Academic journal article The Qualitative Report

Applying Online Educational Technology to Foster Financial Literacy: Financial-Institution Leaders' Insights

Academic journal article The Qualitative Report

Applying Online Educational Technology to Foster Financial Literacy: Financial-Institution Leaders' Insights

Article excerpt

Financial literacy is a lifelong skill essential for individuals to support their livings and to maintain national stability (Bernanke, 2012; OECD, 2017a). Americans, however, are facing the problem of financial literacy deficiency as revealed by the economic downturn during the Great Depression. The lack of financial capability of Americans to properly manage financial resources to repay mortgages, or incur debt beyond household saving, has led to the tragic incidents of heartbreaking foreclosures, personal bankruptcies, and other family social issues during the financial crisis (Houle & Light, 2014). It is paramount to strengthen financial literacy education to prevent similar occurrence. Unfortunately, financial education provided by the state public schools has not received adequate attention and the problem of low financial literacy remains. Financial institution leaders can play a critical role in fostering financial literacy given their financial expertise and close contact with consumers in making financial decisions (OECD, 2005; Vitt, 2013). Likewise, as our world marches into the digital era in the 21st century, how online technology can be applied to foster financial literacy education is an area well-worth exploring (OECD, 2017b). The focus of existing research on financial literacy is mostly quantitative through on-ground education using students or household adults as research subjects without viewing the issue from the perspective of the financial institution leaders. This study can add value and shed new light on the application of online technology to foster financial literacy by exploring the perceptions of financial institution leaders through a qualitative approach.

Through a qualitative exploratory inquiry using telephone interviews supplemented by web-site content analysis, this study integrates the three important aspects, namely, financial literacy education, financial-institution leadership, and the application of technology through answering the following research question. What are the perceptions of financial-institution leaders on applying online educational technology to foster financial literacy?

Background of the Problem

Americans are facing the problem of financial literacy deficiency (Bumcrot, Lin, & Lusardi, 2013; Lusardi & Mitchell, 2014). Financial literacy is defined as "the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing" (President's Advisory Council on Financial Literacy, 2009, p. 4). Findings from a nationwide survey conducted by Jump$tart Coalition for Personal Financial Literacy (2008) revealed that American students achieved very low financial literacy scores. The result from the FINRA Investor Education Foundation (2016) continued to show that Americans' financial literacy level remained low. The number of foreclosures was high with the financial crisis (Houle & Light, 2014). Personal bankruptcy filings rose to 1.5 million in 2010, the highest since 2005 (Kehiaian & Williams, 2012). During the past decade from 2008 to 2018, household debt in the United States increased notably while saving rates stayed low. Household debt reached a high of $13.51 trillion at end-September 2018 (Federal Reserve Bank of New York, 2018). In contrast, the personal saving rate of Americans fell to a low of 2.4% in 2017 (Bureau of Economic Analysis, 2018).

Significance of the Problem Supported by Literature Review

The low level of financial literacy among Americans is not a recent development (Anthes, 2004). Anthes (2004) noted the low financial literacy problem more than a decade ago and called for financial leaders to promote financial literacy education. Despite government regulators, financial professionals, and consumer advocates agreed about the importance of financial literacy education (Pearson, 2008), a lack of agreement existed about how financial education could be delivered effectively to influence financial behavior (Schuchardt et al. …

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