Causal effects of financial education intervention on financial knowledge and financial self-efficacy

Based on a randomized controlled experiment among final-year undergraduate students, I provide an assessment of treatment effects of financial education intervention focused on debt-financed graduate education decision-making. Specifically, I find in this study positive treatment effects on both objective financial knowledge and subjective financial knowledge and self-confidence in financial decision-making. In addition, I carry out a causal mediation analysis to investigate the extent to which objective financial knowledge plays a mediating role in the effect of the financial education treatment on the intervention outcome (perceived financial self-efficacy). The mediation proportion, the proportion of treatment effect on outcome explained by the intermediate variable of financial knowledge, is around 0.21 (21%), which is important. Thus, policies that aim to improve financial capabilities among college students through financial education programs should be aware that financial literacy is a significant antecedent of (a prerequisite for) financial self-efficacy.

Salas-Velasco, M. (2022). Causal Effects of Financial Education Intervention Aimed at University Students on Financial Knowledge and Financial Self-Efficacy. Journal of Risk and Financial Management, 15(7), 284.

https://doi.org/10.3390/jrfm15070284