Financial Education, Financial Knowledge and Risky Credit Behavior of College Students

Abstract

The purpose of this study is to examine associations among financial education, financial knowledge, and risky credit behavior of college students. Using data from a sample of first-year college students, we found evidence that taking personal finance courses in high school and college is associated with financial knowledge as well as risky credit behavior. Specifically, both high school and college personal finance courses are associated positively with subjective financial knowledge. Subjective financial knowledge in turn reduces the chance of engaging in risky paying behavior. In addition, objective credit knowledge reduces the likelihood of engaging in both risky paying and borrowing behaviors.

Keywords: financial education, financial literacy, financial behavior, young adult, consumer credit