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Childhood Roots of Financial Literacy

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  • Antonia Grohmann
  • Roy Kouwenberg
  • Lukas Menkhoff

Abstract

Financial literacy predicts informed financial decisions, but what explains financial literacy? We use the concept of financial socialization and aim to represent three major agents of financial socialization: family, school and work. Thus we compile twelve relevant childhood characteristics in a new survey study and examine their relation to financial literacy, while controlling for established socio-demographic characteristics. We find in a mediation analysis that both family and school positively affect the financial literacy of adults. Moreover, financial literacy and school related variables also have a direct effect on financial behavior. This suggests that family factors and schooling work through complementary channels.

Suggested Citation

  • Antonia Grohmann & Roy Kouwenberg & Lukas Menkhoff, 2015. "Childhood Roots of Financial Literacy," Discussion Papers of DIW Berlin 1504, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1504
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    Cited by:

    1. Levy, Daniel & Snir, Avichai, 2017. "Potterian Economics," MPRA Paper 76344, University Library of Munich, Germany.
    2. Kiliyanni, Abdul Latheef & Sivaraman, Sunitha, 2016. "The perception-reality gap in financial literacy: Evidence from the most literate state in India," International Review of Economics Education, Elsevier, vol. 23(C), pages 47-64.
    3. Cumurovic, Aida & Hyll, Walter, 2016. "Financial Literacy and Self-Employment," Annual Conference 2016 (Augsburg): Demographic Change 145732, Verein für Socialpolitik / German Economic Association.
    4. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," World Bank Economic Review, World Bank Group, vol. 31(3), pages 611-630.
    5. repec:eee:wdevel:v:102:y:2018:i:c:p:71-89 is not listed on IDEAS
    6. repec:spr:blkpoe:v:44:y:2017:i:3:d:10.1007_s12114-017-9258-9 is not listed on IDEAS
    7. repec:spr:jbecon:v:87:y:2017:i:5:d:10.1007_s11573-017-0853-9 is not listed on IDEAS
    8. Antonia Grohmann, 2017. "Financial Literacy and Financial Behavior: Evidence from the Emerging Asian Middle Class," Discussion Papers of DIW Berlin 1702, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Financial literacy; financial behavior; family background; education; numeracy;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • I20 - Health, Education, and Welfare - - Education - - - General

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