Advertisement

Journal of Consumer Policy

, Volume 42, Issue 3, pp 333–348 | Cite as

Does Consumer Financial Management Behavior Relate to Their Financial Access?

  • J. BirkenmaierEmail author
  • Q. J. Fu
Original Paper

Abstract

Financial management behavior and financial access are important to overall financial well-being, yet have not been well studied. This study contributes to the literature of financial access and financial management behavior by empirically exploring relevant factors for each and the relationship between them. The data are derived from the 2012 and 2015 National Financial Capacity Study. Exploratory factor analysis (EFA) was applied to derive the factors relevant for consumer financial access and consumer financial management behaviors. Confirmatory factor analysis (CFA) was applied to establish reliability and construct validity of the identified factors. The structural equation modeling and linear regression were jointly used to examine the relationship between them. Results suggest that consumer financial access consists of a nine-element structure: savings accounts, checking accounts, retirement accounts, retirement plans, emergency funds, homeownership, investments, credit, and health insurance. Financial management behavior consists of a five-element structure: consumption, cash management, emergency savings, small-dollar consumer loans, and credit management. Financial management behavior is significantly associated with financial access. Better consumer financial management behavior is associated with better financial access. Policy implications are discussed.

Keywords

Financial access Financial management Financial behaviors Structural equation modeling 

Notes

References

  1. Apaam, G., Burhouse, S., Chu, K., Ernst, K., Fritzdixon, K., Goodstein, R. et al. (2018). 2017 FDIC national survey on unbanked and underbanked consumers. Washington, DC: Federal Deposit Insurance Corporation.Google Scholar
  2. Aspen Institute. (2016). Income volatility: A primer. Washington, DC: Author. Retrieved from https://assets.aspeninstitute.org. Accessed 2 May 2019.
  3. Bell, C., Gorin, D., & Hogarth, J. M. (2009). Does financial education affect soldiersfinancial behavior? Networks Financial Institute, Indiana State University. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1445635. Accessed 2 May 2019.
  4. Birkenmaier, J. M., & Fu, Q. (2016). The association of alternative financial services usage and financial access: Evidence from the National Financial Capability Study. Journal of Family and Economic Issues, 37(3), 450–460.CrossRefGoogle Scholar
  5. Birkenmaier, J., Despard, M., Friedline, T., & Huang, J. (2019). Financial inclusion and financial access. In Oxford research encyclopedia of social work. Oxford: Oxford University Press. Google Scholar
  6. Brevoort, K. P., Gimm, P., & Kambara, M. (2015). Data point: Credit invisibles. Washington, DC: Consumer Financial Protection Bureau.Google Scholar
  7. Burke, K., Lanning, J., Leary, J., & Wang, J. (2014). CFPB data point: Payday lending. Washington, DC: Consumer Financial Protection Bureau. Retrieved from https://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf. Accessed 2 May 2019.
  8. Butricia, B. A., Iames, H. M., Smith, K. E. & Toder, E. J. (2009). The disappearing defined benefit pension and its potential impact on the retirement incomes of baby boomers. Social Security Bulletin, 69(3). Retrieved from https://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.pdf. Accessed 2 May 2019.
  9. Cattell, R. B. (1966). The scree test for the number of factors. Multivariate Behavioral Research, 1(2), 245–276.CrossRefGoogle Scholar
  10. Collins, J. M. (2010). Effects of mandatory financial education on low-income clients. Focus, 27(1), 13–18.Google Scholar
  11. Collins, J. M. (2012). Financial advice: A substitute for financial literacy? Financial Services Review, 21(4), 307–322.Google Scholar
  12. de Bassa Scheresberg, C. (2013). Financial literacy and financial behavior among young adults: Evidence and implications. Numeracy, 6(2).Google Scholar
  13. Demirgüc-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The global Findex Database 2017. Measuring financial inclusion and the Fintech revolution. World Bank Group. Retrieved from https://www.worldbank.org/en/news/press-release/2018/04/19/financial-inclusion-on-the-rise-but-gaps-remain-global-findex-database-shows. Accessed 9 May 2019.
  14. Despard, M. R., & Chowa, G. A. (2014). Testing a measurement model of financial capability among youth in Ghana. Journal of Consumer Affairs, 48(2), 301–322.CrossRefGoogle Scholar
  15. Dew, J., & Xiao, J. J. (2011). The financial management behavior scale: Development and validation. Journal of Financial Counseling and Planning, 22(1), 43–59.Google Scholar
  16. Donnelly, G., Ksendzova, M., & Howell, R. T. (2013). Sadness, identity, and plastic in overshopping: The interplay of materialism, poor credit management, and emotional buying motives in predicting compulsive buying. Journal of Economic Psychology, 39, 113–125.CrossRefGoogle Scholar
  17. Faber, J. W. (2019). Segregation and the cost of money: Race, poverty, and the prevalence of alternative financial institutions. Social Forces.Google Scholar
  18. Fabrigar, L. R., Wegener, D. T., MacCallum, R. C., & Strachan, E. J. (1999). Evaluating the use of exploratory factor analysis in psychological research. Psychological Methods, 4(3), 272–299.CrossRefGoogle Scholar
  19. Farrell, L., Fry, T. R., & Risse, L. (2016). The significance of financial self-efficacy in explaining women’s personal finance behaviour. Journal of Economic Psychology, 54, 85–99.CrossRefGoogle Scholar
  20. Fernandes, D., Lynch Jr, J. G., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial behaviors. Management Science, 60(8), 1861–1883.Google Scholar
  21. FINRA Investor Education Foundation. (2016). 2015 National Financial Capability Study. Retrieved from http://www.usfinancialcapability.org/about.php. Accessed 2 May 2019.
  22. Fitzpatrick, K. (2009). The effect of bank account ownership on credit, consumption, and savings: Evidence from the United Kingdom. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1488788. Accessed 2 May 2019.
  23. Friedline, T., & Despard, M. (2017). Mapping financial opportunity. Washington, DC: New America. Retrieved from https://www.newamerica.org/in-depth/mapping-financial-opportunity/. Accessed 2 May 2019.
  24. Gardeva, A., & Rhyne, E. (2011). Opportunities and obstacles to financial inclusion: Survey report. Washington, DC: Accion, Center for Financial Inclusion. Retrieved from https://centerforfinancialinclusionblog.files.wordpress.com/2011/12/opportunities-and-obstacles-to-financial-inclusion_110708_final.pdf. Accessed 2 May 2019.
  25. Grable, J., Park, J. Y., & Joo, S. H. (2009). Explaining financial management behavior for Koreans living in the United States. The Journal of Consumer Affairs, 43, 80–107. CrossRefGoogle Scholar
  26. Grinstein-Weiss, M., Guo, S., Reinertson, V., & Russell, B. (2015). Financial education and savings outcomes for low-income IDA participants: Does age make a difference. Journal of Consumer Affairs, 49(1), 156–185.CrossRefGoogle Scholar
  27. Gunay, G., Boylu, A. A., & Oğuz, A. (2015). Determinants of financial management behaviors of families. In A. Copur (Ed.), Handbook of research on behavioral financial and investment strategies (pp. 236–254). Hershey: IGI Global.CrossRefGoogle Scholar
  28. Gutter, M. S., Hayhoe, C. R., DeVaney, S. A., Kim, J., Bowen, C. F., Cheang, M., et al. (2012). Exploring the relationship of economic, sociological, and psychological factors to the savings behavior of low-to moderate-income consumers. Family and Consumer Sciences Research Journal, 41(1), 86–101.CrossRefGoogle Scholar
  29. Haynes-Bordas, R., Kiss, D. E., & Yilmazer, T. (2008). Effectiveness of financial education on financial management behavior and account usage: Evidence from a ‘second chance’ program. Journal of Family and Economic Issues, 29(3), 362–390.CrossRefGoogle Scholar
  30. Hilgert, M. A., Hogarth, J. M., & Beverly, S. G. (2003). Consumer financial management: The connection between knowledge and behavior. Federal Reserve Bulletin, 89, 309–322. Retrieved from https://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf. Accessed 2 May 2019.
  31. Huang, J., Nam, Y., & Sherraden, M. S. S. (2013). Financial knowledge and Child Development Account policy: A test of financial capability. Journal of Consumer Affairs, 47(1), 1–26.CrossRefGoogle Scholar
  32. Huang, J., Nam, Y., & Lee, E. J. (2014). Financial capability and economic hardship among low income older immigrants in a supported employment program. Journal of Family Economic Issues, 36(2), 239–250.CrossRefGoogle Scholar
  33. Huang, J., Nam, Y., Sherraden, M., & Clancy, M. (2015). Financial capability and asset accumulation for children’s education: Evidence from an experiment of Child Development Accounts. Journal of Consumer Affairs, 49(1), 127–155.CrossRefGoogle Scholar
  34. Huang, J., Kim, Y., Sherraden, M., & Clancy, M. (2016). Improved financial capability can reduce material hardship among mothers. Social Work, 61(4), 313–320.CrossRefGoogle Scholar
  35. Jorgensen, B. L. (2007). Financial literacy of college students: Parental and peer influences. Masters thesis, Master of Science, Human Development. Virginia Tech.Google Scholar
  36. Joseph, M., Dhanuraj, P. C., & Antony, J. K. (2017). Influence of financial inclusion and financial self-efficacy on the credit behaviour of BPL consumers. International Journal of Research in Economics and Social Sciences, 7(1), 52–66.Google Scholar
  37. Karp, N. & Nash-Stacey, B. W. (2015). Technology, opportunity, & access: Understanding financial inclusion in the U.S. (Working Paper No. 15/25). BBVA Research. Retrieved from https://www.bbvaresearch.com/wp-content/uploads/2015/07/WP15-25_FinancialInclusion_MSA.pdf. Accessed 2 May 2019.
  38. Kelly, N., Harpel, T., Fontes, A., Walters, C., & Murphy, J. (2017). An examination of social desirability bias in measures of college students’ financial behavior. College Student Journal, 51(1), 115–128.Google Scholar
  39. Ksendzova, M., Donnelly, G. E., & Howell, R. T. (2017). A Brief Money Management Scale and its associations with personality, financial health, and hypothetical debt repayment. Journal of Financial Counseling and Planning, 28(1), 62.CrossRefGoogle Scholar
  40. Mandell, L., & Klein, L. S. (2009). The impact of financial literacy education on subsequent financial behavior. Journal of Financial Counseling and Planning, 30(1), 15–24.Google Scholar
  41. Marsh, H. W., Hau, K. T., & Wen, Z. (2004). In search of golden rules: Comment on hypothesis-testing approaches to setting cutoff values for fit indexes and dangers in overgeneralizing Hu and Bentler’s (1999) findings. Structural Equation Modeling, 21(3), 320–341.CrossRefGoogle Scholar
  42. Martin, R. (2002). Financialization of daily life. Philadelphia, PA: Temple University Press.Google Scholar
  43. Miller, M., Reichelstein, J., Salas, C., & Zia, B.c (2014). Can you help someone become financially capable? A meta-analysis of the literature. World Bank Group. Retrieved from https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-6745. Accessed 9 May 2019.
  44. Mitchell, O. & Lusardi, A. (2015). Financial literacy and economic outcomes: Evidence and policy implications. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2568732. Accessed 2 May 2019.
  45. Muthén, L. K., & Muthén, B. O. (2017). Mplus user’s guide. Los Angeles, CA: Muthén & Muthén.Google Scholar
  46. Nam, Y., Lee, E. J., Huang, J., & Kim, J. (2015). Financial capability, asset ownership and later-age immigration: Evidence from a sample of low-income older Asian immigrants. Journal of Gerontological Social Work, 58(2), 114–127.CrossRefGoogle Scholar
  47. National Institute on Retirement Security. (2012). The retirement savings crisis: Is it worse than we think? National Institute on Retirement Security. Retrieved from http://www.nirsonline.org/index.php?option=content&task=view&id=768.  Accessed 2 May 2019.
  48. Office of the Inspector General United States Postal Service. (2014). Providing non-bank financial services for the underserved. Retrieved from https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-14-007_0.pdf. Accessed 2 May 2019.
  49. Sherraden, M. S. (2017). Financial capability. In C. Franklin (Ed.), Encyclopedia of social work.  https://doi.org/10.1093/acrefore/9780199975839.013.1201.
  50. World Bank. (2012). Financial inclusion strategies reference framework. World Bank Group. Retrieved from http://documents.worldbank.org/curated/en/801151468152092070/pdf/787610WP0P144500use0only0900A9RD899.pdf. Accessed 2 May 2019.
  51. World Bank. (2019). Financial inclusion: Overview. World Bank Group. Retrieved from http://www.worldbank.org/en/topic/financialinclusion/overview. Accessed 2 May 2019.
  52. Turbeville, W. C. (2015). Financialization and equal opportunity. Demos. Retrieved from http://www.demos.org/publication/financialization-equal-opportunity. Accessed 2 May 2019.
  53. White House Council of Economic Advisors. (2016). Financial inclusion in the United States. Retrieved from https://obamawhitehouse.archives.gov/blog/2016/06/10/financial-inclusion-united-states. Accessed 2 May 2019.
  54. Wikoff, N., Huang, J., Kim, Y., & Sherraden, M. (2015). Material hardship and 529 college savings plan participation: The mitigating effects of Child Development Accounts. Social Science Research, 50, 189–202.CrossRefGoogle Scholar
  55. Worthy, S. L., Jonkman, J., & Blinn-Pike, L. (2010). Sensation-seeking, risk-taking, and problematic financial behaviors of college students. Journal of Family and Economic Issues, 31(2), 161–170.CrossRefGoogle Scholar
  56. Xiao, J. J. (2008). Applying behavioral theories to financial behavior. In J. J. Xiao (Ed.), Handbook of consumer finance research (pp. 69–81). New York, NY: Springer.CrossRefGoogle Scholar
  57. Xiao, J. J. (2016). Preface. In J. J. Xiao (Ed.), Handbook of consumer finance (ix–x). Switzerland: Springer.Google Scholar
  58. Xiao, J. J., & Porto, N. (2016). Which financial advice topics are positively associated with financial satisfaction? Journal of Financial Planning, 29(7), 52–60.Google Scholar
  59. Xiao, J. J., Shim, S., & Lyons, A. (2008). Academic success and well-being of college students: Financial behaviors matter. In Center for Economic and Financial Education, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-ChampaignGoogle Scholar
  60. Xiao, J. J., Tang, C., & Shim, S. (2009). Acting for happiness: Financial behavior and life satisfaction of college students. Social Indicators Research, 92(1), 53–69.CrossRefGoogle Scholar
  61. Xiao, J. J., Collins, J. M., Ford, M., Keller, P., Kim, J., & Robles, B. J. (2010). A review of financial behavior research: Implications for financial education. National Foundation for Financial Education. Google Scholar
  62. Xiao, J. J., Chen, C., & Chen, F. (2014). Consumer financial capability and financial satisfaction. Social Indicators Research, 118(1), 415–432.CrossRefGoogle Scholar
  63. Zottel, S., Ortega, C. R., Randall, D., & Xu, S. Y. (2014). Enhancing financial capability and inclusion in Morocco: A demand-side assessment. Washington, DC: World Bank Group.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.College for Public Health and Social JusticeSaint Louis University School of Social WorkSt. LouisUSA
  2. 2.College for Public Health and Social JusticeSaint Louis University School of Public HealthSt LouisUSA

Personalised recommendations