Nexus between Financial Education, Literacy, and Financial Behavior: Insights from Vietnamese Young Generations

Abstract

This study examines the relationship between financial education, financial literacy, and financial behavior among young Vietnamese adults. Based on survey data from over 1000 participants, this study measures financial literacy through objective and subjective knowledge and financial ability. Financial behavior is assessed in terms of short-term behaviors (emergency funds, spending, overdraft, and budgeting) and long-term behaviors (retirement planning, having a retirement account, investment, and setting financial goals). Logistic and ordered logistic regression models are employed to analyze the data. The findings indicate a significant difference in financial behavior between individuals who have received financial education and those who have not. This study also reveals that financial literacy has a negative impact on short-term financial behaviors but a positive effect on long-term financial behaviors. This novel finding highlights the importance of considering different time horizons when examining the interplay between financial literacy and behaviors. The insights from this study hold implications for policymakers, educators, and financial institutions in developing countries like Vietnam, as they can inform the design of effective financial education programs. Ultimately, this research contributes to enhancing the financial well-being of young adults and supporting the country’s overall economic growth.