Financial Self-Efficacy and the Financial Satisfaction of Credit-Card Users
29 Pages Posted: 25 Sep 2017
Date Written: September 22, 2017
This study tests whether an individual’s sense of financial self-efficacy mitigates the effects of credit-card mismanagement on users’ financial satisfaction. We first replicate the results of a previous study of credit-card usage and risk tolerance and find that credit-card mismanagement is associated with lower financial satisfaction for only borrowers with low risk tolerance. We then use data from the Health and Retirement Study and find that credit-card mismanagement reduces the financial satisfaction of borrowers with lower financial self-efficacy only. These results also demonstrate the usefulness of FSE as a predictor of borrower behavior, and reinforce the theoretic connection between FSE and individual risk preferences.
Keywords: credit, credit cards, financial satisfaction, Health and Retirement Study, financial self-efficacy
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