Family Processes and Adolescents’ Financial Behaviors

This article examined the contribution of family processes (parental warmth, parental financial monitoring, and parent–child interactions about money) to explain cognitive and behavioral aspects of adolescents’ financial behaviors. Data came from the 2002/2003 Child Development Supplement to the Panel Study of Income Dynamics, a national sample of adolescent age 12–18 and their families (N = 1,471). Results indicated that higher levels of parent communication about child donations were positively associated with both children’s saving for future schooling and their likelihood of donating to charities. Higher levels of parental warmth were associated with saving for future schooling. Giving an allowance was negatively related to child financial anxiety. Implications for researcher and policy makers have been discussed.     

Shanghai, World Financial and Trade Center

With its ideal location and history of international finance and trade, the bustling port of Shanghai continues to offer a good climate for investors from around the world.     

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

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.

Educational and Financial Institutions Partnering to Implement CSAs: Evaluation of Financial Partners’ Perspectives from the 2011 GEAR UP Invitational Priority

Educational and financial institutions are increasingly partnering to open Children’s Savings Accounts (CSAs); however, little is known about these partnerships’ effectiveness for planning and implementing CSAs. A 2011 invitational priority from the Department of Education encouraged partnerships between Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) programs and financial institutions to open CSAs for low-income students, which provided an opportunity to evaluate these partnerships. In-depth interviews with 10 personnel from 6 financial institutions who partnered with 4 GEAR UP programs revealed that partnerships with stakeholders, time spent on planning, and strategies for overcoming barriers were important for implementing CSAs. Lessons for practice and policy are discussed.     

Young Adults’ Life Outcomes and Well-Being: Perceived Financial Socialization from Parents,the Romantic Partner,and Young Adults’ Own Financial Behaviors

We examined how perceived financial socialization—from parents, the romantic partner, and young adults’ own behavior—was associated with young adults’ life outcomes and well-being (i.e., physical and mental health, finances, romantic relationship). Using data (N?=?504) from young adults specific to their finances, results from hierarchical regression analyses showed that young adults’ own financial behaviors were the most patterned, followed by financial socialization from the romantic partner, and then from financial socialization from parents (only objective financial knowledge). We discuss how young adults’ financial behavior, financial socialization from the romantic partner and, to a lesser extent, parental socialization are associated with young adults’ life domains, underscoring the developmental salience of increased financial capability and relationship formation and decreased dependence on parents during the transition to adulthood.     

Financial worry among older people: Who worries and why?

This study sought to clarify what drives economic worries among older people. Based upon the data from a national sample of adults aged 65 and older in Israel (N = 550), we examined associations between financial worry and economic status, lifestyle, social network, concerns about functional health, long term care needs and cognition, and population group. The main financial worry was that pension funds will not suffice for one's entire life. Multivariate analysis revealed that financial worry was negatively related to perceived income adequacy and age, and positively related to concerns about care and to apprehensions regarding one's ability to make decisions. Immigrants from the former Soviet Union were found to worry less. Understanding the different sources of financial worries among older people is essential insofar as older people are increasingly expected to take personal responsibility for their financial futures. Dealing with negative outcomes that stem from financial worries are important programming and policy goals in an era of population aging.     

Macroeconomic Conditions and Australian Financial Risk Attitudes, 2001–2010

This paper employed panel data from the 2001–2010 waves of the Household, Income, and Labor Dynamics in Australia (HILDA) survey to investigate the financial risk attitudes of 10,000 individuals across 6,839 households. Ordered logit models including individual and household random effects tested for changes in risk tolerance while focusing on the impact of transitory macroeconomic conditions and controlling for individual demographic and socioeconomic characteristics. We found Australians generally reduced their tolerance for risk over time, though higher levels of education, wealth, good health, and being self-employed indicated the increased likelihood of risk tolerance. We also found macroeconomic conditions were jointly significant in determining financial risk attitudes. However, the innate demographic and socioeconomic characteristics of individuals were more important at the margin.     

Financial Risk Attitude and Behavior: Do Planners Help Increase Consistency?

This study is the first to evaluate the effect of sources of information on households’ consistency between their risk attitude when making savings and investment decisions and risk behavior displayed when they do save and invest. As the responsibility is being shifted to individuals to save for their own financial future, it is important that individuals and households save and invest in a manner that is consistent with their financial risk tolerance. Financial planners were found to provide significant value to households on the consistency of their financial risk attitude and behavior. The implications of this work are far-reaching in the financial planning arena.     

Sirens’ Call: Understanding Poor Financial Decision Making and Credit Card Misuse

Poor financial decision-making paradigms such as misuse of credit cards exist as ruinous forms of personal debt. Psychiatric and physical health problems arise from financial distress. Significant challenges exist for consumers to become financially solvent. Obstacles that exist in overcoming financial stressors can be explained by behavioral economic theories. These theories explain why consumers make unwise financial decisions. Research, practice implications, and a financial therapy model for improving financial decision-making skills are presented. The need for social work to ally with family economic scholars and policymakers around financial literacy and the development of effective financial therapy interventions is discussed.     

Financial forecasts during the crisis: Were experts more accurate than laypeople?

The main goal of this paper was to examine the accuracy and confidence of financial forecasts during the 2009/2010 crisis. The study was carried out in February 2009 in Poland. The participants represented two groups: financial analysts and laypeople (people without knowledge or skills in finance). All participants were asked to forecast future stock market performance and foreign exchange rates. Additionally, they marked their confidence on a 100-point scale. The results showed that the forecasts significantly differed from the real values. In forecasting both the stock market and the currency exchange market, the prediction error significantly differed from zero. Even if the participants were optimistic in making the directional stock market forecasts, they were pessimistic when making point index predictions, which suggests a judgmental paradox. The experts were slightly better than the non-experts in predicting the stock market. However, their accuracy was generally not better in the exchange market forecasts. The next step of the analysis focused on the confidence factor. The results of this part of the research showed that the laypeople were less confident than the experts in all the judgments.     

Elementary Preservice Teachers’ and Teacher Educators’ Perceptions of Financial Literacy Education

The authors conducted an online survey of elementary teacher education programs within a large midwestern state to assess preservice teachers’ and teacher educators’ beliefs about and preparedness to teach financial literacy. Very few preservice teachers had meaningful experiences with personal finance in high school, college, or personal decision making. No teacher educators reported ever teaching financial literacy in their higher education roles. Only 13% of teacher educators and 25% of preservice teachers thought that it was very important to teach financial literacy in elementary education. Most teacher education faculty and preservice teachers reported that they were not well qualified to use state economics standards or the JumpStart standards for financial literacy. Preservice teachers were more confident in meeting financial literacy standards than teacher educators. Both preservice teachers and teacher educators expressed openness to collaborating with other faculty members, members of the financial service industry, and parents to teach financial literacy. Follow-up phone interviews affirmed that elementary preservice teachers and teacher educators value social studies education (and financial literacy) less than reading and mathematics education. Qualitative results also suggest that elementary preservice teachers and teacher educators would like more easily accessible resources for teaching financial literacy.     

Does Revenue Diversification Predict Financial Vulnerability Among Non-governmental Organizations in sub-Saharan Africa?

Non-governmental organizations (NGOs) in sub-Saharan Africa (SSA) experience financial challenges that hinder efforts to promote social change and development. Revenue diversification is one adaptive response to these challenges, yet there is a lack of evidence concerning the relationship between revenue diversification and financial vulnerability among NGOs in SSA. Using data from an online survey of NGOs (N = 170), we hypothesized that a greater number of revenue sources is associated with lower probability of financial vulnerability, while a greater level of dependence on international funding is associated with higher probability of financial vulnerability. Results from probit regression models controlling for organizational characteristics indicated partial support for hypotheses. Having four or more types of revenue was associated with 87% lower probability of financial vulnerability compared to having one type of revenue (p < 0.001). Also, NGOs with up to half of their budgets covered by international sources had 17% lower probability of financial vulnerability compared to NGOs with no international funding (p < 0.05). Implications for future research to further explore these relationships are discussed.     

Changing College Students’ Financial Knowledge, Attitudes, and Behavior through Seminar Participation

This pilot study examined the influence of Credit Wise Cats, a financial education seminar presented by Students in Free Enterprise, on the attitudes, knowledge, and intentions toward financial responsibility of college students (N = 93). Findings suggest that the seminar effectively increased students’ financial knowledge, increased responsible attitudes toward credit and decreased avoidant attitudes towards credit from pre-test to post-test. At post-test, students reported intending to engage in significantly more effective financial behaviors and fewer risky financial behaviors. Finally, demographic factors (e.g., gender and employment status) predicted students’ financial knowledge, attitudes, and behaviors. These results suggest that a seminar format may be useful in reaching a wider audience of college students and, thus, warrants future longitudinal evaluation.

NPO Financial Statement Quality: An Empirical Analysis Based on Benford’s Law

In order to assess the accuracy of the figures reported in NPOs’ financial statements, I perform a digital analysis on Belgian non-profit organizations’ financial statements for accounting years 2007 up to 2012. Specifically, I compare observed frequencies for digits in the second-from-the-left position with expected frequencies based on Benford’s Law. Results based on the full sample indicate that observed frequencies strongly conform to Benford’s Law (and thus suggest a high degree of accuracy of the figures reported in NPOs’ financial statements). Nevertheless, I note statistically significant deviations from Benford’s Law (both for the entire distribution and at the individual digit level). The largest deviation is noted for zeroes in the second position (i.e., a significantly positive deviation), which can be explained based on humans’ reliance upon so-called cognitive reference points. Considering different sub-samples, I note that observed deviations from Benford’s Law are largest for the smallest non-profits and those non-profits that rely most heavily on grants and/or donations.     

Should NPOs Follow International Standards for Financial Reporting? A Multinational Study of Views

Financial reporting is an important aspect of not-for-profit organisations’ (NPOs’) accountability. Globally, numerous and varying regimes exist by which jurisdictions regulate NPO financial reporting. This article explores whether NPOs should be required or expected to follow sector-specific international financial reporting standards. We investigate stakeholder perceptions on the nature and scope of any such developed standards, interpreting our findings through the lens of moral legitimacy. Using an international online survey of stakeholders involved in NPO financial reporting, we analyse 605 responses from 179 countries. Based on our findings, we argue that diverse stakeholder groups, especially those who are involved with NPO financial reporting in developing countries, are likely to grant moral legitimacy to developed NPO international accounting standards if the consequences are to enhance NPO accounting and accountability information, subject to agreement as to whether all or only NPOs of a certain size should comply and whether any such standards should be mandatory.     

Fathers’ Financial Support of Children in a Low Income Community in South Africa

We used data from the Birth to Twenty Cohort study to understand children’s receipt of financial support from their fathers in a low income, Black community in urban South Africa. Specifically, we (1) described fathers’ financial support over the life course of children; (2) estimated survival probabilities of receiving support for all children and not receiving support for children who experienced a parental union dissolution; and (3) identified factors that explained variation in the receipt of support after a union dissolution. Results suggest that most children received full or partial support throughout the life course. Furthermore, a high proportion of children received support after a union dissolution with much of the variation driven by pre-dissolution support, father’s education and the presence of extended kin.     

What Happens to Defined Contribution Accounts When Labor Markets and Financial Markets Move Together?

The relationship among earnings, savings, and retirement is well known; however, the linkage between labor market outcomes and financial market performance is generally unacknowledged. We examine the implications of the link between labor markets and financial markets for workers who save money in individual retirement accounts. Specifically, differences in labor market outcomes across groups may imply differences in the timing of investments, which may reduce savings over time for these groups compared to their counterparts. Using monthly data from the Current Population Survey (1979–2002), we generate hypothetical investment portfolios using stock and bond indices. We exploit differences across demographic groups in unemployment and wage growth and use these differences to examine each group's investment outcomes. We then disaggregate the total effects into short-term and long-term components. We find some evidence of short-term market timing effects on investment, but we find much larger long-term effects for some groups. Our findings suggest that, for many people, the retirement savings losses associated with the timing of markets are similar to the costs of annuitizing savings upon retirement. The differences are especially pronounced by education and gender.     

Financial Leverage and Shareholder’s Required Returns: Evidence from South Africa Corporate Sector

Recent financial crisis which saw an increase in risk premium and shareholder’s required return around the world has been in part attributed to firms excessive debt leverage. This paper tests the impact of debt leverage on shareholder’s required return in South Africa. The paper specifies dynamic panel models and uses difference generalized method of moment (GMM) estimation technique. The results show that long term debt is positively related to shareholder’s required return. Similarly, total debt is positively related to shareholder’s required return. The results are robust to alternative model specification namely system GMM. Based on the findings, the study suggests that debt leverage is an important risk factor to be priced in equity valuation. The findings also suggest that the dynamic nature of firms’ capital structure decision should not be neglected. The paper contributes to capital structure research by testing Modigliani and Miller proposition two on listed firms in South Africa. Besides, it uses better estimation technique that controls for unobservable firm-specific effects and endogenous problem. In addition, two measures of leverage are used as independent variable compared to a single measure commonly found in the literature.