Class
Article
Faculty Mentor
Yoon Lee
Presentation Type
Poster Presentation
Abstract
A substantial amount of research indicates that debt is a problem in the United States. Financial knowledge has the potential to help U.S. households understand the impacts of holding high debt loads and the importance of positive debt repayment behavior. Research indicates that although U.S. households are in significant debt, those with financial knowledge were more likely to have healthy financial behaviors such as paying credit card balances in full, taking on the appropriate amount of student loan debt, and making on time mortgage payments (Mitchel & Lusardi, 2015). Using data from the 2018 National Financial Capability Study (NFCS), this study examined how financial knowledge influences debt repayment behaviors, such as on time mortgage payments and paying credit card balances in full each month. The logistic regression results show that objective financial knowledge was positively associated with debt repayment behavior. Specifically, those who answered correctly the knowledge-based questions (e.g., interest, inflation, mortgages, and stock questions) were more likely to make their mortgage payment on time. Similarly, those who answered correctly the bond and compounding interest questions were more likely to pay credit card balances in full each month. The logistic regression results also reveal that subjective financial knowledge was significant for positive credit card debt repayments, suggesting that those with higher levels of perceived financial knowledge were more likely to pay credit card balances in full than those with lower levels of perceived financial knowledge. These findings could provide evidence that financial knowledge can help predict debt repayment behavior and overall financial well-being of U.S. households. Financial practitioners could use the information to bring awareness to protective financial behavior such as making on time debt payments. Financial educators can also use the findings of this study to educate individuals about risky financial behavior and the implication of such behavior. Presentation Time: Wednesday, 11 a.m.-12 p.m. Zoom link: https://usu-edu.zoom.us/j/85282214929?pwd=Yld6WTgvSG01QmFTK3dTSHlDamZtUT09
Location
Logan, UT
Start Date
4-11-2021 12:00 AM
Included in
Financial Knowledge and Debt Repayment Behavior of U.S. Households
Logan, UT
A substantial amount of research indicates that debt is a problem in the United States. Financial knowledge has the potential to help U.S. households understand the impacts of holding high debt loads and the importance of positive debt repayment behavior. Research indicates that although U.S. households are in significant debt, those with financial knowledge were more likely to have healthy financial behaviors such as paying credit card balances in full, taking on the appropriate amount of student loan debt, and making on time mortgage payments (Mitchel & Lusardi, 2015). Using data from the 2018 National Financial Capability Study (NFCS), this study examined how financial knowledge influences debt repayment behaviors, such as on time mortgage payments and paying credit card balances in full each month. The logistic regression results show that objective financial knowledge was positively associated with debt repayment behavior. Specifically, those who answered correctly the knowledge-based questions (e.g., interest, inflation, mortgages, and stock questions) were more likely to make their mortgage payment on time. Similarly, those who answered correctly the bond and compounding interest questions were more likely to pay credit card balances in full each month. The logistic regression results also reveal that subjective financial knowledge was significant for positive credit card debt repayments, suggesting that those with higher levels of perceived financial knowledge were more likely to pay credit card balances in full than those with lower levels of perceived financial knowledge. These findings could provide evidence that financial knowledge can help predict debt repayment behavior and overall financial well-being of U.S. households. Financial practitioners could use the information to bring awareness to protective financial behavior such as making on time debt payments. Financial educators can also use the findings of this study to educate individuals about risky financial behavior and the implication of such behavior. Presentation Time: Wednesday, 11 a.m.-12 p.m. Zoom link: https://usu-edu.zoom.us/j/85282214929?pwd=Yld6WTgvSG01QmFTK3dTSHlDamZtUT09