Does Consumer Financial Management Behavior Relate to Their Financial Access?
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.
KeywordsFinancial access Financial management Financial behaviors Structural equation modeling
- 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
- Aspen Institute. (2016). Income volatility: A primer. Washington, DC: Author. Retrieved from https://assets.aspeninstitute.org. Accessed 2 May 2019.
- Bell, C., Gorin, D., & Hogarth, J. M. (2009). Does financial education affect soldiers’ financial behavior? Networks Financial Institute, Indiana State University. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1445635. Accessed 2 May 2019.
- 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
- Brevoort, K. P., Gimm, P., & Kambara, M. (2015). Data point: Credit invisibles. Washington, DC: Consumer Financial Protection Bureau.Google Scholar
- 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.
- 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.
- Collins, J. M. (2010). Effects of mandatory financial education on low-income clients. Focus, 27(1), 13–18.Google Scholar
- Collins, J. M. (2012). Financial advice: A substitute for financial literacy? Financial Services Review, 21(4), 307–322.Google Scholar
- de Bassa Scheresberg, C. (2013). Financial literacy and financial behavior among young adults: Evidence and implications. Numeracy, 6(2).Google Scholar
- 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.
- 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
- Faber, J. W. (2019). Segregation and the cost of money: Race, poverty, and the prevalence of alternative financial institutions. Social Forces.Google Scholar
- 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
- FINRA Investor Education Foundation. (2016). 2015 National Financial Capability Study. Retrieved from http://www.usfinancialcapability.org/about.php. Accessed 2 May 2019.
- 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.
- 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.
- 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.
- 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
- 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.
- Jorgensen, B. L. (2007). Financial literacy of college students: Parental and peer influences. Masters thesis, Master of Science, Human Development. Virginia Tech.Google Scholar
- 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
- 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.
- 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
- 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
- Martin, R. (2002). Financialization of daily life. Philadelphia, PA: Temple University Press.Google Scholar
- 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.
- 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.
- Muthén, L. K., & Muthén, B. O. (2017). Mplus user’s guide. Los Angeles, CA: Muthén & Muthén.Google Scholar
- 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.
- 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.
- Sherraden, M. S. (2017). Financial capability. In C. Franklin (Ed.), Encyclopedia of social work. https://doi.org/10.1093/acrefore/9780199975839.013.1201.
- 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.
- World Bank. (2019). Financial inclusion: Overview. World Bank Group. Retrieved from http://www.worldbank.org/en/topic/financialinclusion/overview. Accessed 2 May 2019.
- Turbeville, W. C. (2015). Financialization and equal opportunity. Demos. Retrieved from http://www.demos.org/publication/financialization-equal-opportunity. Accessed 2 May 2019.
- 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.
- Xiao, J. J. (2016). Preface. In J. J. Xiao (Ed.), Handbook of consumer finance (ix–x). Switzerland: Springer.Google Scholar
- 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
- 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-Champaign. Google Scholar
- 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
- 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