indonesian Financial Services Authority (OJK) in collaboration with financial institutions supervised by professional coaches, investment, and stock trading has become a new trend in young adults' lifestyles in Indonesia. ...
Young adults have been characterized as significantly reliant on the internet and gadgets. They spend much time online and on social media. Many are also stereotyped as having extravagant lifestyles and wasting money. These phenomena imply how they behave in financial management. Financial knowledge and attitude development shape young adults’ behavior toward money. This study aimed to examine the roles of young adults' lifestyles in moderating the relationship between financial knowledge and attitude and their management behavior toward money. This study involved 400 young adults in Pekanbaru, Indonesia, selected using purposive sampling. Moderating regression analysis with a structural equation model was employed to analyze the data. The results showed that lifestyle significantly moderates the effect of financial knowledge and attitude on financial management behavior. Lifestyle strengthens those relationships. Furthermore, financial knowledge, attitude, and lifestyle positively and significantly affect young adults’ management behavior toward money. This study concludes that young adults must make prudent and smart financial decisions based on their financial knowledge, attitudes, and lifestyles to attain financial well-being. This finding implies that financial knowledge should become compulsory literacy for students to deal with the trending consumerism lifestyle to build their management behavior.
... Given its practical applicability, the adoption of innovative learning-by-playing initiatives in financial education appears to be an effective strategy for conveying financial concepts (Batty et al., 2020). However, the evidence regarding its effectiveness remains limited (Angel, 2018;French et al., 2020;Kalmi & Rahko, 2022;Rodriguez-Raga & Martinez-Camelo, 2022;Sconti, 2022). ...
This paper evaluates the impact of an online game-based financial education tool on students' financial literacy levels. By conducting a Randomized Controlled Trial (RCT) involving 2,220 students across four countries in a multi-country experimental setting, we demonstrate that the intervention significantly enhances students' financial literacy levels by 0.313 SD. This study contributes to the emerging academic literature concerning the evaluation of financial education interventions that incorporate learning-by-playing. The participation of students from four countries adds relevance by facilitating cross-comparison of outcomes and stimulating discussions about country-specific factors and peculiarities influencing youth financial literacy.
... The app reduced the cost of accessing personal financial information which led to a drop in nonsufficient fund fees. French et al. (2020) assessed whether smartphone apps can be utilized to improve financially capable behaviour. In the study, four smart phone apps, packaged together under the title "money matters" were provided to working age members (16-65 years) of the largest credit union in Northern Ireland. ...
... Studies show that personal finance apps can assist individuals in better monitoring and managing their spending, as well as help in budgeting and savings planning French et al. (2019). These apps can also provide a better understanding of personal finance and assist users in making smarter financial decisions (Hentzen et al., 2021). ...
This study aims to analyse the influence of Fintech on the use of personal finance applications in the millennial generation. The research method used in this study is the survey method. The survey was conducted using a questionnaire distributed to millennial respondents who use personal finance applications. The data collected through the survey will be analysed quantitatively to identify usage trends, feature preferences, and the impact of personal finance apps on individual financial behaviour. The results show that millennials have a high adoption rate of personal finance apps. They tend to use these apps to track expenses, organise budgets, and conduct financial transactions. In-app personalisation features are highly valued by millennials, as it allows them to tailor the experience according to individual needs and preferences. However, data security and privacy remain key concerns in the use of personal finance apps. Personal finance apps have great potential in helping millennials manage their finances more effectively. However, serious attention should be paid to data security and user privacy. Therefore, it is recommended that personal finance app providers continue to improve their security systems and privacy practices. In addition, it is also necessary to educate users on the importance of protecting their personal information when using personal finance apps.
... Xiao and Bialowolski (2023) recently challenged dominant research by emphasizing the need to explore the factors critical to fostering sustained financial capability while focusing on the consequences of achieving such capability. Among the few attempts to examine critical factors, French et al. (2020) investigate the influence of smartphone app use on financial behavior and suggested a positive impact of financial technology (FinTech) on financial capability in the UK. In the United States, Lusardi et al. (2021) emphasize the benefits of using online technology to make financial decisions. ...
... In addition, Servon and Kaestner (2008) emphasize the importance of DFL, concluding that unless consumers have the appropriate digital literacy that entails technology and financial literacy, the adoption of electronic banking will be limited to a few people. Similar concern has also been raised in studies by French, McKillop, and Stewart (2020) and Panos and Wilson (2020), who noted that digital financial illiteracy triggers unsophisticated financial consumers to make bad financial decisions, due to impulsive behavior or accepting costly, short-term digital credit. ...
Technology adoption through digital banking has transformed the delivery of banking services not only in Tanzania but across the globe. Digital banking (DB) as a delivery model has proven to be effective in reducing banks' operational costs, reaching the unbanked, and ensuring timely and convenient services to the banked. It is evident there are high levels of adoption of this model in developed economies as compared to most developing countries, thus limiting financial inclusion in the banking sector. To explore this phenomenon, this study examines the role of digital financial literacy in influencing the use of digital banking services. In addition, the study examines whether the differences in demographic characteristics affect the relationship between DFL and DB. Applying the Technology Accepted Model (TAM) this study considers digital financial literacy as a factor that influences ease of use in digital banking technology adoption. This study employed a cross-sectional survey that involved a sample of 440 respondents from four regions in Tanzania. The Smart PLS-SEM technique was used for data analysis and testing the study hypotheses. Results indicate digital financial literacy has a positive and significant influence on the use of digital banking. In addition, it was noted that level of income and age have a moderating impact on this relationship. However, differences in gender and residential location have no significant effect on the relationship between DFL and DB. The findings of this study inform policymakers, regulators, and financial services providers on the dimensions of digital financial literacy and how DFL can improve the demand-side capability of consumers. Further, the findings of this study inform the design and delivery of national initiatives on matters related to financial education, financial consumer protection, and digital financial inclusion.
... By promoting digital financial transactions, mobile money encourages users to engage actively in financial activities, such as budgeting, saving, and investing. These platforms often provide users with real-time updates on their financial status, enabling them to monitor their expenditure patterns more effectively and make adjustments accordingly (Dorfleitner & Nguyen, 2022;French, McKillop, & Stewart, 2020;Katusiime, 2021;Natile, 2020). Moreover, mobile money services frequently incorporate features that encourage responsible financial behavior. ...
... Financial capacity, on the other hand, is a catch-all phrase that refers to the variables that influence how well financial decisions are made (Febrian & Maulina, 2018). The focus of traditional definitions of financial competence has shifted from knowledge and skills to opportunities and motivation in recent years (French et al., 2021;Taylor, 2011). Financial aptitude is crucial for sustained growth and resilience in the face of economic problems (Huang et al., 2015). ...
This study investigates the complex dynamics of creating an entrepreneurial ecosystem in Indonesia by examining the influence of CEO social capital, marketing capability, and financial capability on business performance. It also explores business performance implications for the sustainable business practices of MSMEs (Micro, Small, and Medium Enterprises) and the broader entrepreneurial ecosystem. A quantitative approach was used, incorporating quantitative data collected through offline and online surveys of 504 samples. Structural Equation Modeling - Partial Least Squares (SEM-PLS) 4 was used for data analysis. This study supported the hypothesis that CEO social capital, marketing, and financial capability significantly influence business performance. In addition, strong evidence was found for a positive relationship between business performance and sustainable business practices and the influence of sustainable business practices on the entrepreneurial ecosystem. This study underscores the multifaceted nature of entrepreneurship in Indonesia, where CEO social capital, effective marketing strategies, financial stability, and sustainable business practices are interconnected elements that contribute to firm success and the overall vitality of the entrepreneurial ecosystem. These findings have implications for policymakers, entrepreneurs, and stakeholders who want to encourage entrepreneurship, support MSMEs, and strengthen Indonesia's entrepreneurial ecosystem for sustainable economic growth and development.
... Indeed, opinions differ on the link between Fintech and financial literacy (Panos and Wilson 2020). Consequently, some authors see Fintech as a lever in the process of financial inclusion and an important tool for financial education (Eniola and Entebang 2015;Minerva 2016;Wolbers 2017;Morgan and Trinh 2019;McKillop, French, and Stewart 2020). Others, however, find a relationship that is either insignificant or negative (Panos and Wilson 2020;Panos, Karkkainen, and Atkinson 2020;Motroni and Posocco 2017). ...
Recent and ongoing advancements in the field of ICT have led to the introduction of increasingly diversified financial products, and their use is improving people’s level of financial knowledge and skills. This article aims at assessing the effect of Fintech on the level of financial literacy of small business’ managers in Cameroon. To this end, information was gathered using a questionnaire from 209 small business managers in Cameroon. Descriptive statistics, principal component analysis (PCA), and multiple linear regression are used. Results lead to two main conclusions. On the one hand, unlike knowledge of their existence, the frequency of use of Fintech tools is better able to contribute to improving financial literacy levels overall. On the other hand, specifically, this result is of increased importance when it comes to competence and self-confidence in managing financial affairs. As a result, increasing the utilization of financial technology instruments in companies is imperative for efficiency.
... Considering this beneficial effect of financial literacy on financial inclusion, it seems worthwhile to consider the potential of Fintech solutions to promote financial literacy. In this context, French, McKillop and Stewart (2020) showed in a test of four Fintech smartphone apps on Irish Journal of International Business and Management (JIBM) https://rpajournals.com/jibm volunteers aged 16 to 65 years that their use led to significant improvements in "financial knowledge, understanding and basic skills" and "attitudes and motivations" to use online-based financial solutions. Further potentials of using Fintech solutions to promote financial literacy and inclusion should be investigated. ...
Finance is a field that shapes human relations not only from a purely economic point of
view, but also has a strong influence on social structure, community development,
prosperity, political or international interaction, which is even more relevant in a hyper-
globalized world. The transformations began with the rising of the internet some decades
ago and accelerated due to recent changes, such as increased computing power, the
usage of financial apps etc. The scope of this paper is to present a short literature
overview about the disruption brought in the finance sector by the recent technology
developments. In addition to understand that technology is synonymous with innovation
this paper shows examples of innovation drivers (including products and services).
Finally, this paper highlights the long-term impact on social and geopolitical grounds
with shifting power equilibriums, like the loosing banking monopoly of finances in
favour of tech giants GAFA (Google, Amazon, Facebook, Apple) or the recent
announcements of global and official cryptocurrencies, e.g. LIBRA by Facebook or
CBDC (Central Banks Digital Currencies) from China government. The main findings
of this paper are that FinTech has the chance to revolutionize the financial sector because
it is more than just payment, new players (BigTech) could enter into the traditional
banking sector and rise a new form of competition and FinTech has social impact on
financial inclusion and financial literacy.
... For economic sustainability, many financial services motivate users with either expert recommendations or peer group comparison. French et al. (2020) found that expert assessment of the participants' current income, expenditure, and loan interests (e.g., appropriate savings rates) via a mobile app reinforced the participants' positive financial behavior. Zhang (2021) concluded that assessing the participants' risk tolerance level, current digital financial literacy level, and current spending habits are effective in improving the participants' financial behavior. ...
Background
Korean single-households in their 20s are increasing, but they are not aptly prepared for a sustainable future in the ecological and economic aspects due to their low interest in the energy saving for environmental protection and weak financial literacy of preferring consumption to saving. Financial services that proactively urge them to save on both natural and monetary resources are called for, but current personal finance apps only provide category budgeting functionality.
Methods
A service concept of expense tracking app, Eco², was proposed. It advises the consumers with two reference points: (1) expert-recommended energy spending goals for ecological sustainability, and (2) the peer group—i.e., consumers with similar age, income and household—spending average for economic sustainability. The differences between a consumer’s current spending and the two reference points are calculated and displayed to show how much energy–money he/she could have saved. The effectiveness of the Eco² was tested in a randomized trial with 140 single-households in their 20s. Mock Eco² UI screens were designed with an example of electricity consumption for running home appliances in the Rent and Utilities category. Two designs where two levels of information granularity—providing the reference points on the category level only (Exp1) and on the category and specific appliance levels (Exp2)—were compared in contrast to the control condition. The designs were hypothesized to affect the participants’ attitude towards energy efficiency when they shop for home appliances (H1), perceived effort-effect size of energy–money saving behavior (H2), and the number of energy– money saving tips they are willing to practice (H3).
Results
For H1, Exp1 and Exp2 encouraged the participants to consider energy efficiency with higher priority, and Exp2 was more effective than Exp1 for female participants. For H2, Exp1 and Exp2 were equally effective in changing the participants’ perceived effort-effect size of energy–money saving behavior. For H3, Exp1 and Exp2 increased the number of energy-money saving tips the participants are willing to practice; the increment was larger in the female Exp1 data than male, and larger in the male Exp2 data than Exp1.
Conclusions
The Eco² approach of advising the consumer with expert recommendations and peer group spending average as reference points was effective for both male and female participants, but gender differences exist in the reception of higher granularity information.
... A second approach to researching the value of financial capability is with better or improved financial outcomes. Research has shown that people with higher scores in financial capability have better financial outcomes, including better planning for retirement (Nam & Loibl, 2021), less debt delinquency (Xiao & Kim, 2022), and improved budgeting to build resilience against financial shocks (French et al., 2020). Financial capability is important for low-income households as it mediates the relationship between economic hardship and wellbeing (Ranta et al., 2020), is associated with lower food insecurity (Gilbert & Ashley, 2020), and reduces the risk of material hardship (Huang et al., 2016). ...
... Debt behaviour is pivotal debt management practices among credit card users (French et al. 2020). In particular, the behaviour discusses ten sub-themes. ...
8th International Seminar of Entrepreneurship and Business (ISEB 2020)
22 November 2020
... Smartphones can offer a range of benefits, such as helping people connect (Wanga et al., 2020), manage their finances (French et al., 2020), and access physical (Agu et al., 2013) and mental health (Hind & Sibbald, 2014) interventions. Given these benefits, it is unsurprising that smartphones have become ubiquitous (Deloitte, 2018(Deloitte, , 2019a(Deloitte, , 2019b. ...
Motives for smartphone use may be key factors underlying problematic smartphone use (PSU). However, no study has reviewed the literature investigating the association of motives with PSU. As such, we conducted a systematic review to: (a) determine which smartphone use motives were associated with PSU; and (b) examine the potential indirect and moderating effects of motives in the relationship of psychosocial factors with PSU. We identified 44 studies suitable for inclusion in our systematic review. There was extensive heterogeneity in smartphone use motives measures across the studies, including 55 different labels applied to individual motives dimensions. Categorisation of these motives based on their definitions and item content identified seven motives that were broadly assessed across the included studies. Motives which reflected smartphone use for mood regulation, enhancement, self-identity/conformity, passing time, socialising, and safety were generally positively associated with PSU. There were indirect effects of depression, anxiety, and transdiagnostic factors linked to both psychopathologies on PSU via motives, particularly those reflecting mood regulation. Stress and anxiety variously interacted with pass-time, social, and a composite of enhancement and mood regulation motives to predict PSU. However, the heterogeneity in the measurement of smartphone use motives made it difficult to determine which motives were most robustly associated with PSU. This highlights the need for a valid and comprehensive smartphone use motives measure.
... Research suggests that women are more prone to financial exclusion, are highly likely to display lower levels of financial literacy than men and possess less confidence in their financial knowledge and skills (Bucher-Koenen et al., 2021). Digitisation of finance can bring down the cost of service delivery and speed up the pace of financial inclusion (Ghosh & Chaudhury, 2020;Saroy et al., 2020), and improve financial 3 knowledge, skills, attitudes and behaviours (McKillop et al., 2020). Though digital financial literacy has positive effects on actual behaviours, Setiawan et al. (2020) found that it can also be affected by socio-economic characteristics such as age, income and education. ...
Technology has brought unprecedented changes in the financial realm, and its benefits were evident during the times of COVID-19. Nonetheless, digital divide has kept fintech out of the reach of many. Digital financial exclusion needs practical solutions to bring positive attitudes and confidence to use fintech among these segments. This is an original work that suggests reverse fintech socialisation as a tool to create such confidence within the digitally excluded. Employing a cross-sectional design, a sample of 349 middle-aged mothers was drawn from Kerala, India to examine the relationships between attitude, reverse socialisation, and confidence to deal in fintech. Findings supported the hypothesised relations between these variables and revealed that attitude predicts reverse fintech socialisation, which has a very high influence on confidence. Age, income, and income earner in the family too were found significant for confidence. Findings imply that policymakers can formulate interventions that make use of the youth to create confidence within the digital immigrants to use fintech.
... 3 Over the last years, the diffusion of digital tools has paved the way for the creation of fintech apps that promote financial culture. Some of them turned out to be effective in helping people to keep track of their income and expenditures (see French et al., 2020). Viviano & Michelangeli (2021) using a survey of the Italian population carried out by the Bank of Italyfind that Internet banking allowed Italian households, to begin to enter into financial markets, as well as fostering better understanding of financial concepts. ...
Is the propensity to save and to invest related to digital skills and financial knowledge? Do digital skills and financial knowledge affect people’s attitudes towards digital payments and digital financial services? Is there a gender gap? This paper addresses these issues by using a new dataset based on around 4,000 individuals interviewed in two waves between 2019 and 2021.
We find that digital and financial skills are fundamental to shaping financial behaviours and attitudes, including those towards digital financial services. But there are some reservations to be made: digital skills complement financial ones in managing personal budgets, monitoring expenses and saving money at the end of the month, as well as helping people realize the benefits of making use digital financial services. On the other hand, digital skills do not affect investment decisions. We also show that both digital and financial skills are positively associated with educational and income levels and are characterized by a significant gender gap.
... The within comparisons of reviewing current and past income and expenses using an expense tracking app led the participants to review account balance more frequently, though their budgeting skill and financial knowledge were not improved (Angel, 2018). The between comparisons of a consumer and her peer group averages on finance apps were more effective: a comparison of a user's spending against the Northern Ireland average household spending in various categories improved the user's financial capability (French et al., 2020); overspenders who were informed of the peer average spending in each consumption category tend to reduce their spending, while the users who spend less than the average have a tendency to increase or maintain (D'Acunto et al., 2022). The expert assessment, particularly consistent assessment from the same experts (Keh & Sun, 2018) also enables the users' positive financial behaviours: an educational tool teaching the concept of the compound interest rates that involves the relationship between principal, period, and interest rate improved the participants' financial literacy (Hubbard et al., 2016); a quiz section assessing the users' risk tolerance level, financial literacy level, and spending habits also improves their financial behaviours (Zhang, 2021). ...
Both Islamic financial literacy, and financial literacy share common objective; to enhance the financial sustainability via financial education of all ages. Financial education and Islamic finance education admits the importance of interventions in various aspects to achieve such enhancement. In relation to various aspects of financial education intervention, this paper aims to discuss the comparison between financial educational interventions and Islamic finance educational interventions globally. Narrative review approach is adopted for this study. The results showed that there are a few distinctions between financial educational interventions and Islamic finance educational interventions, which indicates the gaps for future research. The differentiations include: the number of educational interventions, the varieties of educational interventions, the group segments of educational interventions, and the aggressiveness on the movement of the education. Therefore, it is recommended that various educational interventions are made accessible as a supplemental strategy for enhancing the instruction and learning of finance, and Islamic finance to meet the objective in financial literacy agenda worldwide.
Purpose
This study examines the antecedents and outcomes of using mobile fintech applications, including mobile banking, mobile payments, mobile transfer and mobile financial money management tools.
Design/methodology/approach
This paper examines the antecedents (i.e. financial education and financial literacy) and outcomes (i.e. desirable financial behaviors and financial well-being) of the utilization of mobile fintech. Using data from the 2018 National Financial Capability Study and structural equation modeling techniques, this study provides empirical evidence to show significant direct and indirect relationships among these factors.
Findings
The structural equation modeling results revealed that financial education was positively associated with both financial literacy and mobile fintech utilization. Interestingly, financial literacy was negatively associated with mobile fintech utilization and served as a negative mediator between financial education and mobile fintech utilization, while it positively correlated with desirable financial behaviors, enhancing financial well-being. Utilization of mobile fintech was negatively associated with desirable financial behaviors and indirectly and negatively associated with financial well-being. The alternative model highlighted a direct and negative association between mobile fintech usage and financial well-being, and a direct positive association between financial literacy and financial well-being.
Originality/value
This study makes contributions to the literature on financial well-being by examining pathways of antecedents and outcomes of mobile fintech utilization. The findings provide new insights into the rapid evolution of mobile fintech innovations and provide important policy and practical implications.
Financial literacy is very important to everyone for survival nowadays. Currently, in Malaysia, there is a problem for students in learning getting a grasp of financial literacy because they are lack of education in finance. They cannot be able to coop or organize themselves even for simple financial transactions or finance skipping. Therefore, in order to solve this problem, we proposed the objectives of this research. First of all, we need to identify the requirement of a suitable mobile application for financial literacy for children. Secondly, we are going to develop an interactive courseware based on financial literacy to help the students to overcome the problem. Thirdly, we are going to evaluate the interactive courseware to know how the level of user satisfaction using our software. So, therefore this study is intended to design and develop mobile learning application interactive courseware for financial literacy for elementary school students. The methodology that used in this mobile learning software development is ADDIE and we use it together with the software development life cycle (SDLC). After that, this research is going to evaluate using heuristic evaluation. The result expected will be the requirement of the criteria design of the software. Secondly, the result expected will be a prototype of software for financial literacy for elementary school students. Therefore, this article proposed a conceptual framework for this study. Then the final result expected is the level of satisfaction the users using the software. Future studies will be conducted to meet the stated objectives.
Bu çalışmanın ana amacı dijital finansal okuryazarlık ile finansal teknolojiler arasındaki nedensel ilişkiyi incelemektir. Ayrıca bu ilişkide sosyal medya kullanımı ve yaş gibi kategorik değişkenlerin düzenleyici rolünü irdelemek ile dijital finansal okuryazarlık ve finansal teknolojilerin sosyo-demografik değişkenler ve finansal okuryazarlık sertifikası sahipliği, finansal işlemlerde akıllı telefon kullanımı ve katılımcıların dillerine göre nasıl değiştiğini gözlemlemektir. Araştırma nicel desenli birincil anket verilerini yüz yüze toplayarak değişkenler arasındaki ilişkiyi inceleyen ilişkisel tarama modelini kullanmaktadır. Veriler Türkiye’nin en çok ziyaret edilen yerlerinden biri olan Antalya’ya gelen yabancı turistleri hedef almaktadır. Bölgeyi en çok ziyaret eden ilk üç ülke mensuplarının dilleri dikkate alınarak katılımcılar için İngilizce, Rusça ve Lehçe olmak üzere üç dilde anket uygulanmıştır. Verilerin analizinde SPSS ve AMOS paket programlarından yararlanılmıştır. Araştırmada 292 katılımcı üzerinden sürekli değişkenlere ait ölçek ve ölçüm geçerliliği ve güvenilirliğini sağlamak için ölçüm modeline dayalı DFA kullanılmıştır. Ardından uyum iyiliği sağlanan ve geçerlilik testi onaylanan modele ait örtük değişkenler arasındaki nedensel ilişkiyi veren yapısal eşitlik modeli oluşturulmaktadır. Model uyumu sağlanmış ve dijital finansal okuryazarlığın finansal teknoloji deneyimini artıracağı sonucuna ek olarak bu ilişkide sosyal medya kullanımı ve yaşın düzenleyici rolü saptanmıştır. Ayrıca çalışmada sosyo-demografik değişkenlere göre dijital finansal okuryazarlık ve finansal teknoloji deneyiminin nasıl değiştiğini irdelemek için t-testleri ve ANOVA analizi yapılmıştır. Sonuç olarak dijital finansal okuryazarlığın finansal teknoloji deneyimini anlamlı şekilde artırdığı, sosyal medya kullananlarda bu ilişki anlamlı ve daha yüksek olduğu, 36-45 yaş aralığında bu ilişki anlamlı değilken, diğer yaş aralıklarında anlamlı şekilde değiştiği ortaya konmaktadır. Ayrıca yaş aralıkları içerisinde bu ilişkiyi en fazla etkileyen 55 ve üstü yaş aralığındakiler olduğu saptanmıştır. Öte yandan İngilizce konuşanların Rusça konuşanlara göre daha yüksek dijital finansal okuryazarlık ve finansal teknoloji deneyimine sahip oldukları gözlenmektedir. Son olarak finansal okuryazarlık sertifikası olanların olmayanlara göre daha yüksek dijital finansal okuryazarlığa ve finansal teknoloji deneyimine sahip olduğu anlaşılmaktadır.
The primary aim of this study is to examine the causal relationship between digital financial literacy and financial technologies. Additionally, it explores the moderating role of categorical variables such as social media use and age in this relationship. The study also investigates how digital financial literacy and financial technologies vary based on socio-demographic variables, ownership of financial literacy certificates, smartphone use in financial transactions, and the languages spoken by the participants. The research utilizes a quantitative relational survey design, collecting primary survey data through face-to-face interactions. The data targets foreign tourists visiting Antalya, one of Turkey's most popular destinations. Surveys were conducted in English, Russian, and Polish, considering the languages of tourists from the top three visiting countries. Data analysis was performed using SPSS and AMOS software packages. To ensure the validity and reliability of the scales and continuous variables, a Confirmatory Factor Analysis (CFA) based on the measurement model was employed on a sample of 292 participants. Subsequently, a Structural Equation Model (SEM) was created to examine the causal relationships between latent variables in the validated model. The model's fit was achieved, and it was concluded
Öğr. Gör. Dr., Bursa Uludağ Üniversitesi, Finans-Bankacılık ve Sigortacılık, kayhanahmet@uludag.edu.tr, https://orcid.org/0000-0002-2658-189X
Technology and understanding money-related matters go hand in hand together in the higher education niche. The increase in the knowledge of generative artificial intelligence and its application in the higher education sector have gained much popularity especially for complex financial terminologies. A key study area where AI can enhance the experience of student learning is financial literacy. However, the application of AI is not without its challenges; the limited availability of technology and access to digital skills leave out some from optimising the full benefits of a fledged AI-related financial literacy. Students are often stuck with so much information flooding the search engines to the extent that they ultimately lose directions for a conclusion. Therefore, it is prominent that the learners get exposed to AI and engage swiftly with financial technologies. This study is predicated on the thrust that if the learners are engaged with using AI systems at a higher education level, they will be more inclined to make more calculated financial decisions.
The dependence on digital financial technologies influences financial behaviors among people. This systematic review aims to identify and understand the variables interplay between digital financial literacy and financial behavior. The systematic literature review uses the PRISMA systematic review guidelines to identify and screen the literature. The results show there is a positive significant relation between digital financial literacy and financial behaviors. It was found that there are minimal studies on the variables interplaying between digital financial literacy and financial behavior. The interplaying variables identified are financial self-efficacy, financial confidence, self-control, financial autonomy, financial capability, psychological biases and digital, financial socialization, and socio-economic and demographic factors. This review develops a framework for future exploration explaining the relationship between digital financial literacy and financial behavior identifying financial wellbeing as the outcome.
Smartphones are ubiquitous and offer numerous benefits in daily life. However, the ongoing excessive use of smartphones has been associated with a range of adverse effects, capturing the attention of researchers worldwide. While higher smartphone use is often seen as potentially compulsive or addictive, it is essential to recognise that not all smartphone use is inherently problematic; practical reasons can also contribute to increased or excessive usage. Consequently, distinguishing between purposeful or productive use and excessive or potentially harmful smartphone behaviours is essential. Existing research recognises differences in smartphone usage but lacks depth in its exploration. There is a notable demand for in-depth studies that distinguish between productive and problematic use of smartphones and examine what drives the transition between these behaviours. Therefore, this review critically examines prior research to explain the distinctions among various types of smartphone use and explore the characteristics, reasons, causes, effects, and consequences associated with these behaviours. This article introduces an Integrative Pathways Model (IPM), a conceptual framework designed to explore the reasons behind individuals’ active smartphone use. It delves into the specific gratifications users seek from their smartphone use and investigates the various factors that may influence these motivations and, thereby, affect their behaviours. It highlights three distinct yet not mutually exclusive smartphone use-related pathways: effectual use, ineffectual use, and problematic use. This research contributes to enhancing understanding of Problematic Smartphone Use and Dependence (PSUD) by probing into the multifaceted interplay of individual characteristics, social dynamics, and environmental factors. This article underscores the need for a multi-dimensional approach to better understand smartphone usage, acknowledging that increased usage does not always signify problematic behaviour. It also emphasises the increasing demand for practical strategies to effectively manage PSUD.
Financial technologies are constantly changing traditional methods of delivering financial services. This puts a twofold pressure on the users: one, to gain financial knowledge, and two, to learn financial technologies to be able to make informed financial decisions. Keeping this in view, this study aimed to examine the impact of the user interface (UI) design of banks’ web pages on the development of users’ financial literacy—in particular, retention and transfer learning, in the context of informal learning. For this purpose, we conducted a study by applying the multimedia principles of the Cognitive Theory of Multimedia Learning (CTML) to the UI of a bank’s web pages. The participants (n = 37) explored the bank’s web pages, with the experimental group using web pages enhanced with multimedia principles and the control group using the original web pages of the bank. The results show that participants in the experimental group performed significantly better both in retention (t(35) = 2.19, p = 0.035) and transfer scores (t(35) = 2.2, p = 0.02). These results are significant for using the UI design of web pages to integrate and educate people on financial matters and enhance their financial well-being.KeywordsFinancial literacyUser interface (UI) designMultimedia principlesBanks’ web pagesInformal learning
Objectives:
To study the impact of a financial education program on financial well-being among college students.
Participants:
162 students at a university.
Methods:
We designed a digital educational intervention to improve money management practices and financial well-being among college students, where we delivered weekly nudges for three months via mobile phone and email to review and complete activities from the online platform CashCourse. We evaluated our intervention using a randomized controlled trial (RCT), and the outcome variables of interest were the financial self-efficacy scale (FSES) and financial health score (FHS).
Results:
Using a difference-in-difference regression analysis we found that students in the treatment group were significantly more likely to pay their bills on time after the intervention compared to the control group. Students who had higher than median financial self-efficacy level reported lower stress levels related to COVID-19.
Conclusions:
Digital education programs for college students to improve financial knowledge and behavior could be one strategy, among others, to improve financial self-efficacy particularly among females and help mitigate the adverse impact from unexpected financial hardships.
Widespread adoption of smart mobile platforms coupled with a growing ecosystem of sensors including passive location tracking and the ability to leverage external data sources create an opportunity to generate an unprecedented depth of data on individuals. Mobile health technologies could be utilized for chronic disease management as well as research to advance our understanding of common diseases, such as asthma. We conducted a prospective observational asthma study to assess the feasibility of this type of approach, clinical characteristics of cohorts recruited via a mobile platform, the validity of data collected, user retention patterns, and user data sharing preferences. We describe data and descriptive statistics from the Asthma Mobile Health Study, whereby participants engaged with an iPhone application built using Apple's ResearchKit framework. Data from 6346 U.S. participants, who agreed to share their data broadly, have been made available for further research. These resources have the potential to enable the research community to work collaboratively towards improving our understanding of asthma as well as mobile health research best practices.
Tobacco use is the leading cause of preventable disease and death in the USA. However, limited data exists regarding smoking cessation mobile app quality and intervention effectiveness. Innovative and scalable interventions are needed to further alleviate the public health implications of tobacco addiction. The proliferation of the smartphone and the advent of mobile phone health interventions have made treatment more accessible than ever. The purpose of this review was to examine the relation between published scientific literature and available commercial smartphone health apps for smoking cessation to identify the percentage of scientifically supported apps that were commercially available to consumers and to determine how many of the top commercially available apps for smoking cessation were supported by the published scientific literature. Adhering to the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines, apps were reviewed in four phases: (1) identified apps from the scientific literature, (2) searched app stores for apps identified in the literature, (3) identified top apps available in leading app stores, and (4) determined which top apps available in stores had scientific support. Seven articles identified six apps with some level of scientific support, three (50%) were available in at least one app store. Conversely, among the top 50 apps suggested by each of the leading app stores, only two (4%) had any scientific support. While half of the scientifically vetted apps remain available to consumers, they are difficult to find among the many apps that are identified through app store searches.
Background
Health and fitness applications (apps) have gained popularity in interventions to improve diet, physical activity and sedentary behaviours but their efficacy is unclear. This systematic review examined the efficacy of interventions that use apps to improve diet, physical activity and sedentary behaviour in children and adults. Methods
Systematic literature searches were conducted in five databases to identify papers published between 2006 and 2016. Studies were included if they used a smartphone app in an intervention to improve diet, physical activity and/or sedentary behaviour for prevention. Interventions could be stand-alone interventions using an app only, or multi-component interventions including an app as one of several intervention components. Outcomes measured were changes in the health behaviours and related health outcomes (i.e., fitness, body weight, blood pressure, glucose, cholesterol, quality of life). Study inclusion and methodological quality were independently assessed by two reviewers. ResultsTwenty-seven studies were included, most were randomised controlled trials (n = 19; 70%). Twenty-three studies targeted adults (17 showed significant health improvements) and four studies targeted children (two demonstrated significant health improvements). Twenty-one studies targeted physical activity (14 showed significant health improvements), 13 studies targeted diet (seven showed significant health improvements) and five studies targeted sedentary behaviour (two showed significant health improvements). More studies (n = 12; 63%) of those reporting significant effects detected between-group improvements in the health behaviour or related health outcomes, whilst fewer studies (n = 8; 42%) reported significant within-group improvements. A larger proportion of multi-component interventions (8 out of 13; 62%) showed significant between-group improvements compared to stand-alone app interventions (5 out of 14; 36%). Eleven studies reported app usage statistics, and three of them demonstrated that higher app usage was associated with improved health outcomes. Conclusions
This review provided modest evidence that app-based interventions to improve diet, physical activity and sedentary behaviours can be effective. Multi-component interventions appear to be more effective than stand-alone app interventions, however, this remains to be confirmed in controlled trials. Future research is needed on the optimal number and combination of app features, behaviour change techniques, and level of participant contact needed to maximise user engagement and intervention efficacy.
Background
Mobile apps for health exist in large numbers today, but oftentimes, consumers do not continue to use them after a brief period of initial usage, are averse toward using them at all, or are unaware that such apps even exist. The purpose of our study was to examine and qualitatively determine the design and content elements of health apps that facilitate or impede usage from the users’ perceptive. Methods
In 2014, six focus groups and five individual interviews were conducted in the Midwest region of the U.S. with a mixture of 44 smartphone owners of various social economic status. The participants were asked about their general and health specific mobile app usage. They were then shown specific features of exemplar health apps and prompted to discuss their perceptions. The focus groups and interviews were audio recorded, transcribed verbatim, and coded using the software NVivo. ResultsInductive thematic analysis was adopted to analyze the data and nine themes were identified: 1) barriers to adoption of health apps, 2) barriers to continued use of health apps, 3) motivators, 4) information and personalized guidance, 5) tracking for awareness and progress, 6) credibility, 7) goal setting, 8) reminders, and 9) sharing personal information. The themes were mapped to theories for interpretation of the results. Conclusions
This qualitative research with a diverse pool of participants extended previous research on challenges and opportunities of health apps. The findings provide researchers, app designers, and health care providers insights on how to develop and evaluate health apps from the users’ perspective.
Background Physical inactivity is a major, potentially modifiable, risk factor for cardiovascular disease, cancer, and other chronic diseases. Effective, simple, and generalisable interventions that will increase physical activity in populations are needed. Aim To evaluate the effectiveness of a smartphone application (app) to increase physical activity in primary care. Design and setting An 8-week, open-label, randomised controlled trial in rural, primary care in the west of Ireland. Method Android smartphone users >16 years of age were recruited. All participants were provided with similar physical activity goals and information on the benefits of exercise. The intervention group was provided with a smartphone app and detailed instructions on how to use it to achieve these goals. The primary outcome was change in physical activity, as measured by a daily step count between baseline and follow-up. Results A total of 139 patients were referred by their primary care health professional or self-referred. In total, 37 (27%) were screened out and 12 (9%) declined to participate, leaving 90 (65%) patients who were randomised. Of these, 78 provided baseline data (intervention = 37; control = 41) and 77 provided outcome data (intervention = 37; control = 40). The mean daily step count at baseline for intervention and control groups was 4365 and 5138 steps per day respectively. After adjusting, there was evidence of a significant treatment effect (P = 0.009); the difference in mean improvement in daily step count from week 1 to week 8 inclusive was 1029 (95% confidence interval 214 to 1843) steps per day, favouring the intervention. Improvements in physical activity in the intervention group were sustained until the end of the trial. Conclusion A simple smartphone app significantly increased physical activity over 8 weeks in a primary care population.
Many people fail to save what they need to for retirement (Munnell, Webb, and Golub-Sass 2009). Research on excessive discounting of the future suggests that removing the lure of immediate rewards by pre-committing to decisions, or elaborating the value of future rewards can both make decisions more future-oriented. In this article, we explore a third and complementary route, one that deals not with present and future rewards, but with present and future selves. In line with thinkers who have suggested that people may fail, through a lack of belief or imagination, to identify with their future selves (Parfit 1971; Schelling 1984), we propose that allowing people to interact with age-progressed renderings of themselves will cause them to allocate more resources toward the future. In four studies, participants interacted with realistic computer renderings of their future selves using immersive virtual reality hardware and interactive decision aids. In all cases, those who interacted with virtual future selves exhibited an increased tendency to accept later monetary rewards over immediate ones.
Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers' financial decisions over the last generation. We conduct a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples. Like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention. Correlational studies that measure financial literacy find stronger associations with financial behaviors. We conduct three empirical studies, and we find that the partial effects of financial literacy diminish dramatically when one controls for psychological traits that have been omitted in prior research or when one uses an instrument for financial literacy to control for omitted variables. Financial education as studied to date has serious limitations that have been masked by the apparently larger effects in correlational studies. We envisage a reduced role for financial education that is not elaborated or acted upon soon afterward. We suggest a real but narrower role for “just-in-time” financial education tied to specific behaviors it intends to help. We conclude with a discussion of the characteristics of behaviors that might affect the policy maker's mix of financial education, choice architecture, and regulation as tools to help consumer financial behavior.
This paper was accepted by Uri Gneezy, behavioral economics.
The risk of experiencing adverse financial events (e.g. bankruptcy) depends on the world economy and on individual differences in financial and psychological variables. Analysing data from 109,472 British survey respondents, this study reports the risks associated with financial capabilities, money attitudes, and socio-economic status for suffering negative financial outcomes. The results show that (1) socio-economic status is associated with financial capabilities but not with money attitudes; (2) money attitudes and financial capabilities are largely independent; (3) money attitudes and financial capabilities each contribute independently to the risk of experiencing adverse financial outcomes, even after adjusting for socio-economic status; and (4) financial capabilities are greater risk factors of adverse financial outcomes than money attitudes; the latter, however, are likely to be promising targets for interventions.
Novel mobile assessment and intervention capabilities are changing the face of physical activity (PA) research. A comprehensive systematic review of how mobile technology has been used for measuring PA and promoting PA behavior change is needed.
Article collection was conducted using six databases from February to June 2012 with search terms related to mobile technology and PA. Articles that described the use of mobile technologies for PA assessment, sedentary behavior assessment, and/or interventions for PA behavior change were included. Articles were screened for inclusion and study information was extracted.
Analyses were conducted from June to September 2012. Mobile phone-based journals and questionnaires, short message service (SMS) prompts, and on-body PA sensing systems were the mobile technologies most utilized. Results indicate that mobile journals and questionnaires are effective PA self-report measurement tools. Intervention studies that reported successful promotion of PA behavior change employed SMS communication, mobile journaling, or both SMS and mobile journaling.
mHealth technologies are increasingly being employed to assess and intervene on PA in clinical, epidemiologic, and intervention research. The wide variations in technologies used and outcomes measured limit comparability across studies, and hamper identification of the most promising technologies. Further, the pace of technologic advancement currently outstrips that of scientific inquiry. New adaptive, sequential research designs that take advantage of ongoing technology development are needed. At the same time, scientific norms must shift to accept "smart," adaptive, iterative, evidence-based assessment and intervention technologies that will, by nature, improve during implementation.
a b s t r a c t In Iceland, levels of debt had risen to an unprecedented extreme in the years prior to the country's economic collapse in October 2008. This rise occurred in the context of a con-sumer culture highlighting supposed psychological benefits of consumer goods. This paper reports findings from two studies, conducted during an economic boom in Iceland, exam-ining the association of materialism and indicators of financial well-being: amount of debt, financial worries, spending tendency, money-management skills and compulsive buying. Study 1 1 (N = 271) showed that people who endorse materialistic values have more financial worries, worse money-management skills and greater tendency towards compulsive buying and spending. Study 2 (N = 191) replicates the findings of Study 1 and further shows that amount of debt, including mortgage, can be directly linked to materialism, controlling for income and money-management skills. The research contributes to the psychology of mate-rialism and overspending and provides an evidence-based foundation for designing interven-tions encouraging individuals to improve their financial well-being. Ó 2012 Elsevier B.V. All rights reserved.
This paper reports the results of a pilot randomized controlled trial comparing the delivery modality (mobile phone/tablet or fixed computer) of a cognitive behavioural therapy intervention for the treatment of depression. The aim was to establish whether a previously validated computerized program (The Sadness Program) remained efficacious when delivered via a mobile application.
35 participants were recruited with Major Depression (80% female) and randomly allocated to access the program using a mobile app (on either a mobile phone or iPad) or a computer. Participants completed 6 lessons, weekly homework assignments, and received weekly email contact from a clinical psychologist or psychiatrist until completion of lesson 2. After lesson 2 email contact was only provided in response to participant request, or in response to a deterioration in psychological distress scores. The primary outcome measure was the Patient Health Questionnaire 9 (PHQ-9). Of the 35 participants recruited, 68.6% completed 6 lessons and 65.7% completed the 3-months follow up. Attrition was handled using mixed-model repeated-measures ANOVA.
Both the Mobile and Computer Groups were associated with statistically significantly benefits in the PHQ-9 at post-test. At 3 months follow up, the reduction seen for both groups remained significant.
These results provide evidence to indicate that delivering a CBT program using a mobile application, can result in clinically significant improvements in outcomes for patients with depression.
Trial registration
Australian New Zealand Clinical Trials Registry ACTRN 12611001257954
This paper examines Americans’ financial capability, using data from a new survey. Financial capability is measured in terms of how well people make ends meet, plan ahead, choose and manage financial products, and possess the skills and knowledge to make financial decisions. The findings reported in this work paint a troubling picture of the state of financial capability in the United States. The majority of Americans do not plan for predictable events such as retirement or children’s college education. Most importantly, people do not make provisions for unexpected events and emergencies, leaving themselves and the economy exposed to shocks. To understand financial capability, it is important to look not only at assets but also at debt and debt management, as an increasingly large portion of the population carry debt. In managing debt, Americans engage in behaviors that can generate large expenses, such as sizable interest payments and fees. Moreover, more than one in five Americans has used alternative (and often costly) borrowing methods (payday loans, advances on tax refunds, pawn shops, etc.) in the past five years. The most worrisome finding is that many people do not seem well informed and knowledgeable about their terms of borrowing; a sizeable group does not know the terms of their mortgages or the interest rates they pay on their loans. Finally, the majority of Americans lack basic numeracy and knowledge of fundamental economic principles such as the workings of inflation, risk diversification, and the relationship between asset prices and interest rates.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
Policy makers view public sector-sponsored employment and training programs and other active labor market policies as tools for integrating the unemployed and economically disadvantaged into the work force. Few public sector programs have received such intensive scrutiny, and been subjected to so many different evaluation strategies. This chapter examines the impacts of active labor market policies, such as job training, job search assistance, and job subsidies, and the methods used to evaluate their effectiveness. Previous evaluations of policies in OECD countries indicate that these programs usually have at best a modest impact on participants' labor market prospects. But at the same time, they also indicate that there is considerable heterogeneity in the impact of these programs. For some groups, a compelling case can be made that these policies generate high rates of return, while for other groups these policies have had no impact and may have been harmful. Our discussion of the methods used to evaluate these policies has more general interest. We believe that the same issues arise generally in the social sciences and are no easier to address elsewhere. As a result, a major focus of this chapter is on the methodological lessons learned from evaluating these programs. One of the most important of these lessons is that there is no inherent method of choice for conducting program evaluations. The choice between experimental and non-experimental methods or among alternative econometric estimators should be guided by the underlying economic models, the available data, and the questions being addressed. Too much emphasis has been placed on formulating alternative econometric methods for correcting for selection bias and too little given to the quality of the underlying data. Although it is expensive, obtaining better data is the only way to solve the evaluation problem in a convincing way. However, better data are not synonymous with social experiments.
Consistent with mental accounting, we document that investors sometimes choose the asset allocation for one account without considering the asset allocation of their other accounts. The setting is a firm that changed its 401(k) matching rules. Initially, 401(k) enrollees chose the allocation of their own contributions, but the firm chose the match allocation. These enrollees ignored the match allocation when choosing their own-contribution allocation. In the second regime, enrollees simultaneously selected both accounts' allocations, leading them to mentally integrate the two. Own-contribution allocations before the rule change equal the combined own- and match-contribution allocations afterwards, whereas combined allocations differ sharply across regimes.
We outline a framework for causal inference in setting where assignment to a binary treatment is ignorable, but compliance with the assignment is not perfect so that the receipt of treatment is nonignorable. To address the problems associated with comparing subjects by the ignorable assignment--an "intention-to-treat analysis"--we make use of instrumental variables, which have long been used by economists in the context of regression models with constant treatment effects. We show that the instrumental variables (IV) estimand can be embedded within the Rubin Causal Model (RCM) and that under some simple and easily interpretable assumptions, the IV estimand is the average causal effect for a subgroup of units, the compliers. Without these assumptions, the IV estimand is simply the ratio of intention-to-treat causal estimands with no interpretation as an average causal effect. The advantages of embedding the IV approach in the RCM are that it clarifies the nature of critical assumptions needed for a causal interpretation, and moreover allows us to consider sensitivity of the results to deviations from key assumptions in a straightforward manner. We apply our analysis to estimate the effect of veteran status in the Vietnam era on mortality, using the lottery number assigned priority for the draft as an instrument, and we use our results to investigate the sensitivity of the conclusions to critical assumptions. Statistics Version of Record
We assess whether borrowers know their mortgage terms by comparing the distributions of these variables in the household-reported Survey of Consumer Finances (SCF) to the distributions in lender-reported data. We also examine the characteristics of SCF respondents who report not knowing these contract terms. Although most borrowers seem to know basic mortgage terms, borrowers with adjustable-rate mortgages appear likely to underestimate or to not know how much their interest rates could change. Borrowers who could experience large payment changes if interest rates rose are more likely to report not knowing these contract terms. Difficulties with gathering and processing information appear to be a factor in borrowers' lack of knowledge.
Two competing explanations for why consumers have trouble with financial decisions are gaining momentum. One is that people are financially illiterate since they lack understanding of simple economic concepts and cannot carry out computations such as computing compound interest, which could cause them to make suboptimal financial decisions. A second is that impatience or present-bias might explain suboptimal financial decisions. That is, some people persistently choose immediate gratification instead of taking advantage of larger long-term payoffs. We use experimental evidence from Chile to explore how these factors appear related to poor financial decisions. Our results show that our measure of impatience is a strong predictor of wealth and investment in health. Financial literacy is also correlated with wealth though it appears to be a weaker predictor of sensitivity to framing in investment decisions. Policymakers interested in enhancing retirement well-being would do well to consider the importance of both factors.
This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision-making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.
Financial literacy can explain a significant proportion of wealth inequality. Among the key components of financial literacy are numeracy and money management skills. Our study examines the relative importance of these components in the determination of consumer debt and household net worth among credit union members in socially disadvantaged areas. The main finding from our analysis is that money management skills are important determinants of financial outcomes but that numeracy has almost no role to play. This result adds to a recent US-based behavioural finance literature on the role of attention and planning in consumer finance. Findings are found to be robust when the sample is reduced to only those who have a clear role in household financial decision-making and also when controlling for potential endogeneity. Our findings have policy implications in the UK and elsewhere as credit unions across the world are important players in national financial literacy strategies.
This systematic review provides a chronological overview of how mhealth research has evolved with changes in mobile technologies. The review involved a PubMed search complemented by manual searching of all issues of the Journal of Medical Internet Research and Telemedicine Journal and eHealth, from inception to January 2015. Articles reporting the evaluation of mhealth interventions in any patient group for any health-related outcomes were analysed without restrictions on the study design. A total of 3476 publications were obtained from the PubMed search and manual searching of eHealth journals. Analysis was based on an abstract review of 515 (14.8%) original research articles, which fulfilled preset inclusion criteria. Three distinct time periods were identified on the basis of mobile devices used in mhealth research. Personal digital assistants (PDAs) dominated mhealth research in the years before 2007 (17 of 33 articles, 51.5%). Basic and feature phones were the main methods of mhealth intervention from 2007 to 2012 (95 of 193 articles, 49.2%). After 2012, smart devices (smartphones, tablet PCs and iPod touches) were highly used in mhealth research (173 of 289 articles, 59.9%). Despite a growing focus on infectious diseases and maternal and child health in the most recent years, non-communicable conditions continued to overshadow the trend of mhealth research. Overall, mHealth research has evolved over the past decade in terms of the mobile devices employed, health conditions addressed and its purpose. While chronic medical conditions have clearly been the focus of mhealth research, a shift in trends is expected as the application of mhealth interventions spreads to other under-studied areas. Future research should continue to leverage on the advancements and ubiquitous nature of mobile devices to make healthcare accessible to all.
This article can be accessed at: http://innovations.bmj.com/content/2/1/33
We analyze a national sample of Americans with respect to their debt literacy, financial experiences, and their judgments about the extent of their indebtedness. Debt literacy is a component of broader financial understanding that measures knowledge about debt and self-assessed financial knowledge. Financial experiences are the participants’ reported experiences with traditional borrowing, alternative borrowing, and investing. Overindebtedness is a self-reported measure. Debt literacy is low, with only about one-third of the population grasping the basics of interest compounding. Even after controlling for demographics, we find a relationship between debt literacy and both financial experiences and debt loads. Individuals with lower levels of debt literacy tend to transact in high-cost manners, incurring higher fees and using high-cost borrowing. We provide a rough estimate of the national implications of debt ignorance on credit card costs by consumers. Less knowledgeable individuals also report that their debt loads are excessive or that they are unable to judge their debt position.
We outline a framework for causal inference in settings where assignment to a binary treatment is ignorable, but compliance with the assignment is not perfect so that the receipt of treatment is nonignorable. To address the problems associated with comparing subjects by the ignorable assignment - an "intention-to-treat analysis" - we make use of instrumental variables, which have long been used by economists in the context of regression models with constant treatment effects. We show that the instrumental variables (IV) estimand can be embedded within the Rubin Causal Model (RCM) and that under some simple and easily interpretable assumptions, the IV estimand is the average causal effect for a subgroup of units, the compliers. Without these assumptions, the IV estimand is simply the ratio of intention-to-treat causal estimands with no interpretation as an average causal effect. The advantages of embedding the IV approach in the RCM are that it clarifies the nature of critical assumptions needed for a causal interpretation, and moreover allows us to consider sensitivity of the results to deviations from key assumptions in a straightforward manner. We apply our analysis to estimate the effect of veteran status in the Vietnam era on mortality, using the lottery number that assigned priority for the draft as an instrument, and we use our results to investigate the sensitivity of the conclusions to critical assumptions.
Mortgage equity withdrawals (MEW) are correlated with covariates consistent with a permanent income
framework augmented for credit-constraints. We assess linkages between MEW and financial literacy/
education using the Health and Retirement Study (HRS) and Panel Study of Income Dynamics (PSID).
We find that the financially literate are 3–5 percentage points less likely to withdraw housing equity
via non-home equity loan mortgages using the HRS, while college graduates are 5 percentage points less
likely than those without a high school degree in the PSID. Among those withdrawing housing equity in
the PSID, college graduates extract significantly less equity and are less likely to have high levels of housing
leverage after doing so.
The goal of this study was to evaluate the impact of the Active Teen Leaders Avoiding Screen-time (ATLAS) intervention for adolescent boys, an obesity prevention intervention using smartphone technology.
METHODS: ATLAS was a cluster randomized controlled trial conducted in 14 secondary schools in low-income communities in New South Wales, Australia. Participants were 361 adolescent boys (aged 12–14 years) considered at risk of obesity. The 20-week intervention was guided by self-determination theory and social cognitive theory and involved: teacher professional development, provision of fitness equipment to schools, face-to-face physical activity sessions, lunchtime student mentoring sessions, researcher-led seminars, a smartphone application and Web site, and parental strategies for reducing screen-time. Outcome measures included BMI and waist circumference, percent body fat, physical activity (accelerometers), screen-time, sugar sweetened beverage intake, muscular fitness, and resistance training skill competency.
RESULTS: Overall, there were no significant intervention effects for BMI, waist circumference, percent body fat, or physical activity. Significant intervention effects were found for screen-time (mean [SE]: –30 [10.08] min/d; P = .03), sugar-sweetened beverage consumption (mean: –0.6 [0.26] glass/d; P = .01), muscular fitness (mean: 0.9 [0.49] repetition; P = .04), and resistance training skills (mean: 5.7 [0.67] units; P = .001).
CONCLUSIONS: This school-based intervention targeting low-income adolescent boys did not result in significant effects on body composition, perhaps due to an insufficient activity dose. However, the intervention was successful in improving muscular fitness, movement skills, and key weight-related behaviors.
Using a high-stakes field experiment conducted with a financial brokerage, we implement a novel design to separately identify two channels of social influence in financial decisions, both widely studied theoretically. When someone purchases an asset, his peers may also want to purchase it, both because they learn from his choice (“social learning”) and because his possession of the asset directly affects others' utility of owning the same asset (“social utility”). We randomize whether one member of a peer pair who chose to purchase an asset has that choice implemented, thus randomizing his ability to possess the asset. Then, we randomize whether the second member of the pair: (i) receives no information about the first member, or (ii) is informed of the first member's desire to purchase the asset and the result of the randomization that determined possession. This allows us to estimate the effects of learning plus possession, and learning alone, relative to a (no information) control group. We find that both social learning and social utility channels have statistically and economically significant effects on investment decisions. Evidence from a follow-up survey reveals that social learning effects are greatest when the first (second) investor is financially sophisticated (financially unsophisticated); investors report updating their beliefs about asset quality after learning about their peer's revealed preference; and, they report motivations consistent with “keeping up with the Joneses” when learning about their peer's possession of the asset. These results can help shed light on the mechanisms underlying herding behavior in financial markets and peer effects in consumption and investment decisions.
We use survey data from a sample of UK households to analyse the relationship between financial literacy and consumer credit portfolios. We show that individuals who borrow on consumer credit exhibit worse financial literacy than those who do not. Borrowers with poor financial literacy hold higher shares of high cost credit (such as home collected credit, mail order catalogue debt and payday loans) than those with higher literacy. We also show that individuals with poor financial literacy are more likely to lack confidence when interpreting credit terms, and to exhibit confusion over financial concepts. They are also less likely to engage in behaviour which might help them to improve their awareness of the credit market.
omen typically participate less than men in the stock market, while also scoring lower on financial literacy. We explore the link between the gender gap in stock market participation and financial literacy. Using survey data on a random sample of 1,300 individuals that is representative of the Swedish population, we show that controlling for basic financial literacy, essentially a measure of numeracy that does not require knowledge about the stock market, may explain a large part of the gender gap in stock market participation. We also find that women report being less risk taking than men. This gender gap in risk attitudes remains significant also when controlling for financial literacy.
Financial decisions about investing and saving for retirement are increasingly complex, requiring financial knowledge and confidence in that knowledge. Few studies have examined whether direct assessments of individuals' confidence are related to the outcomes of their financial decisions. Here, we analyzed data from a national sample recruited through RAND's American Life Panel (ALP), an internet panel of U.S. adults aged 18 to 88. We examined the relationship of confidence with self-reported and actual financial decisions, using four different tasks, each performed by overlapping samples of ALP participants. The four tasks were designed by different researchers for different purposes, using different methods to assess confidence. Yet, measures of confidence were correlated across tasks, and results were consistent across methodologies. Confidence and knowledge showed only modest positive correlations. However, even after controlling for actual knowledge, individuals with greater confidence were more likely to report financial planning for retirement and to successfully minimize fees on a hypothetical investment task. Implications for the role of confidence (even if it is unjustified) in investment behavior is discussed.
This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. If we consider the respondents who report being certain or probably not able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile. While financial fragility is more severe among those with low educational attainment and no financial education, families with children, those who suffered large wealth losses, and those who are unemployed, a sizable fraction of seemingly “middle class” Americans also judge themselves to be financially fragile. We examine the coping methods people use to deal with shocks. While savings is used most often, relying on family and friends, using formal and alternative credit, increasing work hours, and selling items are also used frequently to deal with emergencies, especially for some subgroups. Household finance researchers must look beyond precautionary savings to understand how families cope with risk. We also find evidence of a “pecking order” of coping methods in which savings appears to be first in the ordering. Finally, the paper compares the levels of financial fragility and methods of coping among eight industrialized countries. While there are differences in coping ability across countries, there is general evidence of a consistent ordering of coping methodsInstitutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
The exact cause of the massive defaults and foreclosures in the U.S. subprime mortgage market is still unclear. This paper investigates whether a particular aspect of borrowers' financial literacy - their numerical ability - may have played a role. We measure several aspects of financial literacy and cognitive ability in a survey of subprime mortgage borrowers who took out mortgages in 2006 or 2007 and match these measures to objective data on mortgage characteristics and repayment performance. We find a large and statistically significant negative correlation between numerical ability and various measures of delinquency and default. Foreclosure starts are approximately two-thirds lower in the group with the highest measured level of numerical ability compared with the group with the lowest measured level. The result is robust to controlling for a broad set of sociodemographic variables and not driven by other aspects of cognitive ability or the characteristics of the mortgage contracts. Our results raise the possibility that limitations in certain aspects of financial literacy played an important role in the subprime mortgage crisis.
This article analyzes a demonstration program mounted by a major bank to understand whether access to information and communications technologies, combined with financial literacy training and training on how to use the Internet, can help low- and moderate-income individuals in inner-city neighborhoods be more effective financial actors. While quantitative analysis turns up few significant program effects, qualitative work implies that implementation issues likely compromised the effectiveness of the program. There was evidence of a potential link between information and communications technologies and financial literacy. Overall, urban low- and moderate-income individuals are interested in becoming technologically and financially literate and an intensive intervention may enable these goals.
A strong positive relationship between self-esteem and an individual's decision to engage in various forms of financial planning is empirically demonstrated using a unique data sample. These results yield interesting implications for the possible effect of self-esteem interventions on financial planning choices and pave the way for future psychological and economic research in this area.
Financial capability, or people’s ability to manage and take control of their finances, is receiving increasing interest among
policy makers as more people find themselves in difficult financial situations during the current economic downturn. We tackle
the problem of how to measure financial capability—with a specific focus on making ends meet and money management—using data
from a general household survey (the British Household Panel Survey), and then identify its key determinants using panel data
models. This is important if appropriate policies and programmes are to be targeted at those most in need. We find the lowest
financial capability among young unemployed single adults living in households with other unrelated non-working adults. In
contrast, older men and women in full-time work with an employed spouse have the most financial capability.
Individuals are increasingly put in charge of their financial security after retirement. Moreover, the supply of complex financial products has increased considerably over the years. However, we
still have little or no information about whether individuals have the financial knowledge and skills to navigate this new financial environment. To better understand financial literacy and its relation to financial decision-making, we have devised two special modules for the DNB Household Survey. We have designed questions to measure numeracy and basic knowledge related to the working of inflation and interest rates, as well as questions to measure more advanced financial knowledge related to financial market instruments (stocks, bonds, and mutual funds). We evaluate the importance of financial literacy by studying its relation to the stock market: Are more financially knowledgeable individuals more likely to hold stocks? To assess the direction of causality, we make use of questions measuring financial knowledge before investing in the stock market. We find that, while the understanding of basic economic concepts related to inflation and interest rate compounding is far from perfect, it outperforms the limited knowledge of stocks and bonds, the concept of risk diversification, and the working of financial markets. We also find that the measurement of financial literacy is very sensitive to the wording of survey questions. This provides additional evidence for limited financial knowledge. Finally, we report evidence of an independent effect of financial literacy on stock market participation: Those who have low financial literacy are significantly less likely to invest in stocks.
We create a novel measure of optimism using the Survey of Consumer Finance by comparing self-reported life expectancy to that implied by statistical tables. This measure of optimism correlates with positive beliefs about future economic conditions and with psychometric tests of optimism. Optimism is related to numerous work/life choices: more optimistic people work harder, expect to retire later, are more likely to remarry, invest more in individual stocks, and save more. Interestingly, however, moderate optimists display reasonable financial behavior, whereas extreme optimists display financial habits and behavior that are generally not considered prudent.
We compare wealth holdings across two cohorts of the Health and Retirement Study: the early Baby Boomers in 2004, and individuals in the same age group in 1992. Levels and patterns of total net worth have changed relatively little over time, though Boomers rely more on housing equity than their predecessors. Most important, planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than non-planners. Instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth.
The present study was prompted by the paucity of research about the perception among young people of their ability to cope with economic risks of contemporary society. The variables used in this exploration were attitudes to money. The variable of emotion management was included on the rationale that stress and negative emotions tend to arise from demands to manage economic aspects of life. The links between a sense of economic self-efficacy and these variables were examined using a questionnaire filled out by 120 respondents. The findings revealed considerable correspondence between economic self-efficacy and the notion of adhering to meticulous saving plans as well as firmer self-control of emotions. Profiles that successfully discriminated between low and high sense of economic self-efficacy were identified. The results further our understanding of the interplay between psychological factors and the self-perception of efficacy in dealing with economic change.
What is a "rational" decision? Economists traditionally viewed rationality as maximizing expected satisfaction. This view has been useful in modeling basic microeconomic concepts, but falls short in accounting for many everyday human decisions. It leaves unanswered why some things reliably make people more satisfied than others, and why people frequently act to make others happy at a cost to themselves. Drawing on an evolutionary perspective, we propose that people make decisions according to a set of principles that may not appear to make sense at the superficial level, but that demonstrate rationality at a deeper evolutionary level. By this, we mean that people use adaptive domain-specific decision-rules that, on average, would have resulted in fitness benefits. Using this framework, we re-examine several economic principles. We suggest that traditional psychological functions governing risk aversion, discounting of future benefits, and budget allocations to multiple goods, for example, vary in predictable ways as a function of the underlying motive of the decision-maker and individual differences linked to evolved life-history strategies. A deep rationality framework not only helps explain why people make the decisions they do, but also inspires multiple directions for future research.
This survey summarizes current research on financial literacy efforts. Because most financial literacy programs are relatively new, much of the literature reviewed here is also new and part of a field that is still developing as a program of research. However, we can conclude that financial education is necessary and that many existing approaches are effective. Among the findings are that some households make mistakes with personal finance decisions; mistakes are more common for low income and less educated households; there is a causal connection between increases in financial knowledge and financial behavior; and the benefits of financial education appear to span a number of areas including retirement planning, savings, homeownership, and credit use.