Like Father Like Son: How Does Parents' Financial Behavior Affect Their Children's Financial Behavior?

This paper investigates the intergenerational influence on financial behavior. Using two national longitudinal studies: the 1979 National Longitudinal Survey Children and Young Adults (NLSCYA) and the 1979 National Longitudinal Survey (NLSY79), we link the financial behavior of 2,520 young adults back to their general self‐control skill and their parents' financial behavior conducted during children's adolescence. We find evidence of intergenerational consistency in financial behavior between parents and their children. Results from the generalized structural equation model indicate that parents' financial behavior affects that of their children both directly and indirectly through general self‐control skill development. Furthermore, the influence of parents is moderated by parent–child relationship. These findings highlight the importance of parental financial socialization. Its implications are discussed.     

Quebec young adults’ use of and knowledge of credit

This research aimed to study young adults’ use of and knowledge of credit. A large representative sample of Quebec young adults aged 18–29 years participated in a telephone survey. Results reveal that their use of credit has increased remarkably over the last decade. The mean score on the credit knowledge scale used in this study is 49.4% for the entire group. Ordinary least squares (OLS) regression analysis show that credit knowledge is positively related to personal income, number of debts, amount of total debt, number of credit cards and favourable attitude towards credit and debts. Young adults reporting either personal experience or family and relatives as their main source of learning about personal finances were found to have a lower level of knowledge about credit in general than those reporting having learned of this subject from courses, the media or financial counsellors. The learning of basic knowledge about credit and personal finances, with stress on the sensible use of credit, should be part of the educational agenda for young consumers.     

Financial Knowledge and “Don't Know” Response

We investigate the effect of group characteristics and educational interventions on young respondents' objective financial knowledge level. We examine six questions about personal finance and covariates selected from the 2015 National Financial Capability Study. Because these questions include “Don't Know” or “Refuse” (DK/RF) responses, a simple regression model could cause researchers to reach misleading conclusions if DK/RF responses are not random. Thus, we suggest a binomial‐latent regression model to evaluate the effect of educational interventions and group differences that are hidden in DK/RF responses. The estimation result shows that rejecting financial education opportunities is disadvantageous to obtaining proper financial knowledge. In addition, both formal and informal financial education are less effective in improving objective financial knowledge in our preferred model. We also find few or no gender, income, and age differences in young adults' objective financial knowledge level after controlling for financial education interventions.     

Financial capability of student loan holders who are college students,graduates, or dropouts

Effective consumer financial education provides relevant information to meet special needs of targeted audiences. The purpose of this study is to examine differences in financial capability among student loan holders who are college students, graduates, and dropouts. Using data from the 2015 U.S. National Financial Capability Study, the results show that student loan holders who have completed their education program have higher scores in all financial capability indicators than college students and dropouts. Further analyses show differences in specific financial knowledge items among college students, graduates, and dropouts. In addition, college graduates are more likely to perform several specific desirable financial behaviors than college students and dropouts. The findings suggest that financial educators should emphasize action taking when they provide financial education for student loan holders who are college students and dropouts.     

Impact of Financial Education Mandates on Younger Consumers' Use of Alternative Financial Services

Over one‐quarter of American adults used credit‐based alternative financial services (AFS) in the past five years, which carry a typical APR of 300%. Young adults are especially more likely to use AFS yet are also more likely to be exposed to personal finance education in schools. In this study, I use data from pooled 2012 and 2015 waves of National Financial Capability Study to examine whether state‐mandated financial education impacts young adults' use of AFS. I find that financial education mandates significantly reduced the likelihood and frequency of payday borrowing in particular. Additionally, I show that exposure to required personal finance courses could affect payday borrowing through increased financial literacy and improved financial planning practices. These findings suggest that policymakers and other stakeholders need to understand the full benefits of financial education when making cost–benefit analysis comparisons as to whether or not to implement.     

Financial Development,Financial Structure and Income Inequality in China

Using panel data of 23 provinces during the period 1996–2012, this paper investigates the impacts of financial development and structure on income inequality in different administrative districts (urban, rural and overall) in China. The results produced by the dynamic generalised method of moments estimator provide some evidence for a linear and inverse ‘U‐shape’ relationship between financial development and income inequality, and increasing the relative importance of financial markets to banks helps to reduce income inequality. Furthermore, the results of panel threshold regressions show that the benefits of financial development only occur if the stock market activity has reached a threshold level and disappear if the stock market capitalisation has reached a certain scale. Meanwhile, the impact of the financial structure weakens as the financial development expands and the proportion of financial markets increases. We also find that the impacts of financial development and structure on rural income inequality are stronger than those on urban income inequality.     

Consumer bankruptcy in Utah (USA): who files and why?

This study examined consumer debtors who filed for bankruptcy and their reasons for filing in Utah, the U.S. state that ranked first in household filing rate in 2002–2004 and consistently ranks in the top ten of the 50 states. The purpose of the study was to determine the demographic characteristics of debtors and reasons for filing. Data were collected during 2004–2005 via survey from 508 debtors. The debtors reported employment problems, medical expenses, divorce or other family problems, as well as trouble managing their finances and overuse of credit cards. More than half of the debtors owed medical providers. Debtors were more likely to report a reduction in income than job loss. Self‐employed persons were over represented. Respondent debtors are less educated, less likely to be married and less likely to own a home compared with Utahns and other Americans. Contrary to expectations, debtor households were smaller than the state average, which may be due to the young age of debtors. Results suggest that in order to reduce the bankruptcy rate in Utah, consumer educators should target renters, adults with less than a college education, divorcing persons and small business owners. Utah's mandate for a personal finance graduation requirement should be implemented early in the secondary school curriculum.     

Budget Allocation Patterns of U.S. Households across Income Levels in the 21st Century

This study examined the budget allocation patterns of U.S. households during the period 2000–2015. Four household groups—classified based on their income levels in relation to the federal poverty level—are used for the analyses. Data from the quarterly interview component of the BLS Consumer Expenditure Survey were used in order to calculate households' annual expenditures in eight commodity groups: food, utilities, apparel and apparel services, transportation, medical care, shelter and household operations, other nondurable expenditures and services, and durable goods. An exact affine stone index (EASI) demand system was used to estimate demand relationships (i.e., price, income elasticities, and marginal effects). Overall, we find that budget allocation, consumers' responses to changes in prices and income, and the effects of sociodemographic characteristics on spending can be markedly different between income groups. The use of a representative or average household for demand analyses can mask substantial differences in economic behaviors between these four income groups.     

Do types of foreign capital matter for income equality?

We investigate the link between financial integration and income inequality, suggesting that different channels of financial integration have contrasting distributional effects. Using an unbalanced panel of 65 countries from 1992 to 2015 and employing dynamic panel data methods, we find that greater financial integration through debt-creating capital increases income inequality compared to equity-type capital. Furthermore, a larger share of direct investment in financial integration is associated with lower income inequality; the converse is true for loans and credit, while the share of portfolio investment has no significant effect when considered as a whole. Evidence also shows that increased financial integration and trade is beneficial for reducing the income inequality of emerging economies.     

浙江省农民收入增长影响因素分析 ——基于CHFS调查数据

缩小城乡收入差距并研究其影响因素,是实现乡村振新战略的必然要求。利用中国家庭金融调查中心数据,对农户收入影响因素进行实证分析。发现耕地市值、劳动力数量、受教育水平、金融素养对农民收入增长起到较显著的正向影响;而农村家庭持有金融资产以及年龄对其总体收入增长起到负面影响,其负作用一定程度上来源于农户金融素养匮乏所导致的家庭资产结构配置不合理。应该持续推进农村居民素质教育工作,促进家庭资产的合理配置,应对快速发展的复杂金融市场所带来的金融风险,进一步有效促进农民合理增收,缓解城乡收入差距过大等问题。     

Financial Identity‐Processing Styles Among Young Adults: A Longitudinal Study of Socialization Factors and Consequences for Financial Capabilities

Using identity theory as a basis for conceptualizing and clustering the financial identity‐processing styles of young adults, this study examines antecedent socialization factors and consequent financial capabilities associated with those clusters. Using two‐timed longitudinal surveys (N = 1,511) of college students, we proposed and confirmed three financial identity‐processing styles, resembling Berzonsky's three identity‐processing styles (i.e., informational, normative, and diffused‐avoidant). Labeled Pathfinders, Followers and Drifters: these three clusters were profiled with respect to their socialization factors and financial capabilities. We concluded that identity theory can be applied to the financial domain, financial identity‐processing styles are influenced by socialization factors (e.g., parents, learning), and these styles have consequences for individuals' financial capabilities (financial knowledge, self‐efficacy, attitudes, and behaviors). Insights from this study may inform the design and implementation of effective financial parenting, financial education and intervention programs, and identify those young adults who may benefit from education and intervention efforts .     

After the global financial crash: Individual factors differentiating young adult consumers’ trust in banks and financial institutions

Our exploratory study aims to examine individual factors that may differentiate young adults’ trust in banks and financial institutions. We use a longitudinal data set compiled during two, timed surveys, before and after the collapse of the nation’s financial system. Participants (N=748) were classified into three groups distinguished according to their differing levels of trust. Findings based on ANOVA and three-group discriminant analyses indicate that several individual factors – self-reported well-being (overall well-being, financial well-being, subjective financial knowledge) and financial status (determined by parents’ socioeconomic status and total debt level) – significantly influence young adult consumers’ level of trust in banks and financial institutions.     

Determinants of financial worry

Grounded in the transactional stress-coping theory and the Tallis and Eysenck (1994) model of nonpathological worry, the present study sought to advance the conceptual and empirical understanding of financial worry (FW). We positioned objective financial stressors (OFS), subjective financial stressors (SFS), and coping resources as key variables in understanding the determinants of financial worry (FW). The cross-sectional data consisted of responses from a representative sample of 19,385 adults, aged 18 and older, drawn from a large U.S. survey. Hierarchical linear regression results revealed that OFS, SFS, household income, and financial capability (FC) are all key determinants of FW. Furthermore, the results revealed adverse effects of OFS and SFS on FW. These effects were moderated by household income, FC, age, and gender. Implications for future research, employers, practitioners, and policymakers are discussed.     

收入差异的“倒U型”假说悖论:初次分配、再分配与政策选择

通过MLD指数分解分析,发现中国收入差异有明显扩大趋势,且地区间差异贡献率高,这与库兹涅茨"倒U型"假说相悖。收入分配的不平衡受初次分配差异与再分配差异共同影响,其中初次分配差异源于要素流动性差异和地区生产力水平差异,而再分配差异应归因于政策倾斜度。要改善中国收入分配不均现状,缩小地区收入差距水平,必须打破二元经济结构,统筹配置资源,适度推进金融自由化进程,加大教育投资,加强社会保障制度建设,并重视西部经济均衡发展。     

Homeownership among Young Americans: A Look at Student Loan Debt and Behavioral Factors

This study uses the National Longitudinal Survey of Youth (1997) to examine the factors that impact homeownership among young adults, with an emphasis on student loan debt. Three key findings arise from the research. First, life cycle and demographic characteristics, such as marital status, education, and income, continue to be strong predictors of homeownership. Married households with a college degree and children are among the most likely to own a home. Second, young adults with student loan debt are no more or less likely to own a home than someone without debt after controlling for a number of factors; however, students who have already paid off their loans are more likely to own a home. Finally, respondents who express a willingness to take risks in finances are more likely to own a home while those who are more conscientious are less likely to own a home.     

Are Young People Becoming More Risk Averse? An Analysis of Factors Contributing to the Rise in Precautionary Savings Among Young Adults

Since the late 1980s, young people aged 18–34 have increasingly stated that their primary reason for increasing their saving rate has been to protect themselves against uncertain future times. The rate of increase in “precautionary” savings exceeds that of all other age groups, and has occurred against a backdrop of declining real income, a tepid economic recovery from the Great Recession of 2008–09, a tightened credit environment, and changing household demographics. This study considers the impact of these and other elements on young adults’ decisions to save for precautionary purposes, and considers what possible impacts these developments might have for broader consumption and production trends in the U.S economy.     

Military executives and corporate outcomes: Evidence from China

This study investigates the impact of executives' military experience on corporate outcomes in China. We find that firms with military executives take higher financial leverage and underperform their non-military counterparts, although they perform relatively better during periods of industry distress. Our results are robust when using propensity score matching and instrumental variable approaches. Interestingly, military executives in China commit relatively more corporate violations compared to those without military experience. This finding differs to the findings of Benmelech and Frydman (2015) for U.S. military CEOs, where there are clear differences in culture, education background, and ethical behaviours as compared with China.     

Financial literacy among university students: A study in eight European countries

This study analysed the level of financial literacy among university students in Estonia, Germany, Italy, Netherlands, Poland, Romania, Russian Federation and Turkey. The purpose of the study was to determine the level of financial literacy among university students, and to find out the relationship between financial knowledge and demographic characteristics of students. Online survey instrument was used to collect data. 409 fully completed questionnaires were accepted for analysis. Logistic regression was used to analyse of impact of the demographic characteristics on financial literacy. Overall mean of correct answers for the survey was 72.2%. This result represents a medium level of financial literacy about personal finance. Results indicate that male students, business major students, PhD students, those who live in a rental house, those whose parents have high level income, those who get advice on financial matters from their friends, those who took financial course before, those who get financial information about financial issues from university education, and students from Poland are more knowledgeable on personal finance. More financial courses should be provided in university education programmes, which could help more students handle their finances better and improve their financial wellbeing. It should be taken into consideration that in recent years, environmental and technological influences on financial literacy may be more important than parental influence.     

Does financial liberalization reduce income inequality? Evidence from Africa

This paper investigates the impact of financial liberalization on income inequality by using the country-level panel data from 51 African countries in more than two decades. We find that income inequality increases, rather than decreases, with the level of financial liberalization. This finding is consistent with the hypothesis that financial liberalization likely induces banks to allocate the scarce financial resources in African countries more discriminatively to rich clienteles but excludes the poor ones from financial access, which thus widens the income gap.     

Capital Freedom,Financial Development and Provincial Economic Growth in China

For more than three decades, China has managed to combine rapid economic growth with a strictly regulated financial sector. The discrepancy between economic and financial development has raised the question of whether China might be an exception to the so‐called finance–growth nexus. This study examines the relationship between finance and growth at the provincial level in China using a new set of measures of capital freedom and financial development. The results indicate that capital freedom and financial development are associated with both higher income and growth rates. In particular, we find that the marketisation of financial institutions and strengthening of legal and government institutions have a particularly strong impact on income and growth in low‐income provinces.