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Determinates of financial behavior: insights into consumer money attitudes and financial literacy

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Abstract

As consumer requirements for financial services permeate society, they link various financial institutions more closely together, developing divergent financial products. This research develops a conceptual framework for discussing consumer money attitudes, financial literacy regarding financial decisions, and financial behavior. Study findings suggest that consumers who have retention-planning and achievement-esteem attitudes toward money make high-risk financial decisions; anxiety toward money tends to exist mainly in low-risk investors. Financial literacy affects consumer financial behaviors, and demographic variables play segmentation roles. Theoretical contributions and management implications are provided in the study for related research, education departments and financial firms.

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Authors and Affiliations

  1. Department of International Business, National Taipei College of Business, No. 321, Sec. 1, Jinan Rd, Zhongzheng District, Taipei City 100, Taiwan, ROC

    Tsui-Yii Shih

  2. Department of Foreign Exchange, Sunny Bank Zhong Xing Branch, No. 36, Sec. 3, Minsheng E. Rd, Zhongshan District, Taipei City 104, Taiwan, ROC

    Sheng-Chen Ke

Authors
  1. Tsui-Yii Shih
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Correspondence to Tsui-Yii Shih.

Appendix: Question items development concerning financial literacy (See Chen and Volpe (1998); Goldsmith and Goldsmith (2006); Perry (2008), compiled by the authors)

Appendix: Question items development concerning financial literacy (See Chen and Volpe (1998); Goldsmith and Goldsmith (2006); Perry (2008), compiled by the authors)

  1. 1.

    Which of the following has the lowest risk? A. bond; B. stock; C. deferral.

  2. 2.

    Interest earned on savings accounts is tax-free. A. correct; B. not correct; C. not above of all.

  3. 3.

    If interest rates decrease, the price of a Treasury bond will A. decrease; B. increase; C. uncertain.

  4. 4.

    Investing $1000 a year for 10 years will earn the same amount of money as investing $2000 a year for 5 years if the interest rate is the same for both investments. A. correct; B. not correct; C. the same.

  5. 5.

    People will be financially better off if the cost of living increases by more than their income. A. correct; B. not correct; C. unknown.

  6. 6.

    It is financially worthwhile to borrow money for investment if the interest rate on the loan is less than the expected return. A. correct; B. not correct; C. unknown.

  7. 7.

    The cheapest way to use a credit card is to pay off the bill in full each month. A. correct; B. not correct; C. unknown.

  8. 8.

    Over the long run, people can expect to earn more money by investing in stocks than by putting money into U.S. savings bonds. A. correct; B. not correct; C. unknown.

  9. 9.

    What will be the impact on the interest rate people pay on a loan if they:

    A. always eventually pay off their debts, but are sometimes late on monthly bills? B. get someone else to co-sign the loan with them? C. have never borrowed money before? D. offer the lender some collateral for the loan?

  10. 10.

    What will be the impact on a person’s credit rating if he-she:

A. charges lots of money on several credit cards, and makes the minimum payment each month?

B. has a good payment record and applies for many new credit cards? C. skips a student loan payment?

D. never borrows money or uses a credit card for anything? E. misses a couple of loan payments but makes them up, with the interest, the following month? F. has a legal judgment over a disputed bill?

  1. 11.

    The main reason to purchase insurance is to:

A. protect you from a loss recently incurred. B. provide you with excellent investment returns.

C. protect you from experiencing a catastrophic loss. D. protect you from small incidental losses.

E. improve your standard of living by filing fraudulent claims.

  1. 12.

    Which statement is false?

A. You can use your credit card to receive a cash advance. B. If your credit card balance is $1000 and you pay $300, interest is charged on the unpaid balance of $700. C. The rate of interest on your credit card is normally higher than you can earn on a certificate of deposit. D. A credit card company will not charge you interest if you pay off the entire balance by the due date. E. You cannot spend more than your line of credit.

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Shih, TY., Ke, SC. Determinates of financial behavior: insights into consumer money attitudes and financial literacy. Serv Bus 8, 217–238 (2014). https://doi.org/10.1007/s11628-013-0194-x

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