Jing Jian Xiao

Financial Socialization of First-Year College Students: The Roles of Parents, Work, and Education.

This cross-sectional study tests a conceptual financial socialization process model, specifying four-levels that connect anticipatory socialization during adolescence to young adults’ current financial learning, to their financial attitudes, and to their financial behavior. A total of 2,098 first-year college students (61.9% females) participated in the survey, representing a diverse ethnic group (32.6% minority participation: Hispanic 14.9%, Asian/Asian American 9%, Black 3.4%, Native American 1.8% and other 3.5%). Structural equation modeling indicated that parents, work, and high school financial education during adolescence predicted young adults’ current financial learning, attitude and behavior, with the role played by parents substantially greater than the role played by work experience and high school financial education combined. Data also supported the proposed hierarchical financial socialization four-level model, indicating that early financial socialization is related to financial learning, which in turn is related to financial attitudes and subsequently to financial behavior. The study presents a discussion of how the theories of consumer socialization and planned behavior were combined effectively to depict the financial development of young adults. Several practical implications are also provided for parents, educators and students.

Handbook of Consumer Finance Research

I. Concepts and theories of consumer finance.-Risk tolerance.-Financial well being.-Retirement savings.-Financial education and program evaluation.-Applying behavior theories to financial behavior.-Consumer socialization.-II. Internet and consumer finance.-E-banking.-Online insurance.-Online shopping.-III. Consumer finances of special populations.-Financial knowledge of high school students.-Risky credit card behavior of college students.-Financial issues of Hispanic Americans.-Money matters of African Americans.-Financial issues of Asian Americans.-Financial issues of older adults.-Financial issues of low income families.-Management issues of business owning families.-Gender differences in investment behavior.-IV. Consumer finance in various settings.-Consumer financial issues in healthcare.-Consumer finance and marriage.-Consumer finance and parent-child communication.-Causes and polices of consumer bankruptcy.-Workplace financial education.-Consumer protection in fair lending.-Promoting applied personal finance research

Antecedents and Consequences of Risky Credit Behavior Among College Students: Application and Extension of the Theory of Planned Behavior

The Credit Card Act of 2009 reflects increased public policy concern about the risky credit behaviors of young adults. This act promotes increased responsibility of parents and implies that young adults must acquire financial knowledge and practice responsible financial behaviors. This study addresses this public issue by investigating the psychological processes underlying young adults’ risky credit card behaviors and the role of parents and financial knowledge in the financial behavior of young adults. A conceptual model based on an extension of the theory of planned behavior is proposed. The authors collected data from a sample of first-year students at a major public university. The results show that both parental norm and parental socioeconomic status are important factors that influence students’ risky credit behaviors. Furthermore, subjective financial knowledge does more to prevent risky credit behaviors than objective financial knowledge. Finally, behavioral intention is the most important factor in preventing risky credit behaviors and credit card debt accumulation. The authors draw on their findings to provide public policy implications.

Hierarchical Financial Needs Reflected by Household Financial Asset Shares

This study explores the relationship between family financial needs and household financial asset shares. A conceptual framework based on the needs hierarchy theory, new consumer demand theory, and prospect theory guides the investigation. Results from the bivariate and tobit analyses suggest that family financial needs are hierarchical that are reflected by patterns of financial asset shares. Specifically, checking and savings accounts represent the lowest-level survival needs, and bonds and stocks represent the highest-level growth needs. The rest of the financial assets examined, except for trusts, represent the middle-level security needs.

Applying Behavior Theories to Financial Behavior

This chapter discusses how two behavior theories can be applied to financial behavior research. The theory of planned behavior (TPB) is a motivational theory designed to predict and understand human behavior. The transtheoretical model of behavior change (TTM) is a multi-stage theory designed to guide people toward positive actions stage by stage. This chapter first discusses how to define financial behavior and then reviews the two theories and their applications to financial behavior. Finally, it discusses issues relevant to future research to better understand and predict financial behavior and to assist consumers to develop positive financial behaviors that improve their quality of life.

Financial Education, Financial Knowledge, and Risky Credit Behavior of College Students

The purpose of this study is to examine associations among financial education, financial knowledge, and risky credit behavior of college students. Using data from a sample of first-year college students, we found evidence that taking personal finance courses in high school and college is associated with financial knowledge as well as risky credit behavior. Specifically, both high school and college personal finance courses are associated positively with subjective financial knowledge. Subjective financial knowledge in turn reduces the chance of engaging in risky paying behavior. In addition, objective credit knowledge reduces the likelihood of engaging in both risky paying and borrowing behaviors.

Financial Adaptation Among College Students: Helping Students Cope with Financial Strain

This study examines the impact of the recent financial crisis on co-occurring patterns of change in financial strain and financial coping behaviors of college students (N=748) using two-timed, longitudinal data collected prior to the 2008 financial crisis and again one year later. Using a stress and coping framework, we found that different measures of perceived change in financial strain acted as antecedents of change in types of financial coping behaviors. We discuss the importance of these findings in developing the financial decision-making skills that young adults need in an era of increasing responsibility for their financial future.

Consumer Debt Delinquency by Family Lifecycle Categories

Purpose – The purpose of this paper is to document debt delinquency patterns by family lifecycle categories using multiple data sets that are nationally representative of American families.Design/methodology/approach – Based on previous research, 15 lifecycle categories appropriate for American families are defined by household head’s age, marital status, presence of children, and age of children. Data used are from Surveys of Consumer Finances (SCF) in the USA in 1992-2010. Multiple logistic regressions are conducted to identify probabilities of debt delinquencies of families in various lifecycle categories by controlling for income, financial assets, holdings of several types of debt, and several other demographic and socioeconomic variables.Findings – The results show that among the 15 household lifecycle categories, the top three most likely to be delinquent are young couples with children aged seven or older, middle-aged singles with children aged 15 or older, and middle-aged singles with children under 15. Younger households are more financially distressed than their older counterparts. Presence of children increases the probability of debt delinquency.Research limitations/implications – In this study, multiple national data sets representing American families are used to document debt delinquency patterns by family lifecycle categories. Results shed light on this important topic and offer helpful information for both banking industry practitioners and consumer financial educators.Practical implications – The information produced by this study can help bank managers better identify their potential clients and understand their current customers. Different marketing strategies based on the research findings can be developed to attract and retain customers with different delinquency risks.Originality/value – This is the first study to examine debt delinquencies by family lifecycle categories with multiple SCF data sets in the USA. The 15 family lifecycle categories used are based on recent research that is specially designed for American families. The research findings provide straightforward implications for both bank managers and consumer educators.

Financial Education and Financial Satisfaction: Financial Literacy, Behavior, and Capability as Mediators

Purpose: To investigate the roles of financial literacy, financial behavior, and financial capability as mediating factors between financial education and financial satisfaction.Methodology: The data is from the 2012 National Financial Capability Study, a large national dataset with rich information on financial literacy related variables. Mediation analyses are used to answer research questions. Findings: Financial education may affect financial satisfaction, a measure of subjective financial well-being, through financial literacy, financial behavior, and financial capability variables. Results show that subjective financial literacy, desirable financial behavior and a financial capability index are strong mediators between financial education and financial satisfaction.Research limitations: The study has used cross sectional data that can only document associations between financial education, literacy, and satisfaction. Future research could use relevant longitudinal data to verify multiple benefits of financial education. Practical implications: The findings have implications for financial service professionals to take advantages of multiple benefits of financial education in content acquisition, confidence in knowledge and ability, and action taking when they communicate with their clients.Social implications: Policy makers on consumer financial education may use the information to advocate and promote effective education programs to improve consumer financial well being. Originality/value: This study is the first of this kind to directly examine the association between financial education and financial satisfaction using relevant mediating factors.

Family Economic Well-Being

Family economic well-being refers to a family economic status that has sustainably adequate economic resources to live a comfortable life. This chapter first proposes a conceptual framework to describe family economic well-being. Then it reviews relevant research on objective and subjective measures of family economic well-being such as family income, expenditure, debt, asset, and financial satisfaction. Directions for future research are suggested at the end of the chapter.