The effect of self-confidence on financial literacy

The effect of self-confidence on financial literacy

Abstract

This study analyses whether self-confidence affects financial abilities of young people in Spain, through financial literacy.

We use data from the Programme for International Student Assessment (PISA) Financial Literacy (2012) report, conducted by the OECD. Our hypothesis is that non-cognitive factors are important to establish young people’s financial literacy. Financial knowledge, together with other personal attitudes, determines people’s financial behaviour. We focus on the role of self-confidence in four dimensions. First, the student’s self-confidence in the environment of their college; second, self-confidence referring to the utility found at school; third, self-confidence in relation to the results obtained; and finally, self-confidence in a broader sense. Our multi-level estimates show that students with higher levels of self-confidence score higher in financial literacy tests, whatever the dimension considered. Beyond the individual’s inherent characteristics, there are other factors such as maturity, gender, socio-economic characteristics and the surroundings, which also influence financial literacy.

Key aspects

How individuals and families conduct their financial dealings is an essential component of economic well-being.

The results show that individuals with higher levels of self-confidence score higher in financial literacy tests.

There are other factors such as maturity, gender, socio-economic characteristics and the surroundings, which also influence financial literacy.

Full content of the publication

Tags

Financial behavior Financial capability Financial education Financial literacy Financial literacy Habilidades financieras Self confidence

Authors

Alfonso Arellano

Senior Economist of the Digital Regulation and Trends Unit at BBVA Research

Noelia Cámara

Senior Economist in the Financial Inclusion team at BBVA Research

David Tuesta

Former Minister of Finance of Peru.

Additional Information

Date published

01/10/2014

Document Type

Working Paper

Geographies

Global, Spain

Target

Público en general

Pages

27

JEL Code

I00, D83, C81

Source

BBVA Research
Logo BBVA Research

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