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Research Article Open access CC BY 4.0

Financial Knowledge and Consumer Saving Behaviors: Evidence from the USA

Fuzhong Chen, Lingyun Meng

South Asian Journal of Social Studies and Economics · pp. 22–34 · Published 11 Aug 2021

10.9734/sajsse/2021/v12i230301

Abstract

With the increase in average life expectancy and the reform of pension and social welfare systems, saving has gradually become a preventive measure against risk and an important means of filling the financial gap. Meanwhile, a large and growing literature has examined the determinants of consumer savings. Using data from 2009, 2012, 2015, and 2018 U.S. National Financial Capability Study, this study aims to examine the association between financial knowledge and consumer saving behaviors through an ordered probit regression approach. In addition, this study conducts a comprehensive robustness test by replacing the estimation method and removing outliers with income. The results indicate that there is a positive relationship between financial knowledge and consumer savings. Therefore, policymakers are recommended to formulate policies to promote financial education to raise consumer savings.

Consumer saving behaviors financial knowledge financial capability ordered probit regression

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