The authors assessed the determinants of the overall financial literacy indicator of higher education students in Portugal and the relationship between the financial literacy indicator and the indicators of resilience and financial well-being. Based on a non-parametric quantitative analysis, the authors used a sample of 469 higher education students. They observed that students present globally more satisfactory indicators compared to the Portuguese population and are influenced by demographic factors such as age, gender, level of education, and income. The results are far from reasonable, especially in the dimension related to knowledge. As also statistically confirmed, there exists a positive and significant relationship between the financial literacy indicator and the indicators of resilience and financial well-being. Therefore, this study adopts a novel approach that intends to link these indicators with higher education students, as there is still a lack of research that addresses the concept of digital financial literacy within this context.
TopIntroduction
As with the 2008 financial crisis and the 2010 recession, the pandemic caused by the SARS-CoV-2 virus also led to a worsening of economic conditions worldwide. These successive and recurring economic restrictions bring to the fore the need for and importance of making appropriate, informed, and conscious financial decisions. This relevance is even greater when we consider the ease with which the digital world provides financial products and services.
Portugal has very low levels of financial literacy. Portugal was the second-least financially literate nation in the European Union in 2023, according to a poll conducted by the European Commission (2023). Additionally, the Organisation for Economic Cooperation and Development (OECD) found that Portugal's inhabitants' level of financial literacy barely improved between 2020 and 2023 in its most recent study, which was released in 2023 (OECD, 2023). In this study, the Portuguese were able to correctly answer 63% of the questions asked about financial knowledge, attitudes and behaviours, increasing just one percentage point compared to the 2020 study (OECD, 2020; 2023). Despite this small improvement, Portugal has above average results in financial attitudes and behaviour, but remains below average in terms of financial knowledge (OECD, 2023).
A low level of financial literacy remains a significant concern in Portugal, as evidenced by various studies and indicators (Banco de Portugal et al., 2021; Mesquita et al., 2021; OECD, 2020; 2023). Even with initiatives to increase financial literacy, a lot of people still find it difficult to comprehend basic financial concepts, manage their money effectively, and make informed decisions about investing, saving, and paying off debt. This lack of financial literacy jeopardises not just the financial security of the individual but also the stability and expansion of the economy as a whole. Furthermore, given the critical transitional stage that students in higher education experience, which is marked by an increase in financial obligations and decision-making, it is imperative that financial literacy be addressed among this population. These students are especially vulnerable since they frequently lack the information and skills needed to deal with the challenges of personal finance. Improving higher education students' financial literacy is vital because it gives them the information and resources they need to make prudent financial choices, form healthy financial habits at a young age, and eventually promote long-term financial well-being. University students' financial literacy levels can be studied and addressed by policymakers, educators, and stakeholders to equip the upcoming generation with the financial skills necessary to succeed in an increasingly complex financial environment. Decision-making will influence not only the present, but also the future, so it is crucial to recognize the relevance of financial literacy in university students as an essential factor for the future macroeconomic stability.
In this sense, the main purpose of this study is to calculate the overall indicator of financial literacy of higher education students in Portugal by determining the indicators of attitude, behaviour, and financial knowledge. Additionally, we intend to analyse their determinants, as well as assess the relationship between the financial literacy indicator and the indicators of resilience and financial well-being. This research is unique because it aims to simultaneously determine these three indicators in higher education students, assuming the importance of these agents as decision makers for the future of the Portuguese economy. The reasoning behind selecting these indicators is that the characteristics of attitude, behaviour and knowledge form the foundation of the most widely accepted definition of financial literacy. According to the same perspective, the OECD (2013) defines financial literacy as the set of information and abilities that empowers a person to make confident and successful financial decisions, hence promoting the growth of both individual and societal financial well-being.
This chapter encompasses 5 chapters. Chapter 1 introduces and motivates the topic. Chapter 2 presents the literature review and defines the study hypotheses. Chapter 3 describes the methodology and sample. The results and discussion are presented below (chapter 4) and the conclusions are described in the last chapter (chapter 5).