Effectiveness of Financial Education on Financial Management Behavior and Account Usage: Evidence from a ‘Second Chance’ Program

  • Rebecca Haynes-Bordas
  • D. E. Kiss
  • Tansel Yilmazer
Original Paper

Abstract

The Get Checking™ program is a “second chance” program that aims to provide financial education to consumers who were reported to ChexSystems by a previous financial institution for account abuse or mismanagement. Using data collected from Indiana participants of the program, the first goal of this study is to investigate the success of the program in impacting financial management behavior of the participants. The second goal is to investigate the change of participants’ actual behavior in terms of account usage and asset-building after the completion of the program. The findings show that the program was successful in positively influencing the financial management behavior of Non-whites in terms of recording transactions and communicating with financial institutions. Also, financial management skills emphasized in the program, especially communicating with financial institutions, have a significant positive effect on the actual behavior of the participants in terms of obtaining a loan. Among the heterogeneous group of the unbanked, findings shed light on the demographic groups, such as Non-whites and young adults that could benefit the most from this type of financial management education.

Keywords

Account usage Asset-building Financial management education Get Checking™ Program Unbanked 

Notes

Acknowledgements

We thank Bharathi Nagarajan for her assistance with the collection of the data and Patryk Babiarz for excellent research assistance. We also thank Angela C. Lyons and Jeanne Hogarth and the seminar participants at the 2006 Federal Reserve Research Forum for Closing the Wealth Gap: Building Assets among Low-Income Households.

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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  • Rebecca Haynes-Bordas
    • 1
  • D. E. Kiss
    • 2
  • Tansel Yilmazer
    • 2
  1. 1.Purdue Extension Marion CountyIndianapolisUSA
  2. 2.Department of Consumer Sciences and RetailingPurdue UniversityWest LafayetteUSA

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