Financial Literacy and Financial Decision-making: The mediating role of financial concerns

Research output: Contribution to conferencePresentationResearch

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Abstract

This paper analyses how the financial literacy of elderly people affect their decisions on adoption of a variety of financial strategies. Multiple mediator models with bootstrap techniques are used to identify the mediating mechanisms of financial concerns that transmit the effects of financial literacy onto specific financial strategies. We find (1) financial concerns do indeed mediate the majority of financial literacy-strategy nexuses; specifically, financially illiterate people are more likely to have financial concerns and are more likely to cut back on spending, seek more job opportunities, increase debts, and downsize or sell their residence as a result; (3) financially literate people are more likely to seek professional financial advice, purchase a life annuity, contribute more to superannuation, and invest more conservatively regardless of their concerns; (4) causal inference is likely to lead to spurious and incomplete implications if mediation effects are ignored. Our findings suggest professional advisors and robo-advisor developers take into account financial concerns when recommending financial advice.

Conference

ConferenceThe 10th Financial Markets & Corporate Governance Conference 
Abbreviated titleFMCG2019
CountryAustralia
CitySydney
Period16/04/1918/04/19
Internet address

Fingerprint

Financial decision making
Financial literacy
Advisors
Financial strategy
Mediation effect
Mediator
Purchase
Debt
Life annuities
Elderly people
Bootstrap
Superannuation
Developer
Causal inference

Cite this

Xue, R., Gepp, A., O'Neill, T., Stern, S., & Vanstone, B. J. (2019). Financial Literacy and Financial Decision-making: The mediating role of financial concerns. The 10th Financial Markets & Corporate Governance Conference , Sydney, Australia.
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title = "Financial Literacy and Financial Decision-making: The mediating role of financial concerns",
abstract = "This paper analyses how the financial literacy of elderly people affect their decisions on adoption of a variety of financial strategies. Multiple mediator models with bootstrap techniques are used to identify the mediating mechanisms of financial concerns that transmit the effects of financial literacy onto specific financial strategies. We find (1) financial concerns do indeed mediate the majority of financial literacy-strategy nexuses; specifically, financially illiterate people are more likely to have financial concerns and are more likely to cut back on spending, seek more job opportunities, increase debts, and downsize or sell their residence as a result; (3) financially literate people are more likely to seek professional financial advice, purchase a life annuity, contribute more to superannuation, and invest more conservatively regardless of their concerns; (4) causal inference is likely to lead to spurious and incomplete implications if mediation effects are ignored. Our findings suggest professional advisors and robo-advisor developers take into account financial concerns when recommending financial advice.",
author = "Rui Xue and Adrian Gepp and Terence O'Neill and Steven Stern and Vanstone, {Bruce J}",
year = "2019",
month = "4",
language = "English",
note = "The 10th Financial Markets & Corporate Governance Conference  : Capital Markets, Sustainability and Disruptive Technologies, FMCG2019 ; Conference date: 16-04-2019 Through 18-04-2019",
url = "https://www.mq.edu.au/about/about-the-university/faculties-and-departments/faculty-of-business-and-economics/departments/department-of-applied-finance/news-and-events/fmcg-2019-conference",

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Xue, R, Gepp, A, O'Neill, T, Stern, S & Vanstone, BJ 2019, 'Financial Literacy and Financial Decision-making: The mediating role of financial concerns' The 10th Financial Markets & Corporate Governance Conference , Sydney, Australia, 16/04/19 - 18/04/19, .

Financial Literacy and Financial Decision-making: The mediating role of financial concerns. / Xue, Rui; Gepp, Adrian; O'Neill, Terence; Stern, Steven; Vanstone, Bruce J.

2019. The 10th Financial Markets & Corporate Governance Conference , Sydney, Australia.

Research output: Contribution to conferencePresentationResearch

TY - CONF

T1 - Financial Literacy and Financial Decision-making: The mediating role of financial concerns

AU - Xue, Rui

AU - Gepp, Adrian

AU - O'Neill, Terence

AU - Stern, Steven

AU - Vanstone, Bruce J

PY - 2019/4

Y1 - 2019/4

N2 - This paper analyses how the financial literacy of elderly people affect their decisions on adoption of a variety of financial strategies. Multiple mediator models with bootstrap techniques are used to identify the mediating mechanisms of financial concerns that transmit the effects of financial literacy onto specific financial strategies. We find (1) financial concerns do indeed mediate the majority of financial literacy-strategy nexuses; specifically, financially illiterate people are more likely to have financial concerns and are more likely to cut back on spending, seek more job opportunities, increase debts, and downsize or sell their residence as a result; (3) financially literate people are more likely to seek professional financial advice, purchase a life annuity, contribute more to superannuation, and invest more conservatively regardless of their concerns; (4) causal inference is likely to lead to spurious and incomplete implications if mediation effects are ignored. Our findings suggest professional advisors and robo-advisor developers take into account financial concerns when recommending financial advice.

AB - This paper analyses how the financial literacy of elderly people affect their decisions on adoption of a variety of financial strategies. Multiple mediator models with bootstrap techniques are used to identify the mediating mechanisms of financial concerns that transmit the effects of financial literacy onto specific financial strategies. We find (1) financial concerns do indeed mediate the majority of financial literacy-strategy nexuses; specifically, financially illiterate people are more likely to have financial concerns and are more likely to cut back on spending, seek more job opportunities, increase debts, and downsize or sell their residence as a result; (3) financially literate people are more likely to seek professional financial advice, purchase a life annuity, contribute more to superannuation, and invest more conservatively regardless of their concerns; (4) causal inference is likely to lead to spurious and incomplete implications if mediation effects are ignored. Our findings suggest professional advisors and robo-advisor developers take into account financial concerns when recommending financial advice.

M3 - Presentation

ER -

Xue R, Gepp A, O'Neill T, Stern S, Vanstone BJ. Financial Literacy and Financial Decision-making: The mediating role of financial concerns. 2019. The 10th Financial Markets & Corporate Governance Conference , Sydney, Australia.