The Impact of Financial Education and Socioeconomic Status on the Undergraduate Students' Financial Literacy

Khusaini Khusaini; Bambang Mardisentosa; Asep Ferry Bastian; Ruhiyat Taufik; Windi Widiawati

doi:10.24856/mem.v27i01.2385

The Impact of Financial Education and Socioeconomic Status on the Undergraduate Students' Financial Literacy

Khusaini Khusaini, Bambang Mardisentosa, Asep Ferry Bastian, Ruhiyat Taufik, Windi Widiawati

Abstract

Financial literacy is a crucial variable for researchers and policymakers because financial literacy's contribution encourages inhabitants to organize future financial planning and decision improvement. The study aims to empirically investigate the determinants of financial literacy such as financial education, parents' socioeconomic status, and gender. The authors used a cross-sectional survey approach with N = 325 samples. The result of measuring students' financial literacy showed a moderate condition (moderate level). The multiple linear regression models showed that parents' socioeconomic status significantly improved students' financial literacy. Meanwhile, financial education and gender did not prove significant in influencing students' financial literacy. The empirical study generated that encouraging parents is one of the essential policy elements in improving students' financial literacy. The higher students' socioeconomic status tends to encourage better financial planning and decision because they comprehend the literacy skills.

Keywords

financial education; financial literacy; gender; socioeconomic status

Full Text:

PDF

References

Almenberg, J., & Säve-Söderbergh, J. (2012). Financial Literacy and Retirement Planning in Sweden. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1809736

Ansong, A., & Gyensare, M. A. (2012). Determinants of University Working-Students’ Financial Literacy at the University of Cape Coast, Ghana. International Journal of Business and Management, 7(9). https://doi.org/10.5539/ijbm.v7n9p126

Askar, M. W., Quattara, B., & Zhang, Y.-F. (2020). Financial Literacy and Poverty Reduction: the Case of Indonesia (No. 1097; ADBI Working Paper Series). https://www.adb.org/publications/financial-literacy-poverty-reduction-case- indonesia

Atkinson, A., & Messy, F.-A. (2012). Measuring Financial Literacy: Results of the OECD/ International Network on Financial Education (INFE) Pilot Study. Oecd, 15, 1–73. https://doi.org/https://doi.org/10.1787/bb2cd70c-en

Basrowi, & Siti, J. (2010). Analisis kondisi sosial ekonomi dan tingkat pendidikan masyarakat Desa Srigading, Kecamatan Labuhan Maringgai, Kabupaten Lampung Timur. Jurnal Ekonomi & Pendidikan, 7(1), 58–81.

Becchetti, L., Caiazza, S., & Coviello, D. (2013). Financial education and investment attitudes in high schools: Evidence from a randomized experiment. Applied Financial Economics, 23(10), 817–836. https://doi.org/10.1080/09603107.2013.767977

Blasch, J., Boogen, N., Daminato, C., & Filippini, M. (2018). Empower the Consumer ! Energy-related Financial Literacy and its Socioeconomic Determinants (18/289; Economics Working Paper Series). https://cer.ethz.ch/content/dam/ethz/special-interest/mtec/cer-eth/cer-eth-dam/documents/working-papers/WP-18-289.pdf

Brugiavini, A., Cavapozzi, D., Padula, M., & Pettinicchi, Y. (2020). On the effect of financial education on financial literacy: Evidence from a sample of college students. Journal of Pension Economics and Finance, 19(3), 344–352. https://doi.org/10.1017/S1474747218000276

Bumcrot, C., Lin, J., & Lusardi, A. (2013). The Geography of Financial Misconduct. Numeracy, 6(2), 1–16. https://doi.org/http://dx.doi.org/10.5038/1936-4660.6.2.2 Authors

Carpena, F., & Zia, B. (2020). The causal mechanism of financial education: Evidence from mediation analysis. Journal of Economic Behavior and Organization, 177, 143–184. https://doi.org/10.1016/j.jebo.2020.05.001

Chen, H. &, & P. Volpe, R. (1998). An Analysis of Personal Financial Literacy Among College Students. Financial Services Review, 7(2), 107–128. https://doi.org/1057-0810

Chen, H., & Volpe, R. (2002). Gender Differences in Personal Financial Literacy Among College Students. In Financial Services Review (Vol. 11, Issue 3, p. 289).

Cole, S., Sampson, T., & Zia, B. (2009). Financial Literacy, Financial Decisions, and the Demand for Financial Services: Evidence from India and Indonesia. https://www.researchgate.net/publication/228420285_Financial_Literacy_Financial_Decisions_and_the_Demand_for_Financial_Services_Evidence_from_India_and_Indonesia

Compen, B., De Witte, K., & Schelfhout, W. (2019). The role of teacher professional development in financial literacy education: A systematic literature review. Educational Research Review, 26, 16–31. https://doi.org/10.1016/j.edurev.2018.12.001

Cordero, J. M., Gil-Izquierdo, M., & Pedraja-Chaparro, F. (2019). Financial education and student financial literacy: A cross-country analysis using PISA 2012 data. Social Science Journal. https://doi.org/10.1016/j.soscij.2019.07.011

Egesta, E., Rahayu, C. W. E., & Rahmawati, C. H. T. (2021). Factors Affecting Student’s Financial Literacy (A Study on the Students of the Faculty of Economics and The Faculty of Science and Technology of Sanata Dharma University Yogyakarta). Media Ekonomi Dan Manajemen, 36(1), 27–38. https://doi.org/http://dx.doi.org/10.24856/mem.v36i1.1577

Frisancho, V. (2020). The impact of financial education for youth. Economics of Education Review, 78(October 2018), 101918. https://doi.org/10.1016/j.econedurev.2019.101918

Garcia, R., & Tessada, J. (2013). The Effect of Education on Financial Market Participation: Evidence from Chile (Working Paper Series Finance UC).

Garg, N., & Singh, S. (2018). Financial literacy among youth. International Journal of Social Economics, 45(1), 173–186. https://doi.org/10.1108/IJSE-11-2016-0303

Gerardi, K., Götte, L., Meier, S., Goette, L., & Meier, S. (2010). Evidence from a Survey Matched to Administrative Data (No. 10; Working Paper Series). http://www.frbatlanta.org/pubs/wp/working_paper_2010-10.cfm

Gerrans, P., & Heaney, R. (2019). The impact of undergraduate personal finance education on individual financial literacy, attitudes, and intentions. Accounting and Finance, 59(1), 177–217. https://doi.org/10.1111/acfi.12247

Ghozali, I. (2016). Aplikasi Analisis Multivariat dengan Prgram IBM SPSS 23 (P. P. Harto (ed.); Ketujuh). Universitas Diponegoro.

Grohmann, A., & Menkhoff, L. A. (2015). School, parents, and financial literacy shape future financial behavior. DIW Economic Bulletin, 5(30/31), 407–412. http://hdl.handle.net/10419/113233%0A

Hair Jr, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2014). Multivariate Data Analysis (Seventh). Pearson Education Ltd.

Hanson, T. A., & Olson, P. M. (2018). Financial literacy and family communication patterns. Journal of Behavioral and Experimental Finance, 19, 64–71. https://doi.org/10.1016/j.jbef.2018.05.001

Herd, P., Holden, K., & Su, Y. T. (2012). The Links between Early-Life Cognition and Schooling and Late-Life Financial Knowledge. Journal of Consumer Affairs, 46(3), 411–435. https://doi.org/https://doi.org/10.1111/j.1745-6606.2012.01235.x

Homan, H. S. (2015). Comparative Study of Students Financial Literacy And Its Demographic Factors. First International Conference on Economics and Banking, 106–111. https://doi.org/10.2991/iceb-15.2015.16

Indrawati, E. S., Soedharto, J., & Semarang, S. T. (2015). Status Sosial Ekonomi Dan Intensitas Komunikasi Keluarga Pada Ibu Rumah Tangga Di Panggung Kidul Semarang Utara. Jurnal Psikologi Undip, 14(1), 52–57.

Irman, M. (2018). Analisis Faktor-Faktor Yang Mempengaruhi Financial Literacy di Kalangan Mahasiswa Universitas Muhammadiyah Riau (UMRI) Pekan Baru. Journal of Economic, Business and Accounting (COSTING), 1(2), 180–197. https://doi.org/https://doi.org/10.31539/costing.v1i2.205

Irman, M., & Fadrul. (2018). Analisis Pengaruh Jenis Kelamin, IPK, dan Pengalaman Kerja terhadap Financial Literacy. Journal of Economic, Business and Accounting (COSTING), 2(1), 41–56. https://doi.org/https://doi.org/10.31539/costing.v2i1.345

Jariwala, H. V. (2015). Analysis of Financial Literacy Level of Retail Individual Investors of Gujarat State and Its Effect on Investment Decision. Journal of Business and Finance Librarianship, 20(September 2014), 133–158. https://doi.org/10.1080/08963568.2015.977727

Jayaraman, J. D., & Jambunathan, S. (2018). Financial literacy among high school students: Evidence from India. Citizenship, Social and Economics Education, 17(3), 168–187. https://doi.org/10.1177/2047173418809712

Kadoya, Y., & Khan, M. S. R. (2020). What determines financial literacy in Japan. Journal of Pension Economics and Finance, 19(3), 353–371. https://doi.org/10.1017/S1474747218000379

Kaiser, T., & Menkhoff, L. (2020). Financial education in schools: A meta-analysis of experimental studies. Economics of Education Review, 78(September), 101930. https://doi.org/10.1016/j.econedurev.2019.101930

Khusaini, Mutiah, & Ramdani, C. R. (2021). Vocational and senior high school differences in financial literacy. 3rd International Conference on Environmental Geography and Geography Education, 1–14. https://doi.org/10.1088/1755-1315/747/1/012018

Kothari, C. R. (2004). Research Methodology: Methods and Techniques (Second). New Age International (P) Ltd. www.newagepublishers.com

Kozup, J., & Hogarth, J. M. (2008). Financial Literacy, Public Policy, and Consumers’ Self-Protection—More Questions, Fewer Answers. Journal of Consumer Affairs, 42(2), 127–136. https://doi.org/https://doi.org/10.1111/j.1745-6606.2008.00101.x

Lantara, I. W. N., & Ni Ketut Rai Kartini. (2015). Financial Literacy Among University Students : Empirical Evidence From Indonesia. Journal of Indonesian Economy and Business, 30(3), 247–256. https://doi.org/https://doi.org/10.22146/jieb.10314

Liu, J., Peng, P., & Luo, L. (2020). The Relation Between Family Socioeconomic Status and Academic Achievement in China: A Meta-analysis. Educational Psychology Review, 32, 49–76. https://doi.org/https://doi.org/10.1007/s10648-019-09494-0

Lührmann, M., Serra-Garcia, M., & Winter, J. (2015). Teaching teenagers in finance: Does it work? Journal of Banking and Finance, 54(November), 160–174. https://doi.org/10.1016/j.jbankfin.2014.11.009

Lusardi, A. (2003). Saving and the Effectiveness of Financial Education. In O. S. Mitchell & S. P. Utkus (Eds.), Pension Design and Structure: New Lessons from Behavioral Finance (Eds, pp. 157–184). Oxford University Press. https://repository.upenn.edu/prc_papers/430

Lusardi, A. (2019). Financial literacy and the need for financial education: evidence and implications. Swiss Journal of Economics and Statistics, 155(1), 1–8. https://doi.org/10.1186/s41937-019-0027-5

Lusardi, A., & Mitchell, O. S. (2011a). Financial Literacy And Retirement Planning In The United States. In National Bureau Of Economic Research (No. 17108; NBER Working Paper). https://www.nber.org/papers/w17108

Lusardi, A., & Mitchell, O. S. (2011b). Financial Literacy Around the World: An Overview. Journal of Pension Economics and Finance, 10(4), 497–508. https://doi.org/10.1017/S1474747211000448

Lusardi, A., & Mitchell, O. S. (2013). The Economic Importance of Financial Literacy: Theory and Evidence. In NBER Working Paper Series (No. 18952; Working Paper). http://www.nber.org/papers/w18952

Lusardi, A., & Mitchell, O. S. (2014). The Economic Importance of Financial Literacy: Theory and Evidence. Journal of Economic Literature, 52(1), 5–44. https://doi.org/10.1257/jel.52.1.5

Lusardi, A., Mitchell, O. S., & Curto, V. (2009). Financial Literacy Among the Young: Evidence and Implications for Consumer Policy. In PRC Working Paper (No. 2009–09; PRC WP). http://ssrn.com/abstract=1459141

Mandell, L. (2008). Financial Literacy of High School Students. In J. J. Xiao (Ed.), Handbook of Consumer Finance Research (Eds, pp. 163–183). Springer. https://doi.org/10.1007/978-0-387-75734-6_10

Margaretha, F., & Pambudhi, R. A. (2015). Tingkat Literasi Keuangan Pada Mahasiswa S-1. Jurnal Manajemen Dan Kewirausahaan, 17(1), 76–85. https://doi.org/10.9744/jmk.17.1.76

Melmusi, Z. (2017). Faktor Faktor Yang Mempengaruhi Literasi Finansial Mahasiswa Fakultas Ekonomi (Studi Kasus di Universitas Putra Indonesia “YPTK” Padang). Majalah Ilmiah, 24(2), 221–229.

Mimura, Y., Koonce, J., Plunkett, S. W., & Pleskus, L. V. O.-26. (2015). Financial Information Source, Knowledge, and Practices of College Students from Diverse Backgrounds. Journal of Financial Counseling and Planning, 26(1), 63–78. https://doi.org/10.1891/1052-3073.26.1.63

Mishra, M. K. (2019). Financial Literacy and Education for Improving Financial Skills. SSRN Electronic Journal, 1–21. https://doi.org/10.2139/ssrn.3488670

Munisah, & Khusaini. (2017). Pengaruh Gender, Status Bekerja, dan Status Perkawinan terhadap Prestasi Akademik. Jurnal Ilmiah KREATIF, 5(1), 76–98.

Mustapha., M., & Jeyaram, S. (2015). Financial literacy and demographic factors. In Journal of Technology Management and Business (Vol. 2, Issue 1).

Nababan, D., & Sadalia, I. (2012). Analisis personal financial liteacy dan financial behavior mahasiswa strata I fakultas ekonomi Universitas Sumatera Utara. Media Informasi Manajemen, 1, 1–16.

Nanda, A. K., & Samanta, S. (2018). Mainstreaming tribals through financial literacy – a review of literature. International Journal of Social Economics, 45(2), 437–444. https://doi.org/10.1108/IJSE-12-2016-0371

Organisation for Co-operation and Development. (2013). PISA 2012: Financial Literacy Framework. http://www.oecd.org/finance/financial-education/PISA2012FrameworkLiteracy.pdf

Organisation for Economic Co-operation and Development. (2020). PISA 2018 Results (Volume IV): Are Students Smart About Money? Vol. IV (M. Achiron (ed.)). OECD Publishing. https://doi.org/10.1787/48ebd1ba-en

Oseifuah, E., Gyekye, A., & Formadi, P. (2018). Financial literacy among undergraduate students: Empirical evidence from Ghana. Academy of Accounting and Financial Studies Journal, 22(6), 1–17.

Otoritas Jasa Keuangan. (2019). Siaran Pers Survei OJK 2019: Indeks Literasi Dan Inklusi Keuangan Meningkat (p. 1). Otoritas Jasa Keuangan. https://www.ojk.go.id/id/berita-dan-kegiatan/siaran-pers/Pages/Siaran-Pers-Survei-OJK-2019-Indeks-Literasi-Dan-Inklusi-Keuangan-Meningkat.aspx

Özdemir, O. (2019). Rethinking the financial Kuznets curve in the framework of income inequality: Empirical evidence on advanced and developing economies. Economics and Business Letters, 8(4), 176–190. https://doi.org/10.17811/ebl.8.4.2019.176-190

Qomariyah, S. N., Harti, & Hariyati. (2019). Social Interaction, Socio-Economic Status, and Basic Economic Knowledge of Students’ Economic Behavior. Jurnal Pendidikan Ekonomi Dan Bisnis (JPEB), 7(2), 101–111. https://doi.org/10.21009/jpeb.007.2.1

Radityas, M. D., & Pustikaningsih, A. (2019). Analysis of the Factors That Influence Students’ Level of Financial Literacy. Jurnal Pendidikan Akuntansi Indonesia, 17(1), 42–56. https://doi.org/10.21831/jpai.v17i1.26336

Rafinda, A., & Gal, T. (2020). Financial Literacy of Economics and Non-Economics Students. International Review of Management and Marketing, 10(3), 35–38. https://doi.org/10.32479/irmm.8974

Riitsalu, L., Murakas, R., & Veeret, D. (2018). Disentangling financial literacy: Threedimensional approach to analysing management of personal finances in Estonia. Journal of Social Research and Policy, 9(1), 29–40.

Rita, M. R., & Pesudo, B. C. A. (2014). Apakah Mahasiswa Sudah Melek Keuangan? Dinamika Akuntansi, Keuangan Dan Perbankan, 3(1), 58–65.

Salas-Velasco, M., Moreno-Herrero, D., & Sánchez-Campillo, J. (2020). Teaching financial education in schools and students’ financial literacy: A cross-country analysis with PISA data. International Journal of Finance and Economics, June 2018. https://doi.org/10.1002/ijfe.2005

Sarpong-Danquah, B., Gyimah, P., Poku, K., & Osei-Poku, B. (2018). Financial Literacy Assessment on Tertiary Students in Sub-Saharan Africa: A Ghanaian Perspective. International Journal of Accounting and Financial Reporting, 8(2), 76. https://doi.org/10.5296/ijafr.v8i2.12928

Senda, D. A., Rahayu, C. W. E., & Tri Rahmawati, C. H. (2020). The Effect of Financial Literacy Level and Demographic Factors on Investment Decision. Media Ekonomi Dan Manajemen, 35(1), 100. https://doi.org/10.24856/mem.v35i1.1246

Seotsanyana, M. E. (2019). Assessment of university students’ level of financial literacy: the voices of the National University of Development Studies education students. Africa Review, 11(1), 63–76. https://doi.org/10.1080/09744053.2018.1538680

Setiawan, B. (2020). Descriptive Analysis of Financial Literacy: Evidence from Public and Private University Students in Indonesia. Sriwijaya International Journal of Dynamic Economics and Business, 4(1), 73. https://doi.org/10.29259/sijdeb.v4i1.73-86

Setyorini, N., Indiworo, R. H. E., & Sutrisno. (2021). The Role Financial Literacy and Financial Planning to Increase Financial Resilience: Household Behaviour as Mediating Variable. Media Ekonomi Dan Manajemen, 36(2), 243–255. https://doi.org/10.24856/mem.v36i2.2179

Shaari, N. A., Hasan, N. A., Mohamed, R. K. M. H., & Sabri, M. A. J. M. (2013). Financial Literacy: A Study Among The University Students. Interdisciplinary Journal Of Contemporary Research in Business, 5(2), 279–299.

Silta, H. P., & Miharti, I. (2020). Factors Affecting The Level Of Financial Literation In College Student. Jambura Science of Management, 2(1), 15–23. https://doi.org/10.37479/jsm.v2i1.4435

Son, J., & Park, J. (2019). Effects of financial education on sound personal finance in Korea: Conceptualization of mediation effects of financial literacy across income classes. International Journal of Consumer Studies, 43(1), 77–86. https://doi.org/10.1111/ijcs.12486

Soseco, T., Wulandari, D., Hadi Utomo, S., & Narmaditya, B. S. (2018). House Ownership Circumstances in Rural Area: Evidence from Indonesia. Jurnal Pendidikan Ekonomi Dan Bisnis (JPEB), 6(2), 93–102. https://doi.org/10.21009/jpeb.006.2.2

Suherman, A., Wardani, Kartika Puspa, E., & Khusaini. (2020). Analisis Literasi Keuangan Mahasiswa di FKIP UNIS Tangerang. Jurnal Pendidikan Ekonomi, 13(1), 18–29. https://doi.org/https://dx.doi.org/10.17977/UM014v13i12020p018

Susanti, & Hardini, H. T. (2018). Gender, academic achievement, and ownership of ATM as predictors of accounting students’ financial literacy. IOP Conference Series: Materials Science and Engineering PAPER, 296, 1–7. https://doi.org/10.1088/1757-899X/296/1/012031

Thompson, S. (2014). Financing the future: Australian students’ results in the PISA 2012 Financial Literacy assessment. Australian Council for Educational Research. https://research.acer.edu.au/cgi/viewcontent.cgi?article=1016&context=ozpisa

U.S. Financial Literacy and Education Commission. (2019). Best practices for financial literacy and education at institutions of higher education: https://arc.accesslex.org/fe-delivery/18/

Van Campenhout, G. (2015). Revaluing the Role of Parents as Financial Socialization Agents in Youth Financial Literacy Programs. Journal of Consumer Affairs, 49(1), 186–222. https://doi.org/https://doi.org/10.1111/joca.12064

Wagner, J., & Walstad, W. B. (2019). The Effects of Financial Education on Short-Term and Long-Term Financial Behaviors. Journal of Consumer Affairs, 53(1), 234–259. https://doi.org/10.1111/joca.12210

Wijayanti, Agustin, G., & Rahmawati, F. (2016). Pengaruh jenis kelamin, IPK, dan semester terhadap literasi keuangan mahasiswa prodi S1 Ekonomi Pembangunan Universitas Negeri Malang. Jurnal Pendidikan Ekonomi, 09(1), 87–96. https://doi.org/: https://dx.doi.org/10.17977/UM014v09i12016p088

Xu, L., & Zia, B. (2012). Financial Literacy around the World: An Overview of the Evidence with Practical Suggestions for the Way Forward (No. 6107; Policy Research Working Paper). http://hdl.handle.net/10986/9322

Xue, R., Gepp, A., O’Neill, T. J., Stern, S., & Vanstone, B. J. (2019). Financial literacy amongst elderly Australians. Accounting and Finance, 59(S1), 887–918. https://doi.org/10.1111/acfi.12362

Yuxiao, W., & Chao, H. (2017). School Socioeconomic Segregation and Educational Expectations of Students in China’s Junior High Schools. Social Sciences in China, 38(3), 112–126. https://doi.org/10.1080/02529203.2017.1339449

Zhao, N., Valcke, M., Desoete, A., & Verhaeghe, J. P. (2012). The quadratic relationship between socioeconomic status and learning performance in China by multilevel analysis: Implications for policies to foster education equity. International Journal of Educational Development, 32(3), 412–422. https://doi.org/10.1016/j.ijedudev.2011.08.004

DOI: http://dx.doi.org/10.24856/mem.v27i01.2385