Immigrants, Financial Knowledge, and Financial Behavior

Abstract

This research seeks to identify gaps in financial knowledge and behaviors between immigrants to Canada and individuals who are born in Canada. The research aims to evaluate to what extent immigrants involve themselves in financial planning and avoid harmful financial behaviors. Employing the Canadian Financial Capability Survey (2009), the findings of the study suggest that immigrants are less likely to show high levels of financial knowledge compared to born citizens. The knowledge gap between immigrants and born citizens narrows as an individual resides longer in Canada. In addition, immigrants are less likely to prepare themselves financially for their retirement or to have longterm investments. The findings provide a basis for addressing the implications of weak financial knowledge.

Financial capability of people with low income: Results from the Canadian financial diaries

“…O'Connor (2019) extended the connection from financial capability to racial and ethnic identity, when they noted that “minorities typically exhibit lower levels of financial knowledge than other population segments” (p. 391). Rostamkalaei and Riding (2020) found that newcomers to Canada, often having lower‐than‐average incomes, have lower levels of financial capability as compared with other Canadian residents, but that the gap diminishes over time. This noteworthy study raises two important issues.…”

Latent Cumulative Disadvantage: US Immigrants’ Reversed Economic Assimilation in Later Life

“…Third and relatedly, structural inequalities and immigrants' lack of certainty about the future can lead to a disadvantage in annuity income. Immigrants have systematically less knowledge about the U.S. retirement system and lower financial literacy than the native-born (Rostamkalaei and Riding 2020), which makes personal financing a challenging task. Many experience uncertainty about whether they will stay in the U.S. for the long term, especially when host country immigration policies are changeable and difficult to navigate (Ayón and Becerra 2013;Rincón 2017).…”

Financial capabilities and financial behavior of overseas Filipino workers in South Korea

“…Having sufficient financial literacy and sound financial attitudes are prerequisites for migrant workers to achieve their goals through sound financial behavior (Rostamkalaei and Riding, 2020; World Bank, 2015). Studies have shown that identifying the purpose of a remittance as a target for financial action can lead to positive behavioral changes.…”

“…Limited access to formal financial services could decrease financial self-efficacy (Rostamkalaei and Riding, 2020) and hinder optimal financial behavior (Birkenmaier and Fu, 2019). Multiple factors could discourage migrant workers from accessing formal financial services (Atkinson and Messy, 2013).…”

“…The financial literacy of immigrants tends to be lower than that of the natives because of language barriers and inequality of access to education in addition to the differences in financial systems between the home and host countries (Barcellos et al, 2016; Karunarathne and Gibson, 2014; Nam et al, 2015; Rostamkalaei and Riding, 2020). Using data from the Program for International Student Assessment (PISA) across 18 countries, Gramatki (2017) found an existing gap in financial literacy scores between native and immigrant students, especially those belonging to the first generations.…”