Testing a Measurement Model of Financial Capability Among Youth in Ghana

Abstract

Youth may benefit from having enhanced financial knowledge and skills and access to financial services to help them navigate transitions to adulthood, though reliable and valid measures of youth financial capability to help assess financial education and inclusion intervention outcomes are lacking. Using survey responses from 5,451 youth ages 12-18 in Ghana, we used exploratory and confirmatory factor analysis to assess 18 survey items concerning youth financial behavior and understanding and attitudes concerning financial services. A 12-item, group invariant scale (α = .72) with three latent factors was retained in a well-fitting model that may help practitioners assess financial education and inclusion outcomes. We found that six items were poor indicators of youth financial capability, possibly because these items measure other constructs like numeracy, or because these items were not sufficiently assessed for developmental and cultural validity using qualitative methods like cognitive interviewing.

The Relative Impact of Income and Financial Literacy on Financial Inclusion in Nigeria

“…The results show that older people save more often with banks and other formal deposit money institutions than the younger adults. The findings are in support of extant studies which show higher levels of financial exclusion among young adults when compared to the older age groups (Bernheim et al, ; Bruhn et al, ; Despard & Chowa, ; EFInA, ; Johnson & Sherraden, ). For the effect of gender on formal savings, the results show that while the formal savings rate is 14 per cent irrespective of gender, the savings rate is 20 per cent among men and 10 per cent among women.…”

“…They show that financial literacy was strongly related to socio‐demographical characteristics and family sophistication. In a related study, Despard and Chowa () assessed the reliability and validity of a questionnaire used to assess financial capability outcomes among youths in Ghana and found the critical financial capability constructs to include money management, financial services awareness and financial services actions. The earlier studies argue for the emphasis of financial literacy education on youth as, according to Bruhn et al (), the right financial habits formed at an early stage are likely to benefit schooling, employment and standards of living throughout adulthood.…”

Financial literacy and savings decisions by adult financial consumers in Zimbabwe

“…The majority of studies analysing the effects of financial literacy on financial outcomes have been confined to developed countries (Lusardi and Mitchell, 2007;Bucher-Koenen and Lusardi, 2011;van Rooij et al, 2011a,b;Jappelli and Padula, 2013;Landerretche and Martinez, 2013;Gaudecker, 2015). There are however, fewer studies analysing the effects of financial literacy on financial behaviours in developing countries (Cole et al, 2011;Sevim et al, 2012;Despard and Chowa, 2014;Doi et al, 2014;Karlan et al, 2014;Sayinzoga et al, 2016). In particular, little is known on how financial literacy influence savings behaviours of households in developing countries.…”

The Assessment of Financial Literacy: New Evidence from Europe

“…The authors also deemed questions regarding skills and behaviors to be difficult to include in a comprehensive financial literacy measure because they would likely require a large number of questions (necessary to investigate the details of different domains). Additional attempts to apply statistical dimensionality reduction techniques (e.g., factor analysis) include the study of Despard and Chowa (2014) that used data with more than 5000 observations about survey responses from youth ages 12-18 in Ghana to develop a 12 items scale.…”