9. Anna Yu. Rumyantseva, Hod Anyigba

Antecedents of Consumer Financial Capability and Its Effect on Financial Resource Mobilization

  • Contact details
  • Abstract
  • References

Anna Yu. Rumyantseva

Director of the Institute of international program of St. Petersburg university of
management technologies and economics, Ph.D. in Economics

Lermontovskiy Ave 44/A, St. Petersburg, Russian Federation, 190103

Hod Anyigba

Director of Graduate Programs, Assistant Professor of Economics & Entrepreneurship of Nobel International Business School, Ph.D. in Economics

7 Oleander Street, East Legon, Ghana

The current research is aimed at studying the financial capability of consumers as a key contributor to resource mobilization and financial well-being of individuals both in the short-run and in the long-run. This spillover effect, generally builds on public spending and consumption, which affects economic growth and development.
Goal. To conceptualize and analyse antecedents of financial capability and its effect on the financial well-being on individuals.
Tasks. To conduct a purposive literature review on constructs of financial capability; to study a methodology and metrics in aggregating financial capability metrics; to make recommendations on policy implications for effective financial capability accumulation.
Methodology. An in-depth selective and purpose approach to literature review was utilized. The analyses is based on a longitudinal assessment.
Results. Financial capability is an important factor providing a favourable result in the financial resources formation. Financial knowledge is critical in determining an individual’s ‘financial self-efficacy. The study reveals that, higher financial behaviour is generally associated with more desirable financial behaviours. In other words, objective and financial financial literacy has a positive impact on financial capability, which is mediated by consumer financial behaviour.
Conclusions. Policy makers must pay attention to the consumer financial capability levels so that financial toolkits like personal financial education programs allows are targeted at individuals to boost their financial literacy. Our findings suggest that financial education may enhance financial capability. Consumers are more likely to accept financial education because of financial security (e.g. retirement benefits), therefore, individual capacities should be enhanced through rigorous and comprehensive financial education packages.

Keywords: financial capability, financial resources, financial literacy, financial behaviour, financial knowledge, consumer

References

  1. Government of the Russian Federation Order of September 25, 2017 No. 2039-r. Strategy of financial capability increasing in the Russian Federation for years 2017–2023. 2017. Available at: http://www.garant.ru/products/ipo/prime/doc/71675558/. (in Russ.).
  2. Atkinson A., McKay S., Kempson E., Collard S. Levels of financial capability in the UK: Results of a baseline survey. London: Financial Services Authority, 2006. 150 p. (Financial Services Authority Consumer Research, No. 47). Available at: http://www.pfrc.bris.ac.uk/publications/Reports/Fincap_baseline_results_06.pdf.
  3. Brown A. M., Collins J. M., Schmeiser M. D., Urban C. State mandated financial education and the credit behavior of young adults. Washington, DC: Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, 2014. 42 p. (Finance and Economics Discussion Series, No. 68). Available at: https://www.federalreserve.gov/pubs/feds/2014/201468/201468pap.pdf.
  4. Danes S., Huddleston-Casas C., Boyce L. Financial planning curriculum for teens: impact evaluation. Journal of Financial Counseling and Planning, 1999, vol. 10, no. 1, pp. 25–37.
  5. Thaler R. H. Some empirical evidence on dynamic inconsistency. Economic Letters, 1981, vol. 8, no. 3, pp. 201–207.
  6. Baumann C., Hall T. Getting Cinderella to the ball: Putting education at the heart of financial education. International Journal of Consumer Studies, 2012, vol. 36, no. 5, pp. 508–514.
  7. Crain S., Ragan K. Designing a financial literacy course for a liberal arts curriculum. International Journal of Consumer Studies, 2012, vol. 36, no. 5, pp. 515–522.
  8. Kolpikova E., Rumyantseva A. The role played by financial culture in the management of enterprises. Ekonomika i upravlenie, 2012, no. 6 (80), pp. 69–73. (in Russ.).
  9. Xiao J. J., O’Neill B. Consumer financial education and financial capability. International Journal of Consumer Studies, 2016, vol. 40, no. 6, pp. 712–721. DOI: 10.1111/ijcs.12285.
  10. Fernandes D., Lynch J. G., Jr., Netemeyer R. Financial literacy, financial education, and downstream financial behaviors. Management Science, 2014, vol. 60, no. 8, pp. 1861–1883.
  11. Mandell L., Klein L. The impact of financial literacy education on subsequent financial behavior. Journal of Financial Counseling and Planning, 2009, vol. 20, no. 1, pp. 15–24.
  12. Strotz R. H. Urban transportation parables. Margolis J., ed. The public economy of urban communities. Washington, DC: Resources for the Future, 1965, pp. 127–169.
  13. Xiao J., Chen C., Chen F. Consumer financial capability and financial satisfaction. Social Indicators Research, 2014, vol. 118, no. 1, pp. 415–432.
  14. Xiao J., Chen C., Sun L. Age differences in consumer financial capability. International Journal of Consumer Studies, 2015, vol. 39, no. 4, pp. 387–395. DOI: 10.1111/ijcs.12205.
  15. Studying the population financial behaviors and the habit of saving money. The All-Russian household survey on consumer finance, conducted by the Research Center of ZAO “Demoscope” on the order of the Ministry of Finance of the Russian Federation. 2014. Available at: https://iq.hse.ru/news/177666461.html. (in Russ.).
  16. Consumer lending in Russia: Prospects and risks based on household finance survey. Analytical note of the Bank of Russia Research and Forecasting Department. September 2017. Available at: http://www.cbr.ru/content/document/file/27556/analytic_note_170928_e.pdf
  17. Shim S., Serido J., Bosch L., Tang C. Financial identity-processing styles among young adults: A longitudinal study of socialization factors and consequences for financial capabilities. Journal of Consumer Affairs, 2013, vol. 47, no. 1, pp. 128–152. DOI: 10.1111/joca.12002.
  18. Angeletos G.-M., Laibson D., Repetto A., Tobacman J., Weinberg S. The hyperbolic consumption model: Calibration, simulation, and empirical evaluation. Journal of Economic Perspectives, 2001, vol. 15, no. 3, pp. 47–68. DOI: 10.1257/jep.15.3.47.
  19. Farkas S., Johnson J. Miles to go: A status report on Americans’ plans for retirement. N. Y.: Public Agenda Publ., 1997. 36 p.
  20. Stigler G. The development of utility theory. Essays in the history of economics. Chicago: Univ. of Chicago Press Publ., 1965, pp. 66–156.
  21. Taylor M. Measuring financial capability and its determinants using survey data. Social Indicators Research, 2011, vol. 102, no. 2, pp. 297–314.
  22. Loewenstein G., Prelec D. Anomalies in intertemporal choice: Evidence and an interpretation. Quarterly Journal of Economics, 1992, vol. 107, no. 2, pp. 573–597.
  23. Robb C. A., Sharpe D. L. Effect of personal financial knowledge on college students’ credit card behavior. Journal of Financial Counseling and Planning, 2009, vol. 20, no. 1, pp. 25–43. Available at: https://files.eric.ed.gov/fulltext/EJ859561.pdf.

Subscribe to electronic version of the article