Financial Literacy to Prevent Poor Borrowing Choices
DOI:
https://doi.org/10.61190/fsr.v29i4.3464Keywords:
High-cost borrowing, Retirement plan loans, Financial literacy, Retirement planningAbstract
Working Americans face the new reality of having to fund and manage their retirement while fac- ing rising levels of indebtedness. A basic level of financial knowledge is essential to make good long-term financial decisions. Using the 2015 National Financial Capacity Study, we investigate the impact of financial literacy on the decision to access retirement plan loans before retirement or use one or more high-cost lenders. Our results show that being financially literate reduces the likelihood of using high-cost lenders and using retirement-plan loans. Furthermore, we find evidence of a nega- tive relation between financial literacy and myopic spending.
Downloads
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Academy of Financial Services
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Author(s) retain the copyright and full publishing rights without restriction.
Author(s) grant the Journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows reusers to distribute, remix, adapt, and build upon the material in any medium or format, for noncommercial purposes only. Reusers must acknowledge the work's authorship and initial publication in this Journal.
Noncommercial means not primarily intended for or directed towards commercial advantage or monetary compensation.
In addition, FSR grants to the UGA Libraries a worldwide, non-exclusive license to all content published by the Journal, including metadata, that is necessary to publish, transmit, and index the Journal and to preserve its content over time.
