Financial knowledge, financial confidence and learning capacity on financial behavior: a Canadian study

Abstract

This study examines the relationships between financial knowledge, confidence, learning capacity, education and other sociodemographic information and financial behavior. A structural equation model is used to analyze the relationships between the study variables and to obtain a more comprehensive understanding of the factors linked to poor financial behavior among a large Canadian sample. The main findings showed that financial confidence plays a crucial role in explaining financial behavior and that learning capacity explains financial confidence. Overall, our results suggest that financial education should be considerably improved and that additional focus should be placed on financial confidence and individual’s learning capacity in order to mitigate existing financial difficulties, prevent new problems from arising, and develop and implement constructive strategies to achieve specific financial goals. This study contributes to previous research on financial literacy by demonstrating the influence of learning capacity on financial confidence and financial behavior.