After apply EFA, CFA model, the research found that Financial Literacy is manifested through Financial Knowledge, Financial literacy is manifested through Financial Attitude and Financia
INTRODUCTION
Background
Personal financial literacy plays an increasingly important role in the balance and prosperity of each individual in particular and the stability and development of economy in general Knowledgeable citizens can ensure that the financial sector effectively contributes to economic growth and to the reduction of poverty in emerging economies (Faboyede et Al, 2015)
These several studies suggest that it is necessary to disseminate knowledge to people about financial services, use financial services and contribute to the achievement of the Millennium Development Goals of poverty reduction It should also be noted that the old people areas have difficult access and utilize to financial services, and their attitudes and behaviours are highly ambiguous
Agarwal et al (2009) have shown that financial performance is highest in middle-aged people around the age of 53 when they make less bad financial decisions than older adults The situation is arguably worse in Vietnam For example, two old people trusted to buy 800 million Tan Hoang Minh bonds without finding out information because of lacking financial literacy which make them lose their investment (Son, 2022) The income of old people from the pension is not large, and often there is a subsidy from the family so having financial knowledge, financial behaviour, financial attitude is very important
According to Grohmann et al (2018), financial literacy is one of the important links with a positive impact on financial inclusion Experience from the financial crisis of 2008 showed that the ability to make financial decisions is important for developing personal finance, thereby creating stability
10 for the economy Demirguc-Kunt et al (2015) believe that financial literacy is one of the factors affecting individual income through financial planning, making positive financial decisions, and risk identification It can be seen that financial literacy has a positive impact on poverty reduction through increasing people's income with especially in developing countries or economies in transition (OECD, 2015)
The definition of Financial Literacy has always been challenging for researchers due to the multitude of perspectives offered, each using different terms with varying degrees and meanings depending on the language used to discuss this issue: "financial ability," "financial education,”
“financial understanding," "financial knowledge, “economic understanding," etc Moreover, Financial Literacy itself is a simultaneous combination of knowledge, education, skills, capabilities, responsibilities, and these concepts are often confused
Financial Literacy includes some key aspects such as: financial knowledge (ANZ, 2005; Huston, 2010; Remund, 2010; OECD, 2013); financial operating experience (Orton, 2007; OECD, 2013); ability to communicate about different financial concepts (Remund, 2010); ability to use different financial concepts and financial tools (Hung et al., 2009; Huston, 2010; Remund, 2010); ability to make informed financial decisions (Remund, 2010; OECD, 2013); attitude towards using financial tools (Orton, 2007); belief in financial behaviors performed (Huston, 2010; Remund, 2010; OECD, 2013); actual financial behavior (Orton, 2007; Huston, 2010) For convenience in defining, these aspects can be divided into 5 groups: (1) knowledge about financial concepts and products (financial knowledge); (2) communication skills related to financial concepts (financial communication); (3) Financial ability (the capacity to apply information to reach essential financial decisions); financial behaviour (the actual usage of different financial instruments); and
11 financial confidence (people's faith in their prior financial choices and acts) The first two groups fall under the category of understanding or understanding financial concepts, the next three groups fall under the category of practical use in practice of previous knowledge
These five aspects of the concept of financial literacy need to be measured However, measurement methods are diverse, mainly due to the different definitions of the components of financial literacy in each study, and their interpretation and expression are not yet unified Among the ways to measure financial literacy, the OECD/INFE (2015) has proposed a set of key questions and identified the components of financial literacy including: financial knowledge, financial attitude, financial behavior
This is the foundation for future researchers and practitioners to apply However, these studies mostly overlook economies in East and Southeast Asia (except Japan and Singapore), which have a culture different from Western countries, manifested in (1) being heavily influenced by Confucianism and Buddhism so the relationship of each family member is very strong, and spending behavior (part of financial literacy) depends heavily on the opinions of others; (2) Tend to save more than consume (Mai and Tambyah, 2011) These completely different demographic characteristics have led to the problem (1) of failure to understand the questionnaires of the people in East and Southeast Asia compared to Western countries (OECD, 2015), thus not accurately evaluating financial literacy, and not specifically identifying the influencing factors (2) policy implications related to the development of financial literacy cannot be implemented such as training on saving money in low-income areas because the savings rate of the people here compared to income is very high
This set of questions can be adjusted and translated to suit the reality in many countries, but this also leads to biases in evaluation due to differences in language leading to different understandings
12 by the reader; at the same time, the adjustment process of the questionnaire is influenced by various specific factors such as demographic characteristics, cultural, social, economic features, especially between developing and developed countries, between Western and Eastern countries.
Objectives
This dissertation will aim to clarifying the factors affecting the financial literacy of the elderly in Vietnam, thereby providing policy implications to develop financial literacy for this population
To accomplish the above goal, the thesis will use a unified financial literacy concept and adjust the measurement method to suit the research object Therefore, this will be an additional source of both theory and practice for the research branch on ethnic minorities in Vietnam as well as in the world
Clarifying the factors affecting the financial literacy of the elderly in Vietnam, thereby providing policy implications to develop financial literacy for this population
Find out what influences the financial literacy of elderly individuals in Vietnam, including their financial knowledge, attitudes, and behaviours
Measuring the impact of financial literacy qualifications to the old people
Providing policy implications and recommendations to develop financial literacy for old people in Vietnam
Methodology
In this study, positivism is used to collect, investigate, and analyze data based on facts from measurable observations, taking into account that it is external and objective (Mahjoub et al.,
2018) Positivism was employed in this study to generate hypotheses The survey is the main tool utilized in this study to collect and obtain data In this research, the respondents filled out a Google form that was sent by the researcher to each individual employee As a result, respondents are more likely to participate in the survey because the questionnaire delivers information in a more efficient and timely manner while yet protecting anonymity (Glen, 2019) Deduction is utilized to explain the causal connections between different variables This study employed a deductive strategy to look into other studies' hypotheses In this study, a cross-sectional time horizon is used
Respondents in this research are old people which people who in retirement age in Vietnam According to Article 5 of Decree 135/2020/ND-CP, the retirement age for employees under normal working conditions is people who more than 55 years old The appropriate sample size is approximate 300 The location of the research is in Vietnam territory
Questions in the study are frequently true-false, multiple-choice, or on a five-point Likert scale with a range of 1 to 5 (strongly disagree to strongly agree)
The study combines quantitative methods, modeling survey data on individuals to have information about financial income and income of research subjects The set of indicators to measure financial literacy by quantitative method will be built based on the OECD questionnaire
(2018), and then adjusted to be suitable for Vietnam Specifically, a completer and more detailed questionnaire to measure financial return includes three factors: financial knowledge (perception of interest rates, calculation of common interest rates, definition of inflation, time value of cash flows, risk classification ); financial behaviour (budget management, active savings, debt repayment plan ); financial attitudes (whether you are inclined to save for the future or not)
Chapter 4: Summary, Conclusions and Recommendations
LITERATURE REVIEW
Financial literacy
Given that many academics and financial professionals have long debated on how to define it, financial literacy is actually a fairly complex subject Financial literacy has been a topic of interest and application around the world since the first study on the topic was published in 1992 (Noctor et al., 1992) Although numerous scholars have put out numerous definitions and explanations thus far, the term continues to have a wide range of interpretations based on the particular study Noctor et al (1992) defined financial literacy as the capacity to make informed judgements and efficient decisions on the use and management of money
Financial literacy is the capacity to use information and skills to manage one's financial resources successfully for lifetime financial security, according to Willis (2008) Several other studies, most notably those by Lusardi et al (2017), which define financial literacy as the capacity to comprehend economic information and make financial planning decisions, build wealth, prepare for retirement, and manage debts, support this point of view
According to Holzmann (2010), applying financial knowledge and understanding to real-world situations is what Holzmann refers to as "transforming" financial knowledge and understanding into financial skills, capabilities, attitudes, and behavior in some nations (recent studies use the term "financial well-being") Financial literacy is viewed as a process whereby customers gain a deeper understanding of financial ideas and goods via knowledge, direction, or focused on financial investment guidance, creating abilities and trust to recognize financial hazards and
18 opportunities, to arrive at informed choices, recognize where to go for assistance, and to take other successful steps that enhance financial well-being and safeguard participation Financial literacy is defined by the OECD (2013) as the awareness, knowledge, skills, attitude, and behavior required to make wise financial decisions and eventually acquire personal financial "wealth" This research has helped to refine the notion of financial literacy in recent years Financial literacy is the combination of a person's awareness, attitude, and skills regarding financial affairs, according to Sekar and Gowri (2015)
Hilgert et al (2003) stated that financial literacy like financial knowledge The authors contend that financial practices and financial knowledge are statistically tightly associated, with more knowledgeable people more likely to follow advised financial practices Financial literacy was additionally described by the U.S Financial Industry Regulatory Authority (FINRA) as "the understanding of ordinary investors about the principles, tools, organization, and market regulations." Specifically, Parker et al (2008) found that specific financial knowledge is more effective in predicting the effectiveness of a hypothetical investment plan than general knowledge This group of definitions distinguishes between financial knowledge—considered the main content of financial literacy—and general knowledge Financial comprehension is thus characterized by the National Foundation for Credit Counselling (NFCC) as "familiarity with basic economic principles, knowledge of the U.S economy, and understanding of some key economic terms."
The mix of consciousness, knowledge, attitude, and behavior required to make wise financial decisions and eventually attain personal financial satisfaction is known as financial literacy (OECD, 2015) This definition is complete with the definitions in the four previously mentioned conceptual groupings and focuses on the three components of financial literacy: financial
19 knowledge, financial attitudes, and financial behavior The majority of subsequent research adopt this definition Therefore, this study also uses the OECD's definition, identifying financial literacy as comprising three components: financial knowledge, financial behavior, and financial attitudes
Financial knowledge is the level of comprehension that people have of financial concepts (such as interest rates, bonds, etc.) and how financial institutions (such as banks and credit organizations) function As a result, financial literacy is a requirement for the development of people's financial attitudes and behaviors (OECD, 2013)
Huston (2010) noted that there are two components to financial literacy: "understanding" and
"application," where financial knowledge is the "understanding" and using that knowledge is the
"use." In other words, financial decision-making is influenced by financial knowledge Furthermore, there has been a lot of interest in creating measurements specifically for financial literacy To measure this factor, a number of organizations and researchers have created questionnaires Examples include the JumpStart financial knowledge test, Knoll and Houts (2012), who used Item Response Theory (IRT) to evaluate individual questions and created a comprehensive scale to measure people's financial understanding, and the 2007 American Life Panel (ALP) survey on Well Being, which contained 70 questions about financial knowledge The OECD's 2013 scale is the most widely applied, containing questions at various levels to evaluate financial knowledge comprehensively
Individuals' responses to shifts in the external economy are referred to as their financial behavior
We can determine a person's sensitivity to economic changes by observing how they respond to the economy (OECD, 2013)
Financial behavior can be defined as any human action related to money management Utilizing cash, saving money, and using credit are common financial behaviors This is a crucial aspect and a part of financial literacy, per OECD (2013) Positive and negative financial behaviors can be distinguished by how they affect one's quality of life and level of financial satisfaction (Xiao et al.,
2006) Researchers from all over the world are not only looking for a common definition but are also curious about measurement techniques Financial behaviors can be assessed in a number of ways, first, as a binary variable using Yes/No questions; second, using multiple-choice questions; third, by quantifying the degree to which the behavior is performed; and fourth, by determining the frequency of the behavior It has been discovered that financial behavior influences other human behaviors Sekar and Gowri (2015) To reducing the negative emotional and cognitive experiences related to debt and financial difficulties can be achieved by being willing to change one's financial behaviors (Lisa et al, 2017)
Financial Attitude refers to an individual's perspective on the surrounding financial conditions, such as government views on the economic situation This mindset derives from a person's financial literacy and serves as the foundation for their financial behavior (OECD, 2013)
Researchers have studied and debated the significance of financial attitude for many years Studies that examine the connections between financial attitude and other financial factors are becoming
21 more common The term "financial attitude" has been defined in a variety of ways, including by Herdjiono and Damanik (2016), who state that it "can be seen as the psychological introductions expressed when evaluating suggested financial management practices to a level of agreement or disagreement." Financial attitude is the state of mind, opinions, and perceptions about one's own finances, according to Humaira and Sagoro (2018) Financial attitudes are influenced by both economic and non-economic beliefs about the results of particular behaviors They help people prepare for specific actions According to theory (Ameliawati and Setiyani, 2018), this is true According to numerous studies, one's attitude towards money is the most important factor influencing their financial behavior, and good money management is positively impacted by good money attitudes (Mien and Thao, 2015; Herdjiono and Damanik, 2016; Humaira and Sagoro,
2018) A person's approach to managing money inflows and outflows, investment behavior, or capacity to manage finances in accordance with needs can all be used to assess their financial attitude (Budiono, 2020) According to the OECD (2013), this is also regarded as a crucial aspect of financial literacy
Financial knowledge, financial behavior and financial attitudes are interrelated in terms of financial literacy
Figure 1 The relationship between the internal factors of financial literacy
Financial attitudes are predicted by financial knowledge (Shim et al ,2010) Louw et al (2013) also argued that having a good understanding of finances can lead to better financial attitudes Here, increasing one's financial literacy can change one's financial attitudes Enhancing financial knowledge training constitutes one of the factors influencing financial attitudes and behaviors, according to Potrich et al (2015) Furthermore, according to Norvilitis and MacLean (2010), knowledge affects attitudes, which in turn influence a person's financial behavior Financial attitudes and knowledge work in tandem to explain financial behaviors, support this point of view These findings support the Knowledge-Attitude-Behavior (KAB) theory (Chase, 2005) Although this relationship is widely acknowledged, examining it in greater detail can help economists and consumers accomplish their goals more quickly As a result, there is a link between financial attitude and knowledge
Factors Affecting Financial Literacy
Financial literacy and educational attainment are positively correlated, as shown by Bhushan and Medury (2013): higher educational attainment increases financial literacy, and vice versa The Ph.D holders in the survey had the highest level of financial literacy (66.54%), followed by those with postgraduate degrees (61.43%), according to the findings Those with elementary or basic vocational education have the lowest levels of financial literacy, while those with higher education levels have the highest basic financial literacy indices (Alessie et al., 2008)
Studies conducted in Vietnam have yielded outcomes that are comparable Higher educational attainment is strongly and favourably correlated with financial literacy in Vietnam, according to Morgan and Trinh (2017) The influence of education on financial literacy is in line with previous studies (Christelis et al., 2010; Lusardi et al., 2017)
The results of these studies indicate that education is a positive factor affecting an individual's financial literacy; the higher the educational level, the higher the rate of correctly answering financial questions and vice versa
In terms of income, most global studies conclude that income has a direct impact on financial literacy, meaning higher income results in higher individual financial literacy scores and vice versa Specifically, Mandell and Klein (2009) show that students from families with high income (more than $80,000 per year) have significantly higher financial literacy scores compared to students from lower-income families This direct relationship between financial literacy and income is also found in the research by Lusardi and Tufano (2015) When asked about gross profit, 48% of those with annual incomes higher than $75,000 answered correctly, whereas this figure was only 26% for those with an annual income less than $30,000 Similar results are found for other questions in the study
Regression analysis in the research on financial literacy by Atkinson and Messy (2011) shows that respondents with higher income generally have higher financial literacy scores For example, in Poland, the financial literacy scores of the low-income group are nearly the same, while the scores for the high-income group are about 25% higher (more than 15 points)
Moreover, saving behavior is also used by researchers to indicate the level of understanding of financial literacy Jonubi and Abad (2013) show that income plays a significant role in human saving behavior Positive signs indicate that as income increases, the ability to save also increases These results are also supported by other studies (Hastings and Mitchell, 2020, Potrich et al., 2015, Bhushan and Medury, 2013; Sekar and Gowri, 2015)
The results of most of the studies indicate that income is one of the factors affecting an individual's financial literacy scores Those with higher incomes tend to have higher financial literacy scores and vice versa
Three groups—employed, self-employed, and unemployed—were categorized by Scheresberg
(2013) and Uppal (2016), who discovered differences in their financial literacy scores In order to further elaborate on this, Nanziri and Leibbrandt (2018) found variations in financial literacy scores across various work characteristic groups According to Ansong and Gyensare (2012), the group with formal employment had the highest average financial literacy score (55.73), while the score for the unemployed group was about 25% lower (41.74 points) While students and the unemployed have the lowest scores, those in formal employment, self-employment, and retirement all have higher scores
Previous research of Mandell and Klein, (2009); Lusardi and Mitchell, (2011); Ansong and Gyensare, 2012) have noted low financial literacy scores among students, the unemployed, and those with fewer years of work experience These results in Vietnam are confirmed by Morgan and Trinh (2017)
In conclusion, all the studies show that one of the factors influencing financial literacy is employment status In comparison to groups without employment, groups with employment, particularly those with many years of work experience, typically have higher financial literacy scores
Numerous international studies have specifically examined the effect of age on financial literacy While middle-aged people typically have the highest financial literacy scores, young people typically have lower scores (Alessie et al., 2008) This can be explained by the influence of age on behavior and financial market habits For instance, ownership of stocks is primarily concentrated among people 40 years of age and older, and market share also rises as owners' ages Other international studies have also supported other financial issues that are frequently experienced by younger age groups Sinha (2018) discovered that 22% of the 3,050 participants in the study who were between the ages of 18 and 24 had stable finances These people have better financial planning and management skills, check or savings accounts with well-known banks, and they are less likely to use pricey alternative financial services
According to age groups, Lusardi and Tufano (2015) identified characteristics of financial literacy: Older people frequently make mistakes when calculating fundamental interest rates Lusardi et al
(2014) also noted that only a small percentage of individuals between the ages of 51 and 56 provided accurate responses to questions relating to compound interest In particular, the group under 30 had the highest correct answer rate (43.16%) for this question, while the group over 65 typically answered incorrectly or was unable to determine the answer According to the study's findings, older age groups typically score lower on financial literacy tests This is one of the important findings, and Agarwal et al (2009)'s study also came to similar conclusions Mien and Thao (2015) discovered that, in Vietnam, "Vietnamese adults (over 30 years old) who work and have higher than average income display better financial skills compared to other groups, consistent with results from other Asia-Pacific countries."
It is interesting to note that older people in the study by Lusardi and Mitchell (2017) rate their own financial literacy highly but perform poorly on tests of fundamental financial knowledge (Lusardi and Mitchell, 2015)
Financial literacy is also shown to rise with age by Bhushan and Medury (2013) Respondents over the age of 60 demonstrated the highest level of financial literacy (65.38%), which was followed by respondents in the 51–60 age range (59.66%) The results of the ANOVA test, however, indicated that there is no statistically significant difference in financial understanding based on age Similar to this, Nanziri and Leibbrandt (2018) argued that age is not a statistically significant variable even though the graph of financial literacy scores and age is U-shaped The study additionally revealed that there is little variation in financial literacy scores among different age groups
In summary, the factor of age is one of the factors affecting financial literacy that has been frequently discussed in studies worldwide, although it has not yet been completely agreed upon
METHODOLOGY, RESULTS and DISCUSSION
Methodology
The study is conducted using quantitative methods, modeling the data collected from individuals to obtain information on financial literacy and other demographic data The study aims to develop criteria to measure various aspects of financial literacy
In detail, the research employs quantitative methods to model survey data about individuals to get insights into their financial literacy The measurement index for financial literacy will be built based on the OECD's 2015 questionnaire and will be modified to fit the Vietnamese context Specifically, the comprehensive and detailed questionnaire to measure financial literacy includes three factors: financial knowledge (understanding of interest rates, calculation of compound interest, definition of inflation, time value of money, risk classification, etc.), financial behavior (budget management, proactive savings, debt repayment plans, etc.), and financial attitudes (tendency to save for the future, spending plans, etc.) The questionnaire's structure will follow a 19-point scale, with 5 for financial knowledge, 7 for financial behavior, and 7 for financial attitudes, aiming to yield statistical results and research models
Financial knowledge will use multiple-choice questions and will be scored on a 5-point scale Financial attitudes and behaviors will use a 5-point Likert scale to obtain suitable results for statistical analysis and research modeling
Furthermore, within the scope of this research, the author has conducted in-depth interviews with a supervisor specializing in financial literacy and personal finance to fine-tune the questionnaire
35 to suit the Vietnamese context This also serves to clarify qualitative relationships between variables in the study and provide explanations for the quantitative results obtained in this research
The research process of the study:
Constructing and Processing the Questionnaire
Step 1: Identify relevant concepts, theories, and measurement methods for variables in the model, based on the overview section of previous studies
Step 2: Collect and compile questionnaires related to financial literacy
Step 3: Evaluate the appropriateness of the questionnaire content and adjust it to suit the purpose and target audience of the study in order to finalize the official questionnaire
Step 4: Conduct a preliminary survey with 50 respondents, receive feedback, and continue to adjust the questionnaire accordingly
Step 5: Distribute the questionnaire and collect the official responses within the scope of the research
Through Chapter 2: Literature review, the researcher proposes the following hypotheses:
H1: Financial literacy is manifested through Financial Knowledge (reflective model)
H2: Financial literacy is manifested through Financial Attitude (reflective model)
H3: Financial literacy is manifested through Financial Behavior (reflective model)
H4: Gender has an impact on financial literacy
H5: Age has an impact on financial literacy
H6: Education has an impact on financial literacy
H7: Income has an impact on financial literacy
H8: Work has an impact on financial literacy
H9: Religion has an impact on financial literacy
To ensure that the sample is representative and accounts for non-respondents or incomplete responses, Leedy and Ormrod (2005) argue that a larger sample size is generally better for achieving this Additionally, the more diverse and complex a research issue, the larger the sample size required for high accuracy in the research results Hair et al (2016) suggests that, for analytical methods like Cronbach’s Alpha reliability testing and Exploratory Factor Analysis (EFA), the sample size for the study should be determined using the following formula:
In which: m is the number of observed variables; M is the sample size in the study For the current study, m = 18, so the minimum number of observations required to meet the analysis criteria is: M
At the same time, besides determining the minimum sample size, a larger sample size provides higher accuracy, leading Comrey and Lee (2013) to investigate and come up with the following rules for evaluating sample sizes:
By combining the above rules, in this research, the author has decided to collect responses from at least 300 respondents to ensure that the sample size is good or better
Data is collected by sending out online and offline questionnaires The subjects of this study are elderly people who are living, studying and working in Vietnam The survey period is from 1 st July
2023 to 15 th August 2023 After one month of performing the survey, researcher had collected 420 surveyed questionnaires The final sample size was 409 after filtering and eliminating incorrect questionnaires because of irrational responses
To construct the scale for this research, the author relied on selectively inheriting and adjusting from previous scales used in various global studies, including questions aimed at measuring financial literacy To adapt to the local context in Vietnam, certain adjustments were made to the questions, while still ensuring that the core content remains intact The specific factors and encoded scales are as follows:
Financial Knowledge Scale (Coding K): measures the level of understanding of finance of the respondents This scale includes 4 questions focusing on inflation, interest rate, loan interest rate, simple interest rate The author constructed and adjusted this scale based on the scale from the research of OECD (2015)
Financial Attitude Scale (Coding A): This scale is designed to assess the viewpoints, attitudes, and thoughts of respondents on the financial events and developments that surround them, and how these affect their financial decisions A set of seven observed variables are used to quantify financial attitudes on a 5-point Likert scale, with levels that range from (1) Strongly Disagree to
(5) Strongly Agree The author of this research synthesized, adjusted, and constructed this scale based on studies by the OECD (2015), Potrich et al (2016) It consists of questions that probe individuals' views on matters related to money management, spending management, personal financial planning, and attitudes towards borrowing and repaying debt
If I borrow money, I will happily repay it A1
Controlling monthly income and expenses is very important
I value paying debts in full and on time A3
Financial Attitude (A) I value making a financial plan and sticking to it A4
I consider different options when purchasing in installments
I am happy to discuss my financial situation with people I know well
I am satisfied with my current financial situation A7
Source: OECD (2015), Potrich et al (2016)
Financial Behavior Scale (Coding B): This scale explores individuals' behaviors related to money management and their responsiveness and acumen in the face of economic fluctuations The scale comprises 7 observed variables, constructed by the author based on scales from research by the OECD (2015) and Potrich et al (2016) Additionally, the observed variables are assessed based on a 5-level Likert scale, ranging from (1) Strongly Disagree to (5) Strongly Agree
I am ready to pay any bill without delay B1
I carefully analyse my financial situation before purchasing anything
I have extra money at the end of the month B3
I keep notes and track my spending B4
I have more income than spending B5
I start or maintain an emergency savings fund B6
I am willing to buy bonds and stocks B7
Source: OECD (2015), Potrich et al (2016)
Data from these surveys were subjected to analysis, evaluating the reliability and convergent validity of the scales through the use of data analysis tools in SPSS 25, R studio, SmartPLS software
Cronbach's Alpha Test is a method used to assess the reliability of scales constructed by the researcher A Cronbach's Alpha coefficient ≥ 0.6 indicates that the scale is acceptably reliable and can be used In addition, the value of Cronbach’s Alpha if Item Deleted is another important coefficient when conducting a Cronbach’s Alpha Test, as it shows how the Cronbach's Alpha coefficient would change if a particular item were removed (Hair et al., 2016) If the Cronbach's Alpha if Item Deleted value is higher than the Cronbach's Alpha coefficient, and the total item correlation is less than 0.3, the item under consideration will be removed to increase the scale's reliability (Donald, 2011)
No Cronbach's Alpha Coefficient Value Meaning
1 ±0.01 to ±0.1 Scale is not meaningful
2 ±0.2 to ±0.3 Scale has low significance
3 ±0.4 to ±0.5 Scale has moderate significance
Financial Knowledge scale has Cronbach's Alpha coefficient is 0.881, and all the total variable correlation coefficients are greater than 0.3 The Financial Knowledge scale meets the requirements to proceed with further analysis
Financial Attitude scale has Cronbach's Alpha coefficient is 0.881 but A6 (0.38) and A7(-0.238) is lower than 0.3 The variable A6, A7 should be removed from the scale to increase reliability Result after remove A6, A7:
Results
Figure 4 Descriptive Statistics of the Demographic variables
About gender, the study found that is 32% is Male (1) and 68% is Female (2) of the 409 respondents Female respondents are 2.125 times larger Male
About age, the authors aim to examine only old people who only age above 50 years old There are many ages ranging from 50 to 90 years old Most of them are in age 71 and 90 which 16 people account for 3.9% of the respond The people who age is 54 and 85 is lowest which only 5 respondents
The author found the most education years of respondents is 12 years take part of 28.1% It is because of past war and live condition make them only study until 12 years The longest time they study for is 22 years with 10 respondents while the shortest study time is 0 years with 13 respondents The study condition is bad in the past when they in school age
Most of the respondents has monthly income of 10 million VND which account for 10.3% of 42 respondents It is also the lowest examined income The highest income is 20 million VND and account for the minimum percentage of 1.5% The reason is the old people retired which make their income reduced
About work experience, there are various time of the respondents from 0 to 40 working years People who do not work account for 1.5% of 6 people while person who has most working year of 40 years account for 3.9% Most of respondents has working for 33 years which take part of 6.1%
The religion in Vietnam has none religion account for 64.5% and follow by three popular religions are Buddhism (10%), Catholicism (12.7%), Protestantism (12.7%)
The financial literacy scale has 4 questions, with correct answers scoring 1 point and incorrect answers scoring 0 points In K1, K2, and K3, the mean score is greater than 0.5, indicating that
61 most people answered correctly However, for K4, the mean score is 0.5, suggesting that half of the respondents answered correctly for question K4
In the financial attitude scale, the mean score ranges from 3.16 to 3.19 for questions A1 to A5, indicating that respondents answered correctly more than half for all five questions The difference in the average scores between the questions is small Not many people answered all five questions correctly
In the financial behavior scale, the mean score ranges from approximately 3.03 to 3.14 About half of the respondents tend to answer correctly more than half the time The number of people who answered all five questions correctly or incorrectly is not high
Financial literacy according to the factors reflected
The mean FLS score is slightly higher for females (62.86) than for males (62.10) The standard deviation is slightly higher for females (17.52) compared to males (16.35), suggesting more variability in the FLS scores among females The range of FLS scores is slightly wider for females (26.00 - 92.89) compared to males (25.78 - 88.67) Women are often making daily financial decisions in the household As a result, their financial knowledge and experience tend to accumulate more over time Financial attitudes and behaviors also tend to be more positive
The FLS score seems to vary across age groups The maximum FLS score is 92.89 for the age group 67, and the minimum is as low as 25.78 for the age group 66 FLS scores seem to fluctuate across different age groups, although no clear age-related trend is immediately evident is correct with the Nanziri and Leibbrandt (2018) that there is no impact of age on financial literacy
Overall, the average "FLS" score across all education levels is about 62.61, with a standard deviation of approximately 17.14 The highest FLS score among the educational levels listed is 70.0900 for the people who study 10 years The scores and their variability differ across educational levels There is no impact of education level on financial literacy
The income bracket with the highest mean FLS score is "18000000," with a mean of 71.9064 This group also has a 95% confidence interval ranging from 62.8340 to 80.9789 for the mean, and a standard deviation of 15.71302 The income bracket with the lowest mean FLS score is
"13000000," with a mean of 57.2042 The minimum and maximum FLS scores across all income brackets are 25.78 and 92.89, respectively The FLS scores across different income brackets do not show a clear trend of increasing or decreasing with income, indicating that FLS scores are varied across income levels There is no impact of income on financial literacy
The respondents who have 27 working years has the highest average FLS score of 76.557, while the people who work for 26 years has the lowest average score of 46.4067 Overall, the FLS score across all groups is 62.6145, with a considerable range and variability in scores This dataset offers insights into how FLS scores vary across different categories, with some having higher means and more or less variability than others There is no impact of work on financial literacy
It shows that the group practicing Buddhism has the highest average FLS score of 64.5202 The group following Catholicism has the lowest average score of 59.1927 Those with no religious affiliation have an average score of 62.7717, and the Protestants have an average score of 63.7354 The overall mean FLS score across all religious groups is 62.6145, with scores ranging from 25.78
71 to 92.89 There's considerable variation within each religious group, as indicated by the standard deviations
Levene's test sig is 0.191 > 0.05, there is no difference in variance between genders, the study use the F-test results in the ANOVA table
F-test Sig: 0.639 > 0.05, leading to the acceptance of the null hypothesis (H0) This implies that there is no significant average FLS difference between genders As a result, the study reject hypothesis H4: Gender has an impact on financial literacy
Levene's test sig is 0.950 > 0.05, there is no difference in variance between age, the study uses the F-test results in the ANOVA table
F-test Sig: 0.705 > 0.05, leading to the acceptance of the null hypothesis (H0) This implies that there is no significant average FLS difference between age So, reject hypothesis H5: Age has an impact on financial literacy
Levene's test Sig is 0.600 > 0.05, there is no difference in variance between age, the study uses the F-test results in the ANOVA table
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
About financial knowledge, more than half of old people has able to choose the correct answers There are only few people can get the full score of the financial knowledge Regarding their behavior and financial attitudes, they also have many positive points They understand what a good attitude is and what they need to do in order to manage their personal finances effectively in general
In the research model, the author includes various demographic factors to understand their impact on the dependent variable, which includes gender, age, education, income, work, religion For each of these factors, the author proposes an accompanying hypothesis Through ANOVA testing, three are no hypotheses are accepted Demographic factors not show clear impact on financial literacy Consequently, in the subsequent section, the author needs to pay attention to these differences in order to propose the most optimal solutions for each target group This study also illustrate the feature variable included gender, age, education, income, work, religion through target variable FLS with decision tree Because of small different between two side on decision tree so income, age, work and gender variable have weak impact on FLS
The Chi-square/df value of 0.756 is less than 5, GFI = 1, CFI = 1, TLI = 1.003 is greater than 0.9, and RMSEA coefficient = 0 is less than 0.8, according to the results of the CFA used to assess the model's fit As a result, the model fits the research well The observed variables that represent the factors all have P-value results of 0.000 It is established that the observed variables can accurately represent the factors in the CFA model Therefore, Financial literacy is manifested through
Financial Knowledge, Financial literacy is manifested through Financial Attitude and Financial literacy is manifested through Financial Behavior
H1: Financial literacy is manifested through Financial Knowledge (reflective model)
H2: Financial literacy is manifested through Financial Attitude (reflective model)
H3: Financial literacy is manifested through Financial Behavior (reflective model)
H4: Gender has an impact on financial literacy Rejected (weak significant)
H5: Age has an impact on financial literacy Rejected (weak significant) H6: Education has an impact on financial literacy Rejected
H7: Income has an impact on financial literacy Rejected (weak significant)
H8: Work has an impact on financial literacy Rejected (weak significant) H9: Religion has an impact on financial literacy Rejected
Recommendations
The elderly must first become more knowledgeable about their own finances and take the initiative to interact with banks and financial services more The elderly must be proactive in order to improve their financial literacy, which includes actively approaching and utilizing financial utilities They will acquire crucial foundational knowledge in this field as a result
Financial literacy is essential for everyone; therefore, the elderly should continue to learn about it regardless of their age Age-related cognitive decline makes it even more important for older people to learn financial literacy early on in order to spend money wisely, effectively, and without taking unfavorable risks
The elderly need to improve their financial attitudes and behaviors They must develop spending discipline and take money management seriously Even though research suggests that the majority of the Vietnamese workforce has positive financial attitudes and behaviors, a small minority still lacks a responsible approach to spending and long-term planning For instance, it's quite common to spend money carelessly without taking the actual need into account These old people must possess the capacity to exercise behavioral restraint and consistently budget their money
It's critical to spread awareness about loan repayment Spending patterns will gradually change as a result of good debt repayment awareness Regardless of their income level, employees will learn how to balance their lifestyle appropriately and will be able to set reasonable and effective limits
Banks must put more effort into developing user-friendly services that facilitate transactions for all parties and streamline the control of individual finances Through policies and programmed
92 like housing loans, the purchase of productive means, and consumer loans, they also play a significant part in supporting the elderly
Policymakers should use radio and banner advertising to deliver clear, concise messages by utilizing the power of visual and aural media They should also broaden the use of contemporary communication channels to spread news and information about finance Local communication initiatives can also expose the public to new financial products, improving their financial literacy and influencing their perceptions of these new products
With an observed sample size of 409, it is possible to represent certain aspects, but focusing solely on the elderly does not encompass all the characteristics of the Vietnamese population The study currently only develops a basic impact model, not incorporating intermediary variables or control variables for a comprehensive evaluation
For further study, future research should expand the sample size to be larger and more diverse, aiming for better representation of the overall population This would also allow for a more rigorous and comprehensive evaluation of the factors affecting a broader range of subjects The research should evolve to include intermediary and control variables in the model, with the goal of uncovering additional factors that influence the dependent variable.
Conclusion
After complete this project, the primary and secondary questions were answered Financial literacy has three components: financial knowledge, financial attitude, and financial behavior This can be achieved by using a multidisciplinary approach The thesis has been able to evaluate the impact of factors reflecting on financial literacy Based on the factors affecting financial literacy and the reflective factors, the thesis offers a number of recommendations to promote the financial literacy of elderly people
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FACTORS THAT INFLUENCE FINANCIAL LITERACY OF ELDERLY PEOPLE IN VIETNAM QUESTIONNAIRE
I am Dong Minh Hieu, a student of the UWE master's program in finance and investment from the Banking Academy, currently conducting research on "Factors that influence Financial Literacy of elderly people in Vietnam", The research aims to present empirical evidence from the elderly in Vietnam, thereby helping to make comments and suggestions to solve financial problems for the elderly in Vietnam
To successfully carry out this research, I would like to have your support by answering the questionnaire
The survey collects no identifying information of any respondent All respondents in the survey will be recorded anonymously The information we collected will be coded and remain confidential It will only be shared with the research group and the instructor
By completing and submitting this study, you are demonstrating your assent to take part in the study Your cooperation is appreciated.
Thank you for your cooperation
3 Your year of education is: ………
Please choose one answer that you think is correct for each question below
1 You bought a bicycle last year for 1 million VND If the inflation rate is 5% per year, how much do you expect the same bike to cost this year?
2 Suppose you borrow 100 million from the bank, and after 1 year you have to repay all
110 million So the interest rate that the bank charges you is
3 Suppose you have 100 million VND and deposit it to earn 5% interest per year After 2 years, they went to the bank to withdraw money You will receive an amount of
4 A TV price is 10 million VND Store A: 1.5 million discount Store B: 10% off, Store C: 6% off, Store D: 1 million off Which store do you choose to buy at?
Please express your opinion with the following comments
1 2 3 4 5 first If I borrow money, I will happily repay it
2 Controlling monthly income and expenses is very important
3 I value paying debts in full and on time
4 I value making a financial plan and sticking to it
5 I consider different options when purchasing in installments
6 I am happy to discuss my financial situation with people I know well
7 I am satisfied with my current financial situation
Please express your opinion with the following comments