Why do financial literacy programmes fail?

Author: Frijns, BPM; Gilbert, A; Tourani-Rad, A

Date: 2013-10-25

Publisher: Auckland Centre for Financial Research, Auckland University of Technology

Type: Journal article

Link to this item using this URL: http://hdl.handle.net/10292/5776

Auckland University of Technology

Abstract

Numerous studies have found a positive relationship between financial literacy and financial experience. Typically, this relationship is interpreted as being a causal relationship, i.e. an increase in financial literacy leads to better financial decision making. However, a simple relationship cannot be interpreted in a causal way. In this paper, we show evidence for a causal relationship running the opposite way, i.e. people with more financial experience seem to acquire more financial knowledge and become more financially literate. This finding has important implications as it suggests that programmes targeted at improving financial literacy could be more effective if they incorporate experiential components.

Subjects: Financial literacy, Financial experience, Causality

Citation: ["Applied Finance Letters, vol.2(1), pp.18 - 21 (4)"]

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