Financial capability

Literacy, behavior, and distress

Authors

  • Janine K. Scott Shepherd University, College of Business Administration
  • Nghia Nguyen Vu School of Economics & Finance, Massey University
  • Yuanshan Cheng Department of Finance, Winthrop University, College of Business and Administration
  • Philip Gibson Department of Finance, Winthrop University, College of Business and Administration

DOI:

https://doi.org/10.61190/fsr.v27i4.3406

Keywords:

Literacy, Financial behavior, Financial distress

Abstract

We inspect the influence of individual financial knowledge and financial behavior on the proba- bility of experiencing financial distress. Using the 2015 National Financial Capability Study, we examine three measures of financial distress related to bill payment, retirement saving, and being late with a mortgage payment. Financial literacy and financial behavior indices are constructed using questions from the survey that pertain to financial knowledge (ranging in complexity) and financial decision-making. In addition to the influence of socioeconomic factors, the conclusion suggests that financial literacy and positive behavior reduces financial distress stemming from simple financial matters. However, the opposite is observed for more complex financial decisions.

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Published

2018-12-30

How to Cite

Scott, J. K., Vu, N. N., Cheng, Y., & Gibson, P. (2018). Financial capability: Literacy, behavior, and distress. Financial Services Review, 27(4), 391–411. https://doi.org/10.61190/fsr.v27i4.3406

Issue

Vol. 27 No. 4 (2018): Winter 2018

Section

New Original Submission

License

Copyright (c) 2018 Academy of Financial Services

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