Financial capability: a systematic conceptual review, extension and synthesis

Xiao, Jing Jian; Huang, Jin; Goyal, Kirti; Kumar, Satish

doi:10.1108/ijbm-05-2022-0185

Cited by 49 publications

(27 citation statements)

References 214 publications

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Section: Discussionsupporting

confidence: 91%

“…However, our higher FKB score for single mothers agrees with West and Mitchell (2021), who showed that women with sound financial knowledge have better wealth outcomes in divorce. Findings from this study strengthen the findings of Xiao et al (2022), who conceptualized financial capability using financial knowledge, behavior and opportunity. The findings of correlation analysis in terms of age agree with those of Kunaifi et al (2019), who found that younger millennials tend to invest more, and their financial resilience is more than that of older millennials.…”

Section: Cognitive Abilities and Financial Resiliencesupporting

confidence: 82%

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Cognitive abilities and financial resilience: evidence from an emerging market

Mundi

Vashisht

2023

IJBM

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PurposeThe current study is to examine the association between cognitive abilities and financial resilience among millennial single parents. This study examines the role of cognitive abilities on financial resilience after controlling for key demographic variables – gender, age, university degree, employment status and staying with parents.Design/methodology/approachUsing the ordered logit regression approach, the authors analyzed results for 395 single parents (237 single mothers and 159 single fathers) aged 31 to 40 in India. Financial resilience is measured using economic resources, financial resources, financial knowledge and behavior, and social capital. The authors further provide several robustness tests to validate their findings. The results are controlled for state-fixed effects.FindingsThe authors find a significant impact of single parents' cognitive abilities on their financial resilience. This study also found that gender, age, university degree, employment status and staying with parents influence single parents' financial resilience. Single mothers are found to have higher levels of both cognitive abilities and financial resilience scores than single fathers.Practical implicationsFinancial institutions, marketers and financial advisors can find innovative ways to increase the financial resilience of single parents by improving their cognitive ability. Also, policymakers should focus on interventions to increase single parents' education level to increase their financial resilience and provide policy support to those without any parental support system.Originality/valueThis study extends the literature on financial resilience in two directions – by establishing a relationship between cognitive abilities and financial resilience and studying the financial resilience of a vulnerable societal section-millennial single parents. The study also extends the literature on single parents' financial vulnerability by establishing a relationship between key demographic variables and their financial resilience.

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Section: Discussionsupporting

confidence: 91%

Section: Cognitive Abilities and Financial Resiliencesupporting

confidence: 82%

Cognitive abilities and financial resilience: evidence from an emerging market

Mundi

Vashisht

2023

IJBM

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“…The concept of digital financial capability is gaining traction amongst policymakers as a response to the growing importance of digitalisation and the need for informed financial decision-making (Xiao et al. , 2022).…”

Section: Methodsmentioning

confidence: 99%

“…An inevitable overlap in terms of financial literacy and financial capability usage as part of financial inclusion has been observed. In their systematic literature review, Xiao et al. (2022) present the five main kinds of financial capability, which signifies an individual's capacity to apply proper financial knowledge and suitable financial behaviour and grab important financial opportunities for financial well-being.…”

Section: Review Of Earlier Studies and Hypotheses Developmentmentioning

confidence: 99%

Measuring financial resilience with consumer sentiment data from India

Yadav

Shaikh

2023

IJBM

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PurposeCovid-19 sparked new interest in consumer financial resilience (CFR) amongst regulatory authorities, financial institutions, policymakers and the academia. No financial and health crisis has been worse than Covid-19, erasing the growth momentum of nations at all development stages. This study measures consumers' current financial resilience and future expectations within India's emerging market and its likely response to policy measures.Design/methodology/approachCFR is investigated using individual household data on economic state, employment, income and savings from the Reserve Bank of India's consumer confidence survey. The empirical approach is based on the temporal time-series data with mixed frequency regression. Consumers' current and future expectation indices appear as the regressand, whereas credit-deposit ratio, credit outstanding, number of bank accounts and digital transactions act as main regressors.FindingsThe response of consumers' current situation is 3.50 times higher than that of their future expectations. This implies that a rise in the credit-deposit ratio and credit line positively affects CFR. In contrast, a higher number of bank accounts, a proxy for financial inclusion, adversely affect consumer's well-being possibly owing to the government's failure to provide financial support through banking networks. Digital payments (value) positively affect consumers' current situation and future expectations.Practical implicationsThe results of this study inform policy formulation for enhancing financial resilience. Consumer sentiment index acts as a proxy for CFR.Originality/valueFinancial resilience is a concern for policymakers. This study is one of the first studies linking CFR with financial inclusion, credit creation and digital financial capability.

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“…, 2007; Lusardi and Mitchell, 2007; Taylor, 2011; Xiao et al. , 2014; Also see a review by Xiao et al. , 2022).…”

Section: Literature Reviewmentioning

confidence: 99%

Financial capability and informal bankruptcy: comparing student loan holders and non-holders

Yao

Xiao

2022

IJBM

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PurposeThe purpose of this study is to examine the association between financial capability and informal bankruptcy, especially among families in which the respondent and/or spouse borrowed student loans to fund their own education and families that did not have such loans.Design/methodology/approachUS nationally representative data were employed. Three family types were used, families with student loans borrowed to fund respondent and/or spouse's education and education was completed (type 1 holders) or not completed (type 2 holders), and families that did not borrow student loans for respondent and/or spouse's education (non-holders). Informal bankruptcy was measured by being insolvent and late in debt payment for 60 or more days. Financial capability was measured by both an index and its various components. Multivariate logistic regressions were conducted to examine associations between financial capability and informal bankruptcy.FindingsGenerally, financial capability was negatively associated with informal bankruptcy, and student loan holders were more likely to be informally bankrupt than non-holders. However, such negative associations were statistically significant for type 1 holders and non-holders but insignificant for type 2 holders. Two desirable financial behaviors (information search and online banking) reduced the chance of informal bankruptcy for type 2 holders.Research limitations/implicationsFirst, cross-sectional data cannot establish a causal relationship. Second, findings using data from a single country may not be generalized to other countries.Practical implicationsFinancial service professionals should help loan applicants evaluate the necessity of borrowing. Banking professionals can use the findings to develop products to meet different consumer needs. Financial educators should target different groups with different strategies in financial capability education. Policymakers should develop policies helping student loan holders complete education funded by student loans.Originality/valueThis study examines factors related to informal bankruptcy, providing insights to warning signs of bankruptcy. This study explores the potential effect of a new factor, financial capability, on informal bankruptcy, filling in a gap in the bankruptcy literature. This study recognizes differences in informal bankruptcy among various types of families and examines the different effects of financial capabilities on informal bankruptcy for different types of families.

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Financial capability: a systematic conceptual review, extension and synthesis

Cited by 49 publications

References 214 publications

Cognitive abilities and financial resilience: evidence from an emerging market

Cognitive abilities and financial resilience: evidence from an emerging market

Measuring financial resilience with consumer sentiment data from India

Financial capability and informal bankruptcy: comparing student loan holders and non-holders

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