Predicting Students’ Financial Knowledge from Attitude towards Finance

Attitude towards finance and financial attitude are very different constructs. Despite the popularity of the latter, it has recently been subject to criticism. Following Di Martino & Zan (2010), the former explicitly considers emotions and beliefs (about self and finance) and the mutual relationship between them. At present, there is a paucity of evidence on how ‘attitude toward finance’ may impact financial knowledge: this is a new area of inquiry in academic literature. Research is at a preliminary stage, although the jigsaw of financial literacy is receiving greater attention worldwide. This study measures individual attitudes towards finance and determines the effects of this profile on financial knowledge level. It uses about 500 economics students in Italy as sample respondents. It is based on a structured questionnaire survey as a data collection method. The data is analysed using Structural Equation Modeling. A significant positive correlation is found between financial knowledge and attitude toward finance. The direction of causality is found to be from attitude toward finance to financial knowledge, and this finding suggests that attitude toward finance can play an important role in financial education. Among the various dimensions of attitude toward finance, emotional disposition towards finance, and secondly, the self-confidence level, are the most influential factors on economic students’ financial knowledge level. Gender is also found to be closely correlated to both financial knowledge and attitude toward finance. Findings mainly suggest the importance of attitude toward finance on financial knowledge. For policymakers, the results of this study could indicate new ways of solving the financial illiteracy problem.