Financial literacy in Brazil – do knowledge and self-confidence relate with behavior?
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| Formato: | Artículo científico |
| Lenguaje: | en |
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Universidade de São Paulo
2019
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| _version_ | 1876456349660872704 |
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| author | Thiago Borges Ramalho |
| author_facet | Thiago Borges Ramalho |
| contents | Financial literacy in Brazil – do knowledge and self-confidence relate with behavior? Thiago Borges Ramalho Denis Forte Administración y Contabilidad Overconfidence Underconfidence Financial literacy Financial behaviour Purpose People are increasingly responsible for making sound financial decisions to foster their financial satisfaction and well-being, which magnifies the importance of financial literacy, and this concept and measurement is still not yet crystallized in the literature, specifically capturing different behavior perceptions. Moreover, there is not a distinction based on different classifications of behavior, such as over or underconfidence, to understand the relation between literacy and decision process. To fill this gap, this paper aims to investigate whether the financial literacy conceptual model proposed applies similarly to every group independently of their previous self-confidence perception. For this purpose and quality control, OECD (2016) data were used with a final sample of 1,487 Brazilian citizens. Quantitative analysis technique using partial least squares structural equations path modeling and differences between groups using multi-group analysis was applied. In line with general studies, when analyzing the financial literacy usual model for the group as a whole, financial knowledge construct positively influences self-confidence, and both together positively affect financial behavior. However, for individuals with low financial knowledge and low self-confidence, as well as for those with too much or too little confidence, the model did not hold. Therefore, self-confidence perception influences the way financial knowledge is used for financial decisions and should be addressed in financial education and training to be more effective. Design/methodology/approach To operationalize the variables and test the paper’s hypotheses, the authors used the methodology developed in OECD (2016), based on the research instrument’s Brazilian application adapted from the questionnaire developed in OECD (2015), with data initially used and made available by Garber and Koyama (2016). Based on the recommendations of Hair Jr et al. (2017a, 2017b), the authors used partial least squares modeling PLS-PM (SmartPLS 3.2.6) to estimate the structural models. Findings Concerning structural relationships, the final model showed knowledge with a positive influence on self-confidence, self-confidence with a positive effect on behavior and knowledge with a positive influence on behavior, both directly and, through its relationship with self-confidence, indirectly. This underscores that, for the total sample, the greater people’s knowledge and self-confidence, the better their behavior. The unexpected absence of attitude in the final model, even allowing for potential measurement problems, brings up an important reflection on the mediating effect that the self-control variable may exert between attitude and behavior. A person may believe that saving for the future is important (attitude) but whether they actually save (behavior) may depend on self-control, which is needed to prevent immediate gains from being prioritized in practice. Research limitation 2019 artículo científico 2531-0488 https://www.redalyc.org/articulo.oa?id=553858038006 https://www.redalyc.org/journal/5538/553858038006/ https://www.redalyc.org/journal/5538/553858038006/html/ https://www.redalyc.org/journal/5538/553858038006/553858038006.epub https://www.redalyc.org/journal/5538/553858038006/movil en http://www.redalyc.org/revista.oa?id=5538 RAUSP Management Journal application/pdf Universidade de São Paulo RAUSP Management Journal (Brasil) Num.1 Vol.54 |
| format | Artículo científico |
| id | redalyc_553858038006 |
| institution | Redalyc |
| language | en |
| publishDate | 2019 |
| publisher | Universidade de São Paulo |
| spellingShingle | Financial literacy in Brazil – do knowledge and self-confidence relate with behavior? Thiago Borges Ramalho Administración y Contabilidad Overconfidence Underconfidence Financial literacy Financial behaviour Financial literacy in Brazil – do knowledge and self-confidence relate with behavior? Thiago Borges Ramalho Denis Forte Administración y Contabilidad Overconfidence Underconfidence Financial literacy Financial behaviour Purpose People are increasingly responsible for making sound financial decisions to foster their financial satisfaction and well-being, which magnifies the importance of financial literacy, and this concept and measurement is still not yet crystallized in the literature, specifically capturing different behavior perceptions. Moreover, there is not a distinction based on different classifications of behavior, such as over or underconfidence, to understand the relation between literacy and decision process. To fill this gap, this paper aims to investigate whether the financial literacy conceptual model proposed applies similarly to every group independently of their previous self-confidence perception. For this purpose and quality control, OECD (2016) data were used with a final sample of 1,487 Brazilian citizens. Quantitative analysis technique using partial least squares structural equations path modeling and differences between groups using multi-group analysis was applied. In line with general studies, when analyzing the financial literacy usual model for the group as a whole, financial knowledge construct positively influences self-confidence, and both together positively affect financial behavior. However, for individuals with low financial knowledge and low self-confidence, as well as for those with too much or too little confidence, the model did not hold. Therefore, self-confidence perception influences the way financial knowledge is used for financial decisions and should be addressed in financial education and training to be more effective. Design/methodology/approach To operationalize the variables and test the paper’s hypotheses, the authors used the methodology developed in OECD (2016), based on the research instrument’s Brazilian application adapted from the questionnaire developed in OECD (2015), with data initially used and made available by Garber and Koyama (2016). Based on the recommendations of Hair Jr et al. (2017a, 2017b), the authors used partial least squares modeling PLS-PM (SmartPLS 3.2.6) to estimate the structural models. Findings Concerning structural relationships, the final model showed knowledge with a positive influence on self-confidence, self-confidence with a positive effect on behavior and knowledge with a positive influence on behavior, both directly and, through its relationship with self-confidence, indirectly. This underscores that, for the total sample, the greater people’s knowledge and self-confidence, the better their behavior. The unexpected absence of attitude in the final model, even allowing for potential measurement problems, brings up an important reflection on the mediating effect that the self-control variable may exert between attitude and behavior. A person may believe that saving for the future is important (attitude) but whether they actually save (behavior) may depend on self-control, which is needed to prevent immediate gains from being prioritized in practice. Research limitation 2019 artículo científico 2531-0488 https://www.redalyc.org/articulo.oa?id=553858038006 https://www.redalyc.org/journal/5538/553858038006/ https://www.redalyc.org/journal/5538/553858038006/html/ https://www.redalyc.org/journal/5538/553858038006/553858038006.epub https://www.redalyc.org/journal/5538/553858038006/movil en http://www.redalyc.org/revista.oa?id=5538 RAUSP Management Journal application/pdf Universidade de São Paulo RAUSP Management Journal (Brasil) Num.1 Vol.54 |
| title | Financial literacy in Brazil – do knowledge and self-confidence relate with behavior? |
| topic | Administración y Contabilidad Overconfidence Underconfidence Financial literacy Financial behaviour |
| url | https://www.redalyc.org/articulo.oa?id=553858038006 https://www.redalyc.org/journal/5538/553858038006/ https://www.redalyc.org/journal/5538/553858038006/html/ https://www.redalyc.org/journal/5538/553858038006/553858038006.epub https://www.redalyc.org/journal/5538/553858038006/movil |