Testing the effects of financial literacy on debt behavior of financial consumers using multivariate analysis methods

Abstract

The aim of this paper is threefold. First, to detect and categorize Croatian financial consumers' financial literacy and analyze whether the different levels of financial literacy is statistically significant in terms of socio-demographic characteristics. The second objective is determining whether a respondent's debt behavior differs based on their financial literacy. Further, the paper aims to examine sources of different debt behavior in relation to financial literacy. Cluster analysis is used to categorize financial literacy and determine whether a respondent's financial literacy differs due to gender and level of disposable income. Here, the nonparametric chi-square test is applied. The effects of financial literacy on debt behavior are investigated using a rank-based nonparametric test, specifically the Kruskal Wallis H test. Finally, the paper will examine the source of differences in debt behavior based on different levels of financial literacy, and a post hoc analysis using Dunnett's C test will be conducted. The results suggest that respondents exhibit different debt behavior due to different levels of financial literacy. In addition, the level of disposable household income per household member was found to be statistically insignificant with respect to different levels of financial literacy, while such levels were found to be statistically significantly different when compared to a respondent's gender.

The influence of religious belief and psychological factors on borrowing behaviour among Malaysian public sector employees

“…The findings are in line with prior studies (Lusardi and Tufano, 2009; Lusardi et al. , 2010; Gathergood, 2012; Bahovec et al. , 2015; Sevim et al.…”

“…On the other hand, empirical evidence suggests that there is a negative relationship between financial literacy and debt-taking propensity (Artavanis and Karra, 2020; Kurowski, 2021) where people with low financial literacy are more likely to have debt problems (Lusardi and Tufano, 2009; Lusardi et al. , 2010; Gathergood, 2012; Bahovec et al. , 2015; Sevim et al.…”

Influence of risk propensity, behavioural biases and demographic factors on equity investors' risk perception

“…This test ascertains the difference in average factor scores across demographic categories, it identifies whether the observations have been drawn from identical populations. It can be gathered from existing literature that this is yet another extensively used method of establishing that the factors extracted differ across specific demographic traits in studies dealing with risk perception/behavioural finance (Das, 2016; Bahovec, 2015; Gultekin and Gultekin, 1983). Kruskal–Wallis H Test is the non-parametric equivalent of the one-way ANOVA test.…”

Pengaruh Emosi, Materialisme, Literasi Keuangan, Persepsi Risiko Dan Pengalaman Keuangan Terhadap Propensity to Indebtedness (Studi Pada Nasabah Kredit Plus Kendari)

“…Lusardi dan Tufano (2015) menjelaskan literasi hutang merupakan kemampuan mengukur pengetahuan tentang konsep dasar yang terkait dengan hutang. Bahovec (2015) berpendapat bahwa semakin tinggi pemahaman keuangan yang dimiliki seseorang, maka semakin rendah tingkat hutang yang dimiliki, sedangkan semakin rendah pemahaman keuangan maka semakin tinggi tingkat hutang yang dimiliki.…”