Explaining Financial Management Behavior for Koreans Living in the United States
Grable, John E., Park, Joo-Yung, Joo, So-Hyun, The Journal of Consumer Affairs
Using a cross-cultural conceptualization with a targeted sample of Americans and Koreans, it was noted that Koreans exhibited more responsible financial management behavior than Americans after controlling for locus of control, financial knowledge, and income interactions. Overall, financial knowledge was positively related to responsible financial behavior. No direct effects on financial management behavior were noted for locus of control or household income. Locus of control was found to mediate the effect of financial knowledge on financial behavior for Koreans. Being Korean did moderate between financial knowledge and financial behavior.
Cross-cultural explorations of human behavior have been studied since the 19th century. Segall et al. (1990), in their introductory text on cross-cultural psychology, justified culturally based research by stating the following: "Given the complexities of human life and the importance of culture as a behavioral determinant, it obviously behooves psychologists to test the cross-cultural generality of their principles before considering them established" (37). According to Weber and Hsee (1999), "considerable benefits can be derived from a fresh advocacy for comparative cross-cultural investigations of individual and group differences in perceptions, values, attitudes, and behaviors" (612). This is particularly true in relation to the roles locus of control, financial knowledge, and socioeconomic status play in shaping and explaining financial management behavior. The continued shifting of global commerce and finance away from Europe and the United States toward East Asia is just one reason cross-cultural research in the personal finance area is needed. Understanding saving, investment, and debt decision differences across cultures can help explain wealth disparities around the globe. Furthermore, it is important for those who make financial decisions to use a reliable base of knowledge. The decision-making process can be strengthened by better understanding cultural similarities and differences among those who engage in financial management behavior. If it turns out that individuals from Asia act differently than those in the United States, in part based on cultural differences, this information can be used to better understand the context of decision making. Moreover, if cultural differences are found to be one of the factors that affect financial management behavior, and if it is assumed that behavior ultimately influences financial well-being, cultural studies can be used to help establish the initial steps toward enhancing financial well-being among various constituencies.
Perry and Morris (2005) examined consumers' willingness to save, budget, and control spending using a dual psychosocial and cultural conceptual perspective. They noted that financial management behavior tends to be associated with a person's perceived control over spending outcomes. Perry and Morris found that a person's locus of control has an important role to play in shaping financial management behavior, with those exhibiting an internal locus of control being more financially responsible. They also established that a person's level of financial knowledge and financial resources play a role in shaping financial management behavior. Locus of control was found to mediate the relationship between knowledge and resources, suggesting "individuals may not take full advantage of their knowledge or financial resources unless they feel that they control their own destiny" (310). While their findings, in and of themselves, were interesting, what made their study noteworthy was the inclusion of cultural background as a potential moderating factor related to the way people manage their financial management behavior. Perry and Morris asserted that the way in which people manage their financial management behavior may vary depending on culturally contextual issues. They concluded …
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Publication information: Article title: Explaining Financial Management Behavior for Koreans Living in the United States. Contributors: Grable, John E. - Author, Park, Joo-Yung - Author, Joo, So-Hyun - Author. Journal title: The Journal of Consumer Affairs. Volume: 43. Issue: 1 Publication date: Spring 2009. Page number: 80+. © 2009 American Council on Consumer Interests. COPYRIGHT 2009 Gale Group.
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