Academic journal article Journal of Financial Education

Is the Second Time the Charm for Students Repeating Introductory Finance?

Academic journal article Journal of Financial Education

Is the Second Time the Charm for Students Repeating Introductory Finance?

Article excerpt


Similar to other required courses in the undergraduate business program, introductory finance courses have large enrollments and students with diverse backgrounds, motivations, and learning styles. Many students begin the course with little understanding of or interest in finance, and they usually regard this course as one of the most challenging in their program. Consequently, introductory finance tends to have a low class average and a high failure rate, and many students need to retake this course. Although a large body of financial education literature examines various factors related to student performance in introductory finance, this practice of repeating the course has largely been ignored.

The analysis of the relation between prior course experience and subsequent performance in the introductory finance course can offer useful guidelines to different academic constituents, including students, academic advisors, finance instructors, and university administrators. Specifically, this analysis will help students to make more informed decisions about repeating the course. It will assist academic advisors and finance instructors with questions to ask and recommendations to give, when advising students about staying in the course or repeating it. In addition, the understanding of the relation between previous course experience and student performance can help finance instructors to better judge the readiness level of their students, and, as a result, to use a more appropriate level of material coverage. Finally, this analysis can help university administrators to develop effective policies on course repeating.

In this paper, we study the issue of course repeating in two respects. In the first part of our analysis, we focus on the students who completed the course with a failing or passing grade in the past, and compare their performance on the repeat attempt to their performance on the original attempt. In the second part, we compare the performance of students who are repeating to the performance of students who are enrolled in the course for the first time. We also examine how the results vary across the students who are repeating after different previous course experiences (e.g., some originally passed, whereas others failed, dropped or withdrew on their original attempt). All data for our analyses come from official university records, and therefore we avoid any potential problems associated with self-reported data from student surveys.


The performance of students in the introductory finance course has received considerable attention in the financial education literature. Interest in this issue is generated not only by large student enrollments in this course, but also by its recognized difficulty for both students and instructors. Indeed, students regard the introductory finance course not only as challenging (Balachandran and Skully, 2004), but also as more difficult than other courses in their program (Krishnan, Bathala, Bhattacharya, and Ritchey, 1999). Similarly, this course, which attracts a heterogeneous student population with different backgrounds, learning styles, and motivations, imposes considerable pedagogical challenges for finance instructors. As one way to address these challenges, a growing body of financial education literature proposes innovative teaching techniques, such as metaphors (Ardalan, 1998), mind mapping (Biktimirov and Nilson, 2006), learning objects (Biktimirov and Nilson, 2007), and trading games (Diele and Levendis, 2011).

Many studies also examine factors related to student performance in the undergraduate finance course. Most notably, grade point average (GPA) routinely shows up as a positive and the most significant variable in predicting students' performance (e.g., Chan, Shum, and Chhachhi, 2005; Didia and Hasnat, 1998; Wilson, 2003). In contrast, researchers tend to find inconsistent results regarding the relation between student demographic characteristics and grades. …

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