International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12
line decor
  
line decor

 Volume 10, Issue 5 (May 2023), Pages: 60-71

----------------------------------------------

 Original Research Paper

Does parental socialization affect financial literacy in Indonesia?

 Author(s): 

 Raden Aswin Rahadi 1, Gianina Nadya Putri 1, Bagus Aditya Nugraha 1, Taufik Faturohman 1, Alfred Boediman 2, Kurnia Fajar Afgani 1, Jumadil Saputra 3, *

 Affiliation(s):

 1School of Business and Management, Institut Teknologi Bandung, Bandung, Indonesia
 2The University of Chicago Booth School of Business, Chicago, USA
 3Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Kuala Terengganu, Malaysia

  Full Text - PDF          XML

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0003-2919-5756

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2023.05.008

 Abstract:

The technological advancement of Industry 4.0 embarked on a trend of digital payment in Indonesia to promote a cashless society. However, the rapid advancement of financial digitalization in the world should be prepared for the changes of a well-literate society. In Indonesia, a cashless society has been intensively promoted. But the low level of literacy index from its younger generation, this campaign has struggled. Among several factors, this study seeks to investigate the effect of parental socialization on improving financial literacy from this generation dominated by undergraduate students in Bandung, West Java, Indonesia. This study is designed using qualitative and quantitative approaches. The qualitative data was collected by interviewing as many as 10 parents. Also, the quantitative data were gathered by distributing the online survey questionnaire to 204 public, and private undergraduate students aged 20-24 in Bandung using Google form started January to May 2020. The data collection process was chosen to solve some constraints during the pandemic of COVID-19. This study has successfully produced a conceptual framework based on parents' perspectives. Through a data analysis process using multiple linear regression, this study found that money allowance and trust variables significantly positively affect financial literacy among undergraduate students in Bandung, West Java, Indonesia. In conclusion, this study has successfully investigated the effect of parental socialization on improving financial literacy. The parents' decisions will determine their children's proficiency in money management. Also, this study found a new model that differs from the previously developed model in the United States. For the Bandung context, these two factors are perceived as effective socialization factors from the perspective of undergraduate students.

 © 2023 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Financial literacy, Undergraduate students, Parental socialization, Financial socialization

 Article History: Received 30 March 2022, Received in revised form 11 January 2023, Accepted 26 February 2023

 Acknowledgment 

We would like to thank the School of Business and Management-Institut Teknologi Bandung, Indonesia, and Universiti Malaysia Terengganu (UMT) that have supported this research publication and everyone who has volunteered to participate.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Rahadi RA, Putri GN, Nugraha BA, Faturohman T, Boediman A, Afgani KF, and Saputra J (2023). Does parental socialization affect financial literacy in Indonesia? International Journal of Advanced and Applied Sciences, 10(5): 60-71

 Permanent Link to this page

 Figures

 Fig. 1 Fig. 2 Fig. 3 Fig. 4

 Tables

 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 

----------------------------------------------    

 References (43)

  1. Bandura A (1986). Social foundations of thought and action: A social cognitive theory. Prentice-Hall Inc., Hoboken, USA.   [Google Scholar]
  2. Chen H and Volpe RP (1998). An analysis of personal financial literacy among college students. Financial Services Review, 7(2): 107-128. https://doi.org/10.1016/S1057-0810(99)80006-7   [Google Scholar]
  3. Clarke MC, Heaton MB, Israelsen CL, and Eggett DL (2005). The acquisition of family financial roles and responsibilities. Family and Consumer Sciences Research Journal, 33(4): 321-340. https://doi.org/10.1177/1077727X04274117   [Google Scholar]
  4. Danes S M (1994). Parental perceptions of children's financial socialization. Journal of Financial Counseling and Planning, 5: 127-149.   [Google Scholar]
  5. Hanson TA and Olson PM (2018). Financial literacy and family communication patterns. Journal of Behavioral and Experimental Finance, 19: 64-71. https://doi.org/10.1016/j.jbef.2018.05.001   [Google Scholar]
  6. Ibrahim DID, Harun R, and Isa ZM (2010). A study on financial literacy of Malaysian degree students. Cross-Cultural Communication, 5(4): 51-59.   [Google Scholar]
  7. Ilham RN, Erlina KAF, Silalahi AS, and Saputra J (2019). Comparative of the supply chain and block chains to increase the country revenues via virtual tax transactions and replacing future of money. International Journal of Supply Chain Management, 8(5): 1066-1069.   [Google Scholar]
  8. Israel GD (1992). Determining sample size. Report No.: Fact Sheet PEOD-6, University of Florida, Gainesville, USA.   [Google Scholar]
  9. Jorgensen BL (2007). Financial literacy of college students: Parental and peer influences. Ph.D. Dissertation, Virginia Tech, Blacksburg, USA.   [Google Scholar]
  10. Jorgensen BL and Savla J (2010). Financial literacy of young adults: The importance of parental socialization. Family Relations, 59(4): 465-478. https://doi.org/10.1111/j.1741-3729.2010.00616.x   [Google Scholar]
  11. Jorgensen BL, Rappleyea DL, Schweichler JT, Fang X, and Moran ME (2017). The financial behavior of emerging adults: A family financial socialization approach. Journal of Family and Economic Issues, 38(1): 57-69. https://doi.org/10.1007/s10834-015-9481-0   [Google Scholar]
  12. Kamaludin M, Azlina AA, Wan Ibrahim WN, Mat Alipiah R, Saputra J, Abdullah MM, and Omar CM (2022). Effectiveness of a conservation education program among school students on the importance of mangrove ecosystems in Setiu Wetlands, Malaysia. Applied Environmental Education and Communication, 21(1): 23-41. https://doi.org/10.1080/1533015X.2021.1936298   [Google Scholar]
  13. Kim J and Chatterjee S (2013). Childhood financial socialization and young adults' financial management. Journal of Financial Counseling and Planning, 24(1): 61-79.   [Google Scholar]
  14. Leung SO (2011). A comparison of psychometric properties and normality in 4-, 5-, 6-, and 11-point Likert scales. Journal of Social Service Research, 37(4): 412-421.https://doi.org/10.1080/01488376.2011.580697   [Google Scholar]
  15. Lusardi A, Mitchell OS, and Curto V (2010). Financial literacy among the young. Journal of Consumer Affairs, 44(2): 358-380. https://doi.org/10.1111/j.1745-6606.2010.01173.x   [Google Scholar]
  16. Mandell L and Klein LS (2007). Motivation and financial literacy. Financial Services Review, 16(2): 105-117.   [Google Scholar]
  17. McLeod JM and O’Keefe GJ (1972). The socialization perspective and communication behavior. In: Kline G and Tichenor P (Eds.), Current perspectives in mass communication research. SAGE Publications, California, USA.   [Google Scholar]
  18. Mendari AS and Kewal SS (2013). Tingkat literasi keuangan di kalangan mahasiswa STIE MUSI. Jurnal Economia, 9(2): 130-140.   [Google Scholar]
  19. Misshuari IW, Herdiana R, Farikhin A, and Saputra J (2021). Factors that affect customer credit payments during COVID-19 pandemic: An application of light gradient boosting machine (lightgbm) and classification and regression tree (cart). In the 11th Annual International Conference on Industrial Engineering and Operations Management, IEOM 2021, Singapore: 5083-5091.   [Google Scholar]
  20. Mitchell OS, Lusardi A, and Curto V (2009). Financial literacy among the young: Evidence and implications for consumer policy. PRC Working Paper WP2009-09, Pension Research Council, Philadelphia, USA. https://doi.org/10.2139/ssrn.1459141   [Google Scholar]
  21. Moore R (2003). Reexamining the field experiences of preservice teachers. Journal of Teacher Education, 54(1): 31-42. https://doi.org/10.1177/0022487102238656   [Google Scholar]
  22. Nidar SR and Bestari S (2012). Personal financial literacy among university students (case study at Padjadjaran University students, Bandung, Indonesia). World Journal of Social Sciences, 2(4): 162-171.   [Google Scholar]
  23. OECD (2016). International survey of adult financial literacy competencies. Organisation for Economic Co-operation and Development, Paris, France.   [Google Scholar]
  24. OECD (2018). Toolkit for measuring financial literacy and financial inclusion. Organisation for Economic Co-operation and Development, Paris, France.   [Google Scholar]
  25. Rahadi R, Nainggolan Y, Afgani K, Yusliza M, Faezah J, Ramayah T, and Angelina C (2022). Towards a cashless society: Use of electronic payment devices among generation Z. International Journal of Data and Network Science, 6(1): 137-146. https://doi.org/10.5267/j.ijdns.2021.9.014   [Google Scholar]
  26. Rahadi R, Putri N, Soekarno S, Damayanti S, Murtaqi I, and Saputra J (2021). Analyzing cashless behavior among generation Z in Indonesia. International Journal of Data and Network Science, 5(4): 601-612. https://doi.org/10.5267/j.ijdns.2021.8.007   [Google Scholar]
  27. Rasyid R (2012). Analisis tingkat literasi keuangan mahasiswa program studi manajemen fakultas ekonomi universitas negeri padang. Jurnal Kajian Manajemen Bisnis, 1: 91-106.   [Google Scholar]
  28. Schoeni RF and Ross KE (2005). Material assistance from families during the transition to adulthood. In: Settersten Jr RA, Furstenberg FF, and Rumbaut RG (Eds.), On the frontier of adulthood: Theory, research, and public policy: 396-416. University of Chicago Press, Chicago, USA. https://doi.org/10.7208/chicago/9780226748924.003.0012   [Google Scholar]
  29. Serido J and Deenanath V (2016). Financial parenting: Promoting financial self-reliance of young consumers. In: Xiao J (Ed.), Handbook of consumer finance research, 291-300. Springer, Cham, Switzerland. https://doi.org/10.1007/978-3-319-28887-1_24   [Google Scholar]
  30. Shim S, Barber B, Card N, Xiao JJ, and Serido J (2010a). Financial socialization of young adults: The role of family, work, and education. Journal of Youth and Adolescence, 39(12): 1457-1470. https://doi.org/10.1007/s10964-009-9432-x   [Google Scholar] PMid:20938727
  31. Shim S, Barber BL, Card NA, Xiao JJ, and Serido J (2010b). Financial socialization of first-year college students: The roles of parents, work, and education. Journal of Youth and Adolescence, 39(12): 1457-1470. https://doi.org/10.1007/s10964-009-9432-x   [Google Scholar] PMid:20938727
  32. Singh A (2014). Challenges and issues of generation Z. IOSR Journal of Business and Management, 16(7): 59-63. https://doi.org/10.9790/487X-16715963   [Google Scholar]
  33. Sorokou CF and Weissbrod CS (2005). Men and women’s attachment and contact patterns with parents during the first year of college. Journal of Youth and Adolescence, 34(3): 221-228. https://doi.org/10.1007/s10964-005-4304-5   [Google Scholar]
  34. Sugiyono D (2013). Metode penelitian pendidikan pendekatan kuantitatif, kualitatif dan R&D. Alfabeta, Bandung, Indonesia.   [Google Scholar]
  35. Sujarweni VW (2014). Metode penelitian: Lengkap, praktis, dan mudah dipahami. Pustaka Baru Press, Yogyakarta, Indonesia.   [Google Scholar]
  36. Sundarasen SDD, Rahman MS, Othman NS, and Danaraj J (2016). Impact of financial literacy, financial socialization agents, and parental norms on money management. Journal of Business Studies Quarterly, 8(1): 140-156.   [Google Scholar]
  37. Tang N and Peter PC (2015). Financial knowledge acquisition among the young: The role of financial education, financial experience, and parents' financial experience. Financial Services Review, 24(2): 119-137.   [Google Scholar]
  38. Tinto V (1998). Colleges as communities: Taking research on student persistence seriously. The Review of Higher Education, 21(2): 167-177.   [Google Scholar]
  39. Tulgan B (2013). Meet generation Z: The second generation within the giant" Millennial" cohort. Rainmaker Thinking Inc., New Haven, USA.   [Google Scholar]
  40. Ulfatun T, Udhma USA, and Dewi RS (2016). Analisis tingkat literasi keuangan mahasiswa fakultas ekonomi universitas negeri yogyakarta tahun angkatan 2012-2014. Pelita-Jurnal Penelitian Mahasiswa UNY, 11(2): 1-13.   [Google Scholar]
  41. Xiao JJ, Ahn SY, Serido J, and Shim S (2014). Earlier financial literacy and later financial behaviour of college students. International Journal of Consumer Studies, 38(6): 593-601. https://doi.org/10.1111/ijcs.12122   [Google Scholar]
  42. Yosep MA, Mohamed M, Yusliza MY, Saputra J, Muhammad Z, and Bon AT (2021). Does digital marketing platforms affect business performance? A mini-review approach. In the 11th Annual International Conference on Industrial Engineering and Operations Management, IEOM Society International, Singapore, Singapore: 4372-4386.   [Google Scholar]
  43. Zickuhr K (2011). Generations and their gadgets. Pew Research Center, Washington, USA.   [Google Scholar]