on increasing the level of financial knowledge as a mean of
improving (or completely changing) financial behavior of
the average consumer.
There is insubstantial empirical research on the relationship between financial knowledge and financial behavior,
which is imperative to know in order to evaluate whether the
present policies are appropriately addressing the right concerns. Furthermore, the empirical research on the relationship between financial knowledge and individual financial
behavior is unclear. The evidence implies that the relationship between knowledge and behavior is much more complicated than it might seem at first, and that improved
knowledge may not be automatically transformed into better
financial behavior (Braunstein & Welch, 2002).
In theory, increased financial knowledge should result in
more effective decision-making, and improved financial
behavior (Liebermann & Flint-Goor, 1996). However, many
studies failed to provide evidence of the direct link between
financial knowledge and financial behavior. Several studies
provided evidence of the significant relationship between the
mentioned variables. However, the results vary in the means
used to measure both knowledge and behavior. Findings of
Bergheim et al. indicate that respondents that are more
knowledgeable will exhibit better financial behavior (Bernheim & Garrett, 1996). Furthermore, Chen and Volpe (1998)
and some other authors (Barbić, Lučić, & Chen, 2018;
Barbić, 2017; Boyce & Danes, 1998; Brown & Graf (2013);
Hilgert, Hogarth, & Beverly, 2003; Mandell & Schmid
Klein, 2007) in their studies came to the same conclusion.
Grohmann (2017) explored the relationship between financial literacy and financial behavior in emerging Asian
countries and showed that respondents with higher financial
literacy exhibit better financial behavior and are more likely
to use the wide range of financial services that are offered to
them. The results presented by Borden et al. suggest otherwise. In their research, they did not manage to find any
evidence of the significant relationship between financial
knowledge and financial behavior (Borden, Lee, Seido, &
Collins, 2008). They argue that increased financial knowledge may improve individuals’ intentions; however, many of
them will not turn their plans into actions, i.e., behavior.
Findings of Mandell (1997, 2004, 2008) suggest the same.
2.2 Self-efficacy and Financial Behavior
Aside from financial knowledge, a number of factors may
facilitate or impede the performance of a behavior. Onkivisist and Shaw (1997), Hira and Mugenda (1999) argue that
the way people perceive themselves and the world around
them greatly determines their financial behavior.
Psychological factors such as self-efficacy, locus of
control, behavioral control, optimism, and many others may
have significant influence on the outcome of financial
behavior (Perry & Morris, 2005). Hira and Mugenda (1999)
indicated that financial behaviors are driven by sociopsychological needs as well as practical and financial ones.
Some of these factors, including knowledge and skills, are
internal to the individual while others, such as task demands
or actions of another person, are external (Ajzen, 1985).
Self-efficacy beliefs reflect internal factors (Armitage &
Conner, 1999). It refers to “people’s beliefs about their
capabilities to exercise control over their own level of
functioning and over events that affect their lives” (Bandura,
1991). Self-efficacy is focused on the ability to perform a
particular behavior. It might be defined as “the conviction
that one can successfully execute the behavior required to
produce certain outcomes” or as “beliefs in one’s capabilities
to organize and execute the courses of action required to
produce given levels of attainments” (Bandura, 1998). The
main attribute of self-efficacy is the control over the behavior
itself (Ajzen, 2002). According to Bandura, the attempt to
perform particular tasks, or meet certain objectives depends
on whether the individual believes he will be successful in
performing these actions (Bandura, 1986). The stronger the
perceived self-efficacy, the more he or she will employ effort
and persevere at a task (Fiske & Taylor, 1991). Barbić et al.
(2018) found that financial attitudes, financial literacy, and
behavioral control play an important role in explaining
responsible financial consumption behavior (RFCB), where
all three variables were significantly and positively related to
RFCB. Attitude turned out to be the most significant factor,
followed by behavioral control and finally by financial
literacy.
3 Data and Methods
3.1 Survey Design
The research was conducted using a questionnaire that was
administered during financial literacy workshops in seven
Croatian cities in the period from October to December
2017. The research was accomplished using the quantitative
research method by means of a survey questionnaire on the
sample of different age groups.
The measurements of all constructs are based on previous
studies. Table 1 shows items that were used to define
financial knowledge, self-efficacy, and financial behavior.
The financial knowledge scale is based on Lusardi and
Mitchell (2011). Individuals’ self-efficacy was assessed
using three items developed by Nysveen, Pedersen, and
Thorbjørnsen (2005). Using three five-point Likert-type
statements, the scale measures one’s subjective degree of
control over performance of a particular behavior, which is
defined as self-efficacy. The reliability indicator for
The Impact of Financial Education and Self-Efficacy …
249
improving (or completely changing) financial behavior of
the average consumer.
There is insubstantial empirical research on the relationship between financial knowledge and financial behavior,
which is imperative to know in order to evaluate whether the
present policies are appropriately addressing the right concerns. Furthermore, the empirical research on the relationship between financial knowledge and individual financial
behavior is unclear. The evidence implies that the relationship between knowledge and behavior is much more complicated than it might seem at first, and that improved
knowledge may not be automatically transformed into better
financial behavior (Braunstein & Welch, 2002).
In theory, increased financial knowledge should result in
more effective decision-making, and improved financial
behavior (Liebermann & Flint-Goor, 1996). However, many
studies failed to provide evidence of the direct link between
financial knowledge and financial behavior. Several studies
provided evidence of the significant relationship between the
mentioned variables. However, the results vary in the means
used to measure both knowledge and behavior. Findings of
Bergheim et al. indicate that respondents that are more
knowledgeable will exhibit better financial behavior (Bernheim & Garrett, 1996). Furthermore, Chen and Volpe (1998)
and some other authors (Barbić, Lučić, & Chen, 2018;
Barbić, 2017; Boyce & Danes, 1998; Brown & Graf (2013);
Hilgert, Hogarth, & Beverly, 2003; Mandell & Schmid
Klein, 2007) in their studies came to the same conclusion.
Grohmann (2017) explored the relationship between financial literacy and financial behavior in emerging Asian
countries and showed that respondents with higher financial
literacy exhibit better financial behavior and are more likely
to use the wide range of financial services that are offered to
them. The results presented by Borden et al. suggest otherwise. In their research, they did not manage to find any
evidence of the significant relationship between financial
knowledge and financial behavior (Borden, Lee, Seido, &
Collins, 2008). They argue that increased financial knowledge may improve individuals’ intentions; however, many of
them will not turn their plans into actions, i.e., behavior.
Findings of Mandell (1997, 2004, 2008) suggest the same.
2.2 Self-efficacy and Financial Behavior
Aside from financial knowledge, a number of factors may
facilitate or impede the performance of a behavior. Onkivisist and Shaw (1997), Hira and Mugenda (1999) argue that
the way people perceive themselves and the world around
them greatly determines their financial behavior.
Psychological factors such as self-efficacy, locus of
control, behavioral control, optimism, and many others may
have significant influence on the outcome of financial
behavior (Perry & Morris, 2005). Hira and Mugenda (1999)
indicated that financial behaviors are driven by sociopsychological needs as well as practical and financial ones.
Some of these factors, including knowledge and skills, are
internal to the individual while others, such as task demands
or actions of another person, are external (Ajzen, 1985).
Self-efficacy beliefs reflect internal factors (Armitage &
Conner, 1999). It refers to “people’s beliefs about their
capabilities to exercise control over their own level of
functioning and over events that affect their lives” (Bandura,
1991). Self-efficacy is focused on the ability to perform a
particular behavior. It might be defined as “the conviction
that one can successfully execute the behavior required to
produce certain outcomes” or as “beliefs in one’s capabilities
to organize and execute the courses of action required to
produce given levels of attainments” (Bandura, 1998). The
main attribute of self-efficacy is the control over the behavior
itself (Ajzen, 2002). According to Bandura, the attempt to
perform particular tasks, or meet certain objectives depends
on whether the individual believes he will be successful in
performing these actions (Bandura, 1986). The stronger the
perceived self-efficacy, the more he or she will employ effort
and persevere at a task (Fiske & Taylor, 1991). Barbić et al.
(2018) found that financial attitudes, financial literacy, and
behavioral control play an important role in explaining
responsible financial consumption behavior (RFCB), where
all three variables were significantly and positively related to
RFCB. Attitude turned out to be the most significant factor,
followed by behavioral control and finally by financial
literacy.
3 Data and Methods
3.1 Survey Design
The research was conducted using a questionnaire that was
administered during financial literacy workshops in seven
Croatian cities in the period from October to December
2017. The research was accomplished using the quantitative
research method by means of a survey questionnaire on the
sample of different age groups.
The measurements of all constructs are based on previous
studies. Table 1 shows items that were used to define
financial knowledge, self-efficacy, and financial behavior.
The financial knowledge scale is based on Lusardi and
Mitchell (2011). Individuals’ self-efficacy was assessed
using three items developed by Nysveen, Pedersen, and
Thorbjørnsen (2005). Using three five-point Likert-type
statements, the scale measures one’s subjective degree of
control over performance of a particular behavior, which is
defined as self-efficacy. The reliability indicator for
The Impact of Financial Education and Self-Efficacy …
249