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Financial literacy, behavioral traits, and ePayment adoption and usage in Japan

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  • Trinh Quang Long

    (FPT University HCM Campus)

  • Peter J. Morgan

    (Asian Development Bank Institute)

  • Naoyuki Yoshino

    (Keio University)

Abstract

This study investigates how financial literacy and behavioral traits affect the adoption of electronic payment (ePayment) services in Japan. We construct a financial literacy index using a representative sample of 25,000 individuals from the Bank of Japan’s 2019 Financial Literacy Survey. We then analyze the relationship between this index and the extensive and intensive usage of two types of payment services: electronic money (e-money) and mobile payment apps. Using an instrumental variable approach, we find that higher financial literacy is positively associated with a higher likelihood of adopting ePayment services. The empirical results suggest that individuals with higher financial literacy use payment services more frequently. We also find that risk-averse people are less likely to adopt and use ePayment services, whereas people with herd behavior tend to adopt and use ePayment services more. Our empirical results also suggest that the effects of financial literacy on the adoption and use of ePayment differ among people with different behavioral traits.

Suggested Citation

  • Trinh Quang Long & Peter J. Morgan & Naoyuki Yoshino, 2023. "Financial literacy, behavioral traits, and ePayment adoption and usage in Japan," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-30, December.
    • Handle: RePEc:spr:fininn:v:9:y:2023:i:1:d:10.1186_s40854-023-00504-3
    DOI: 10.1186/s40854-023-00504-3
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    More about this item

    Keywords

    Financial literacy; Financial literacy heterogeneity; Herd behavior; Risk aversion; ePayment adoption; ePayment usage; Electronic money; Mobile payment app; Japan;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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