ContentServer (3) - MEASURING FINANCIAL LITERACY A CASE STUDY OF SELFASSESSMENT AMONG UNDERGRADUATE STUDENTS IN HUNGARY Domicin Mt Zsuzsanna Kiss Viktor

ContentServer (3) - MEASURING FINANCIAL LITERACY A CASE...

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690 MEASURING FINANCIAL LITERACY: A CASE STUDY OF SELF- ASSESSMENT AMONG UNDERGRADUATE STUDENTS IN HUNGARY Domicián Máté, Zsuzsanna Kiss, Viktor László Takács, Vivien Molnár University of Debrecen, Faculty of Economics, Debrecen, Hungary [email protected] Abstract: This paper analyses the educational self-assessment of Hungarian undergraduate business economics students, focusing primarily on the concept of financial literacy as students predict and evaluate their own performance in written examinations relative to their externally assessed achievement. The main purpose of this study is to explore whether high-achieving students are more accurate in their self-assessment when predicting and evaluating their financial knowledge. In the pre- and post-examination predictions the higher achieving students actually seem to predict and evaluate their examination results more accurately than their lower-achieving fellows. Although we found no substantial differences in self- estimation by gender, females seemed to less likely to overestimate their financial knowledge after taking exams. Our conclusion also allows policy makers to identify potential needs in relation to specific features of financial literacy and provides evidence about which groups of people are in need of supplementary support, not only in higher education but in other contexts as well. Keywords: self-assessment; overestimation; human capital; higher education; financial literacy JEL classification: E52, G02, G38 1. Introduction From time to time the great economic crises shed light on the negative consequences of making decisions without adequate financial knowledge. Financial literacy is especially critical nowadays for promoting desired financial behaviours, such as reaching a verdict on deliberated decisions which result in prudent saving and budgeting, or on the use of bank loans (IBRD, 2009). The OECD (2005) defines financial literacy as the ability to use knowledge and skills to manage financial resources effectively for a lifetime. Thus, financial education is the process by which people improve their understanding of financial products, services etc. to become more aware of risk and return, so they are empowered to make informed choices, to avoid undesirable consequences, or to recognize where to apply for help, and take other measures to improve their present and long-term financial well-being (PACFL, 2008). Greater financial literacy, together with financial education, can reduce the likelihood that customers at any income level will not purchase products or services that they do not need or that are not in their personal interest. Consequently, financially competent consumers are more likely to save their money, compare financial products and services, and discuss daily financial routines with their family.

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