Learning by doing: The role of financial experience in financial literacy

B Frijns, A Gilbert, A Tourani-Rad

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

In this paper, we examine the impact of financial experience on financial literacy. Exploiting a unique feature of New Zealand, whereby domestic students can obtain interest-free student loans and can fully participate in the national retirement scheme while international students cannot, we employ an instrumental variables approach to identify the causal effect of financial experience on financial literacy. We conduct surveys on a sample of 338 business students and find that there is a positive and causal effect of financial experience on financial literacy. Our results have important implications for financial education programmes and may explain why many of these programmes to date have had limited success.
Original languageEnglish
Pages (from-to)123-154
Number of pages32
JournalJournal of Public Policy
Volume34
Issue number1
DOIs
Publication statusPublished - Apr 2014
Externally publishedYes

Keywords

  • A20
  • G00
  • Causality
  • Financial experience
  • Financial literacy
  • Instrumental variable analysis

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