Are the actual and intended sources of financial knowledge the same? Evidence from Japan

Bibliographic Data

ID21583796
AuthorsHiroshi Fujiki (0000-0002-3692-0904, Chuo University, corresponding author)
Year2020
Volume55
Pages101026
Publication date2020-09-01
Open AccessYes
TypeARTICLE
VenueJapan and the World Economy (JOURNAL)
Journal identifiersISSN: 0922-1425 • E-ISSN: 1879-2006
PublisherElsevier BV (PUBLISHER)
DOI10.1016/j.japwor.2020.101026
OpenAlexW3042747473
LanguageEN
References cited17

The recent prolonged period of low economic growth and low interest rates in Japan demands that Japanese households invest in risky assets to accumulate sufficient retirement savings. In so doing, they acquire financial knowledge on these risky assets, typically from financial experts or salespersons in financial institutions. However, they may not necessarily be content with their current sources of financial knowledge because depending on their stage in the life cycle, they require different types of financial knowledge, usually from a variety of sources. Unfortunately, because of limitations in the data available, few studies have investigated whether the actual and intended sources of financial knowledge are the same. To address this research gap, this paper uses a Japanese household survey from 2010 to 2017, which provides unique information on the actual and intended sources of financial knowledge, and obtains two interesting results. First, a household’s actual sources of financial knowledge typically differ from its intended sources. More specifically, 33 % of households choosing financial institutions and experts and 52 % of households choosing financial institutions as their actual sources have a different intended source. Second, the discrepancy between actual and intended sources appears to relate to household demographic characteristics. Among those households choosing financial institutions and experts as their actual source of financial knowledge, 14 % choosing financial institutions as their intended source tend to have a lower level of financial knowledge and educational attainment. These results suggest that they have some difficulty understanding the advice of financial advisers. Among households choosing financial institutions as their actual source of financial knowledge, 26 % choosing financial institutions and experts as their intended source tend to have a larger amount of financial assets, better financial knowledge, and a preference for investing in risky assets; however, they also tend to be younger. This suggests they might want to obtain financial knowledge from financial experts to purchase risky financial assets as they age. While the study does not provide any causal evidence, the results suggest that understanding the reasons for any discrepancy in the actual and intended sources of financial knowledge may help financial institutions provide better services to these customers

Economics · Financial economics · Financial Literacy, Pension, Retirement Analysis · Housing Market and Economics · Housing, Finance, and Neoliberalism

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