Articlegreen2012

Financial Knowledge and Child Development Account Policy: A Test of Financial Capability

142 citations0/0 files storedJournal of Consumer Affairs

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Financial Literacy, Pension, Retirement Analysis Decision-Making and Behavioral Economics Financial Literacy and Behavior

Abstract

This study examines how study participants' financial knowledge and participation in a Child Development Account intervention affects 529 College Savings Plan account holding among caregivers of infants. The study uses data from the SEED for Oklahoma Kids (N = 2,651), a statewide randomized experiment using a probability sample of infants selected from birth records. Results of logit regression show that participants' financial knowledge is positively related to account holding in the treatment group but not in the control group. The interactive effects between financial knowledge and treatment status are statistically significant. This finding implies that the effect of financial knowledge on financial decisions related to college savings is moderated by institutional features, such as incentives, information and access. Results of this study support the propositions of financial capability and suggest that expanding financial capability requires both improved individual financial knowledge and supportive policy.

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References

2000Women and Human Development 2007Financial Literacy and Stock Market Participation 2009Measuring Financial Literacy 2008Planning and Financial Literacy: How Do Women Fare?2010Financial Literacy Explicated: The Case for a Clearer Definition in an Increasingly Complex Economy 2010Cognitive Ability and Portfolio Choice 2005Changes in Telephone Survey Nonresponse over the Past Quarter Century 2006Gauging the Impact of Growing Nonresponse on Estimates from a National RDD Telephone Survey

Cited by

2022Financial capability: a systematic conceptual review, extension and synthesis 2022Investigating the Impact of Financial Inclusion Drivers, Financial Literacy and Financial Initiatives in Fostering Sustainable Growth in North India 2016Building Financial Knowledge Is Not Enough: Financial Self-Efficacy as a Mediator in the Financial Capability of Low-Income Families 2019Ability or opportunity to act: What shapes financial well-being?2020Improving financial capability: the mediating role of financial behaviour 2018

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