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Financial literacy, financial advice, and financial behavior

Oscar A. Stolper () and Andreas Walter ()
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Oscar A. Stolper: Philipps-Universität Marburg
Andreas Walter: Justus-Liebig-Universität Gießen

Journal of Business Economics, 2017, vol. 87, issue 5, 581-643

Abstract: Abstract In this survey, we review the voluminous body of literature on the measurement and the determinants of financial literacy. Wherever possible, we supplement existing findings with recent descriptive evidence of German households’ financial literacy levels based on the novel Panel on Household Finances dataset, a large-scale survey administered by the Deutsche Bundesbank and representative of the financial situation of households in Germany. Prior research not only documents generally low levels of financial literacy but also finds large heterogeneity in financial literacy across the population, suggesting that economically vulnerable groups are placed at further disadvantage by their lack of financial knowledge. In addition, we assess the literature evaluating financial education as a means to improve financial literacy and financial behavior. Our survey suggests that the evidence with respect to the effectiveness of the programs is rather disappointing. We also review the role of individuals’ financial literacy for the use of professional financial advice and assess whether expert intervention can serve as a substitute to financial literacy. We conclude by discussing several directions for future research.

Keywords: Financial literacy; Financial education; Household finance; Financial advice; Financial behavior (search for similar items in EconPapers)
JEL-codes: A20 D14 G11 I20 J26 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:spr:jbecon:v:87:y:2017:i:5:d:10.1007_s11573-017-0853-9