engleski

Theoretical underpinnings of consumers’ financial capability research

This paper investigates the multidisciplinary theoretical context of financial capabil- ity and provides a critical examination of 14 relevant theoretical frameworks. To this end, the paper defines financial capability and develops a new theoretical framework of financial capability termed the personal financial management system. Financial capability is defined as the capacity of consumers to undertake comprehensive fi- nancial activities and thereby achieve personal financial well-being. The exploration of financial capability includes the concepts of financial literacy and psychological financial capability, where the latter represents automatic and controlled mental pro- cesses. Recent advances in behavioural science have profoundly changed the realm of personal finances, and it is, therefore, essential to acknowledge the importance of the intuitive reasoning that shapes our financial decision making. As part of the financial management system's throughput, together with individual motivation and oppor- tunity within the personal financial management system, financial capability forms financial behaviour. The framework identifies three groups of relevant antecedents of financial capability including sociodemographic factors, cognitive and affective fac- tors and personality and values. By constructing a comprehensive theoretical model, this paper contributes to the literature by providing greater consistency in the defini- tions of capability and its related terms, encouraging academic discussion and affirm- ing the much- needed directions for future research.

financial behaviour, financial capability, financial literacy, financial well-being, motivation, opportunity, theory synthesis

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