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Financial literacy and financial strategies: The mediating role of financial concerns

Author

Listed:
  • Rui Xue

    (Department of Applied Finance, Macquarie University, Sydney, NSW, Australia)

  • Adrian Gepp
  • Terry J O’Neill
  • Steven Stern
  • Bruce J Vanstone

    (Bond Business School, Bond University, Robina, QLD, Australia)

Abstract

This article analyses how the financial literacy of elderly people affects their decisions on the adoption of various financial strategies. Multiple mediator models with bootstrap techniques are used to identify the mediating mechanisms of financial concerns that transmit the effects of financial literacy onto specific financial strategies. We find (1) financial concerns mediate the majority of financial literacy-strategy nexuses; specifically, financially illiterate people are more likely to have financial concerns and are more likely to cut back on spending, seek job opportunities, increase debts and downsize or sell their residence as a result; (2) financially literate people are more likely to seek professional financial advice, purchase a life annuity, contribute more to superannuation and invest more conservatively, regardless of their concerns. Our findings suggest professional advisors and robo-advisor developers take into account financial concerns when recommending advice. JEL Classification: D14, J14, J26, I31, G11

Suggested Citation

  • Rui Xue & Adrian Gepp & Terry J O’Neill & Steven Stern & Bruce J Vanstone, 2021. "Financial literacy and financial strategies: The mediating role of financial concerns," Australian Journal of Management, Australian School of Business, vol. 46(3), pages 437-465, August.
    • Handle: RePEc:sae:ausman:v:46:y:2021:i:3:p:437-465
    DOI: 10.1177/0312896220940762
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    2. Nicole Maria Namyslo & Dominik Jung & Timo Sturm, 2025. "The state of robo-advisory design: A systematic consolidation of design requirements and recommendations," Electronic Markets, Springer;IIM University of St. Gallen, vol. 35(1), pages 1-29, December.

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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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