Influence of Generational Effects and Social Media Usage on Financial Literacy: An Empirical Analysis

Abstract

The purpose of this study was to measure and analyse the influence of social media usage and generational effects on financial literacy. Although there are numerous studies that have focused on financial literacy and its influencing factors, only few studies have examined the effect of social media usage on financial attitude and behavior. With increasing importance of social media usage in everyday life, there is a requirement to further examine the influence of social media on financial literacy by looking at user behavior, social networks, intended use, frequency of use as well as the role of generational effects in this context. This study wants to fill the research gap, focusing on German citizens of the generations X, Y, Z and baby boomer. It examines ten social networks which are popular in Germany at the time of data collection.

The data for the analysis was collected via an online survey during the period from October to November 2022. More than 400 people completed the survey and provided information about their financial knowledge and social media user behaviour. A multiple linear regression (based on Ordinary Least Squares (OLS) method) and an analysis of variance with subsequent post-hoc test were used as statistical methods for hypothesis testing. The results of the study show that participants who use social media as source of financial information have, on average, a higher financial literacy score than people who use other sources of financial information, e.g. the family. A second result of the study is that participants consuming financial information via social media have higher scores of financial literacy than participants using social media for other purposes, e.g. for entertainment. A third result of the study is that there is a significant relationship between financial literacy scores of the participants and the different social networks they use. On average, TikTok-users achieve the lowest financial literacy scores. In this context, differences between participants from different generations have emerged. From the findings of this work, measures can be derived to increase financial literacy through social media that take into account the different purposes of social media usage and the abilities and needs of people of different generations using them.

Keywords: financial literacy, generational effects, social media usage, social media, influence, survey

JEL Classification: G00