Academic journal article Kuram ve Uygulamada Egitim Bilimleri

Determining Advanced and Basic Financial Literacy Relations and Overconfidence, and Informative Social Media Association of University Students in Turkey

Academic journal article Kuram ve Uygulamada Egitim Bilimleri

Determining Advanced and Basic Financial Literacy Relations and Overconfidence, and Informative Social Media Association of University Students in Turkey

Article excerpt

(ProQuest: ... denotes formulae omitted.)

University students inhabit an important transitional stage of development. After graduation, many take on significantly greater financial independence, including the need to make their own financial decisions. The financial knowledge that most students acquire during the university period affects their lives as acquired financial skills and knowledge likely persist for a lifetime. Individuals build their economic wellbeing, and their skills and sophistication levels shape their financial prosperity or suffering. Financial literacy is a prerequisite for acquiring the skills and sophistication required to make appropriate financial decisions. Financial literacy means having the minimum degree of financial knowledge and information; the use of this knowledge and information has an impact on individuals' macro and micro economic activities and decision-making processes. Literacy is a broad concept, which includes information pertinent to decision making and economic behavior (i.e., consumption, savings, and investments).

Lusardi (2008) classified financial literacy as either basic or advanced. The minimum degree of literacy required for all individuals from any type of background to navigate daily life is called basic level literacy. Basic financial literacy (hereafter BFL) involves issues such as numeracy, compound interest, inflation, time, the value of money, and the money illusion. Advanced financial literacy (hereafter AFL) involves stock markets, stocks, mutual funds, bonds, other types of securities, and the interest rate effect on securities, security prices, and risk-return relationship issues. Both literacy types fit under the term general financial literacy (hereafter GFL). It is logical and reasonable that advanced financial literacy is based on basic financial literacy, but it is not necessary for an individual to have a basic level of literacy in all areas before developing advanced knowledge in others. For instance, it is possible to know the risk diversification without having the knowledge of money illusion. In this paper, we investigate the relationship between basic and advanced literacy that is not determined before to our knowledge.

In the information era, Internet sources and Internet-based social media applications are new sources of information. University students accept the Internet as a source of knowledge and information (Lyons, Scherpf, & Roberts, 2006). According to the Turkish Statistical Institute (TUIK), Information and Communication Technology Usage in Households and by Individuals survey, 77% of young individuals in Turkey used the Internet and 78% used social networks in the last three months of 2015. The Internet offers a huge variety of information via social media and networks, including financial information. During the information acquisition process, individuals are passive but social media pages and accounts on networks allow users to be active in acquiring, commenting on, discussing, and sharing information and materials. This new information environment raises new questions about acquiring financial information via the Internet and social networks. As Lusardi and Mitchell (2014) identified, there is a lack of research on how individuals acquire financial information and knowledge. We shed some light on this issue: information sources and social network activities are documented by their usage, and the impact of resources and social media activities on the development of financial literacy in university students is assessed.

Mere exposure to information might reinforce existing knowledge and influence decision making, but this a dangerous assumption to make. Social media, especially social networks, enable user contributions and comments to reach potentially millions of users, whether the contributions and comments are true or not. Intentionally or unintentionally, the original information might be manipulated over the course of successive comments and discussions. …

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