2019ImprovingfinancialliteracyincollegeofbusinessstudentsModernizingdeliverytools.pdf

Improving financial literacy in
college of business students:
modernizing delivery tools

Ronald Kuntze
College of , University of New Haven, West Haven, Connecticut, USA

Chen (Ken) Wu and Barbara Ross Wooldridge
Soules College of ,

The University of Texas at Tyler, Tyler, Texas, USA, and
Yun-Oh Whang

Joseph M. Katz Graduate School of ,
University of Pittsburgh, Pittsburgh, Pennsylvania, USA

Abstract
Purpose – The purpose of this paper is to develop and test through an experiment, an innovative online
video teaching module that significantly improves financial literacy in college of business students. Specific
business major financial literacy levels are also tested.
Design/methodology/approach – A total of 244 college of business students were given a financial
literacy test. Half of the students were exposed to the “treatment” (watched a video module), while other half
were not. The videos comprised 67 min of micro-lectures that students could download, free of charge, at their
own convenience. The researchers analyzed the impact of a previous personal finance course on students’
financial literacy levels and tested across four business majors.
Findings – The video intervention was the most successful at increasing financial literacy, surprisingly more
so than having taken a past personal finance course. Interaction effects were not significant. Four college
majors were tested with a shorter, improved financial literacy measure – finding, to our surprise that
non-quantitative business majors (particularly marketing students) are not less financially literate than other
majors. Supporting past research, the authors found that female and African-American college students
performed significantly lower on the test.
Originality/value – The research adds value to the literature by developing and testing a modern, novel
teaching innovation to improve financial literacy in young adults. Using an experimental setting, the authors
showed that the innovation was more effective than the commonly proscribed personal finance course. This is
one of the few studies to measure financial literacy levels for specific college of business majors.
Keywords Experiment, Video, College of business students, Financial literacy improvement
Paper type Research paper

Introduction: financial literacy – a significant individual and societal problem
Since the late 1990s, the study of “Financial Literacy” has been a hot-button issue in the
popular press as well as in education, economics, management, finance and marketing
journals. Politicians, pundits, educators, economists and the media fervently express
trepidation that Americans, particularly younger ones, appear unable to save money, invest
appropriately, handle credit, solve basic math and financial problems as well as comprehend
both personal and national financial matters (Hamilton, 2013; Henager and Cude, 2016;
Huhmann, 2017; Mandell, 2008; Marcolin and Abraham, 2006). Researchers have identified
alarmingly lower levels of financial literacy in certain at-risk demographic groups
potentially leading to negative financial behaviors (Bucher-Koenen et al., 2017;
Nejad and O’Connor, 2016). Recent studies have also shown that consumers may be
over-confident in their perceived financial literacy (subjective vs objective financial
literacy – see Hadar et al., 2013) and as a result may take part in riskier financial behaviors
(Nejad and Javid, 2018; Porto and Xiao, 2016).

International Journal of Bank
Marketing
Vol. 37 No. 4, 2019
pp. 976-990
© Emerald Publishing Limited
0265-2323
DOI 10.1108/IJBM-03-2018-0080

Received 31 March 2018
Revised 17 August 2018
29 October 2018
Accepted 30 October 2018

The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0265-2323.htm

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Millennials are particularly challenged by financial illiteracy due to the unprecedented
burden of credit cards and student loans (de Bassa Scheresberg and Lusardi, 2014; Xiao
et al., 2011), making US college students a surprisingly vulnerable population. This extends
to recent college graduates. Several studies find mean college financial literacy scores not
much higher than K-12, even among business majors (Hamilton, 2013), with post-secondary
US students having “inadequate knowledge” of personal finance (Hanna et al., 2010;
Mandell, 2008; Xiao et al., 2014). As a result, even educated and affluent younger Americans
may find themselves unable to navigate the financial world, prone to make uninformed
decisions and misled about financial matters (Marcolin and Abraham, 2006). Williams and
Oumlil (2005) have called for an “intervention strategy” to improve young college adults’
ability to make informed financial decisions. From a macro-economic perspective, if the
highest educated and financially secure cohort (college graduates) in a nation are crippled
by poor financial skills and knowledge, we risk an “uncompetitive and unattractive
workforce that by necessity will lean more on social programs,” according to Ted Beck, CEO
of the National Endowment for Financial Education (Malcolm, 2012).

Although a generalized lack of objective financial knowledge among younger Americans
has been documented for decades at both the high school and college level (Chen and Volpe,
1998; Danes and Hira, 1987; Lusardi et al., 2010), there appears to be little research focused
on the financial literacy of specific college majors. As marketing and finance professors,
several of the researchers on this project were interested in whether the poor financial
literacy scores found in college of business studies extend equally across all majors. There is
a concern that poor financial literacy may be amplified in marketing, where there is a long
documented history of students experiencing difficulty with math, statistics and numeracy
(Aggarwal et al., 2007; Budden, 1985; Ganesh et al., 2010).

As marketing researchers and scale developers, we also hoped to find more research
exploring financial literacy scale development, refinement and validation (as called for by
Hastings et al., 2013; Hung et al., 2009). Researchers disagree upon construct definitions for
financial literacy, ways to measure it and direct links to behavior (Huhmann and
McQuitty, 2009). There are additional ongoing disagreements about related constructs such
as financial capability, objective financial knowledge and financial self-efficacy (Hung et al.,
2009; Taylor, 2011; Shim et al., 2013; Xiao and O’Neill, 2016).

Finally, it appears that the major thrust, in terms of efforts to improve financial literacy
in millennials, is often relegated to a mandated personal finance course “unevenly applied”
in K-12 grade (Harrington and Smith, 2016). We would like to see the rich tapestry of modern
marketing educational tools such as mixed media, online video workshops and seminars,
and exploratory teaching methods available to marketing educators expand to include the
improvement of financial literacy across the college curriculum.

Study purpose
The purpose of this study is to extend the conceptual and theoretical literature related to
financial literacy improvement in young people, particularly in college of business students.
We analyzed the effectiveness of short videos vs taking a more traditional finance course
and evaluated the impact on the participants’ performance on a financial literacy test.
Working with online media sources already in place, the researchers utilized video
self-tutorials, and an experiment was conducted with 244 college of business students to
explore if these online tutorials would significantly improve financial literacy in business
majors. Specific business school major, GPA, demographics and exposure to a personal
finance course were each analyzed, as well as more appropriate measures of college student
literacy proposed. The study more deeply explores marketing and management majors,
potentially at risk for poor financial literacy demographic groups, and calls for marketing
researchers to assist in scale development and improvement. This study also extends

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research in utilizing greater diversity in teaching perspectives (Xiao and O’Neill, 2016), and
simplifying and modernizing information/content learning and delivery (Huhmann and
McQuitty, 2009) using online web tools and systems (Alwehaibi, 2015; Wankel, 2010).

Financial literacy and students
The GAO (2012) defined financial literacy as: “the ability to make informed judgments and
to take effective actions regarding the current and future use and management of money. It
includes the ability to understand financial choices, plan for the future, spend wisely, and
manage the challenges associated with life events such as a job loss, saving for retirement,
or paying for a child’s education” (p. 3). The origins of academic research and measurement
of financial literacy began with US high school seniors and the development of a lengthy
measurement instrument in the late 1990s with the “Jump$tart, Baseline Survey 1997–1998
of 12th Graders” (Mandell, 2008). Scores on the measure were problematic at best, with high
schoolers in the “failing ranges” of 48–57 percent (Jump$tart, 2014). American university
students performed poorly displaying a “dismal knowledge” of personal finance (Chen and
Volpe, 1998; Volpe et al., 1996) with a mean score of 53 percent on the instrument in the early
years of survey (Hanna et al., 2010). Although the performance of a sub-segment including
both college-bound and college students improved in the late 2000s, the annual nationwide
high school and college student averages were by most measures still “not passing” (OECD,
2005). Jump$tart survey results support a litany of research indicating American
consumers, particularly younger ones, are financially illiterate and this is causing serious
issues at home as well as in business and society (Fernandes, 2014; Malcolm, 2012; Mandell,
2008; Marcolin and Abraham, 2006).

Lack of financial literacy in college students continues to resonate in the popular
business press as this cohort struggles with repaying soaring student debt (Lachance, 2012;
Xiao et al., 2014). The average college student now accrues over $35,000 in student debt
(Ellis, 2013), and poor financial literacy skills in college graduates magnify the problem.
“It comes back to a financial literacy issue and making sure students understand what they’re
getting into, how much they’re borrowing and an understanding that there are different
options for them at the end,” says Megan McClean, Director of Policy and Federal Relations at
the National Association of Student Financial Aid Administrators (Bidwell, 2013).

More recent research has focused on parsing out and measuring important objective and
subjective or “perceived” knowledge elements of the financial literacy construct (Hadar et al.,
2013; Nejad and Javid, 2018). It is presumed that overly confident college students and
graduates who lack true objective financial literacy will make uninformed personal decisions
in their everyday financial lives (Perry, 2008; Porto and Xiao, 2016) and may even negatively
impact significant financial decisions at work after graduation. Fernandes (2014) worried that
financial illiteracy runs rampant in corporate America and that business executives and
managers without basic financial skills make key strategic decisions daily. Numerous studies
and measures indicate that American college students score poorly when it comes to financial
literacy and performance is deteriorating for most groups. Of particular concern are minority
student populations (Harnisch, 2010) and women (Bucher-Koenen et al., 2017) who continue to
test at lower financial literacy levels. Experts further warn that a lack of financial literacy and
basic financial skills in graduated business majors is costing our economy through
entrepreneurial failure (Hannaher, 2011), consumer debt (Collins et al., 2011; Ellis, 2013;
Lusardi and Tufano, 2009), risky decision making (Mouna and Jarboui, 2015; Blankson et al.,
2012) and poor corporate decision making (Fernandes, 2014; Gruca, 2000).

Relatedly, there has been great concern over marketing students’ apparent weaknesses
in math, statistics and quantitative skills. First diagnosed nearly 30 years ago by Budden
(1985), researchers since have called for educators to enhance financial and analytical skills
in the classroom (Brennan and Vos, 2013; Ganesh et al., 2010; Gruca, 2000) and have warned

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that math and quantitative skills have become even more important for marketers
post-graduation (Davis et al., 2002). Undergraduate marketing majors have been found to
lack mathematical and quantitative skills in general (Aggarwal et al., 2007), and may even
gravitate to the major because of perceived lower quantitative skills requirements when
compared with other business majors (Ganesh et al., 2010). According to Tarasi et al. (2012),
marketing students are less likely to have an affinity for the crucial quantitative aspects of
the discipline and statistical anxiety is especially strong for marketing majors relative to
other business majors. This has become a significant concern for marketers with the
contemporary emphasis on “Big Data” analysis and marketing metrics in the workforce
(Schlee and Harich, 2010). This is extremely important for marketing faculty, since
weaknesses in marketing math and elementary financial understandings weaken
employability of marketing graduates (Brennan and Vos, 2013). “Poor mathematical
fluency” appears to continue even after four years of marketing curricula (Saber and Foster,
2011). Degreed marketing managers exhibit poor financial planning skills (Abernethy and
Gray, 2000) and their lack of financial literacy, numeracy and problem-solving skills can
significantly handicap a marketer’s business career as well as hurt his or her ability to
advance in an organization (Ganesh et al., 2010). Aggarwal et al. (2007) warned that
particularly quantitatively challenged marketing undergraduates may find difficulty both
on the job front and in their hopes of gaining an MBA with poor and declining GMAT
scores. After graduation, marketing majors are increasingly called upon to be accountable
for their financial decisions within the firm (Brennan and Vos, 2013; Ganesh et al., 2010;
Saber and Foster, 2011).

The marketing major has a significantly higher percentage of female graduates
compared to higher paying numerical majors such as engineering and computer science
(50 percent vs below 20 percent – Perry, 2016), supporting the argument that women
marketing majors comprise a vulnerable group in terms of financial well-being. Mahdavi
and Horton (2014) found college-educated women particularly at risk for lower levels of
financial knowledge and call for action to enhance financial literacy in this population as
well as vulnerable ethnic groups (Bucher-Koenen et al., 2017; Nejad and O’Connor, 2016).

On the positive side, poor quantitative, statistics and numeracy skills (and apparent
interest) among marketing majors (Tarasi et al., 2012) have resulted in a myriad of
cross-departmental creative teaching innovations for undergraduates and MBA students
(Brennan and Vos, 2013; Gruca, 2000; Saber and Foster, 2011). Innovative pedagogical tools
and methods to improve the “less quantitative minded” business student’ have resulted in
whiteboards in the classroom (Greene and Kirpalani, 2013), stand-alone self-study tutorials
(Chen et al., 2012) and innovative class modules to improve numeracy (Ganesh et al., 2010).
The financial literacy literature appears to have a gap in cutting edge pedagogical tools (see
Lusardi et al., 2017 for an exception), and researchers have called for more creative methods
in the classroom (Goetz et al., 2011; Huhmann and McQuitty, 2009).

Researchers have also suggested greater financial skills development and exposure to
basic finance concepts be integrated into the marketing curriculum (Brennan and Vos, 2013;
Gruca, 2000). A personal finance course and financial literacy itself is often ignored after
high school, and neither is a part of the majority of university business programs. Bianco
and Bosco (2011) examined the curricula of 100 AACSB accredited schools and found that
only 54 percent offered a personal finance course, and that these were mostly (44 percent)
only offered (not required) to business majors. Only 10 percent of these offerings were
available to non-business majors (Lafond and Leaubie, 2014). These numbers indicate that
many marketing majors and graduating marketing professionals from the social sciences
and more practice-based backgrounds miss out on personal finance and financial literacy
education after high school. The majority of advertising-, sales-, web-development- and
branding-focused students are not exposed to the basic concepts of financial literacy.

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Since financial literacy is “the ability to make informed judgments and to make effective
decisions regarding the use and management of money” (Marcolin and Abraham, 2006),
it should be a concern to marketing faculty that financial literacy is not more adequately
addressed in or adjacent to the marketing curriculum.

Study rationale and measure development
In order to ascertain basic financial literacy levels in business majors and explore whether
there might be problems and/or differences among majors, several researchers at different
universities collaborated in an experiment. The idea began with a finance professor who had
taught personal finance in the past, and was interested in analyzing financial literacy in
different majors. This professor had been developing a shorter version of the lengthy Jump
$tart Instrument (2009) that would be more concise (length of time to complete: 15 vs 45 min)
and had more age appropriate measures. Researchers have often used abbreviated
instruments to measure financial literacy (Hanna et al., 2010; Mitchell and Lusardi, 2015).
Through collaborating with several marketing professors, a 16-item financial literacy
instrument was developed and pre-tested across three universities and scores of students.
The shorter instrument maintained similar “means” to the larger, ungainly Jump$tart
measure that had been used over decades primarily to study high school students. This
research tested several new questions specifically developed to measure financially
informed and effective judgments, vs more commonly measured financial knowledge (Jump
$tart questionnaire). We also sought to update the context of the questions to better suit the
age bracket of our subjects (college students). These two sample questions (among others)
delve deeper into behavioral intentions:

(1) You just received the following offers from credit card companies. It came in a good
time because you needed $1,000 for a new laptop to replace the old one that just
broke down. You expect to be able to pay it back in full in two years. Which of the
following would be the best offer?:

• $0 signup fee and 10 percent annual percentage rate (APR) interest for two years.

• $200 signup fee, 0 percent APR interest for the first year and 12 percent APR
interest for the second year.

• $0 signup fee, 0 percent APR interest for the first year and 18 percent APR
interest for the second year.

(2) Which of the following scenarios would you choose for books for next semester? The
on-campus bookstore price of these books is $400. If you buy from the bookstore at
full price, they will give you $100 back if you sell back all the books at end of the
semester (one quarter of your purchase). Assume you cannot sell back books
from online, or if purchased at a discount from the bookstore. Choose the best
priced option:

• You buy the books full price from the bookstore, you only sell back 80 percent of
the books.

• Bookstore has a sale at 25 percent off.

• Online store rents them for 50 percent full price; you must pay shipping and
handling (receiving and returning) of approximately $45 each way.

Although these are two of the longest, most complex (and time consuming) questions, they
clearly resonate with a younger subject pool and represent complex decision making with
real financial outcomes.

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The next step was to use the instrument to test and compare and contrast financial
literacy levels of college of business majors. The marketing professors were interested in
whether marketing majors would score poorly – particularly in comparison to more
“quantitative” business majors such as accounting and finance.

After canvassing the financial literacy literature, two marketing professors suggested
adding an experimental teaching component to the testing of business majors. The
marketing professors had developed innovative pedagogical tools to improve numeracy and
statistical knowledge in marketing students using online training videos in the past. Armed
with the understanding that these kinds of tools were not being commonly used to
improve financial literacy with college students, the co-authors set out to find or produce a
more personalized, online video that could be easily accessed by students on their own time.
The video would be short in time (shorter than a single class period), cost effective (utilizing
extant videos on YouTube – or easily produced videos by a professor) and effective
in terms of increasing financial literacy measures. The goal of this study then expanded
beyond simply measuring financial literacy in college of business majors, to include a
teaching innovation to improve students’ financial literacy knowledge. Collaborating
researchers across different disciplines added to the richness of the scale development and
teaching innovation.

Students at the private southeast school in three different business courses participated
in the experiment. Students in introductory business (4 sections for a total of 116 students),
introductory finance (2 sections for a total of 36 students) and introductory marketing
(3 sections of 92 students) course took part so that the researchers could maximize students
from multiple majors.

Video treatment development
In order to quickly roll out a video tool easily accessible to students, previously developed
financial literacy videos on YouTube were chosen. It should be recognized, however, that
instructors could create and develop their own videos for this or related pedagogical
purposes. Researchers hoped the learning module could be integrated later into an
introduction to business course – or a principles of marketing course (perhaps during
“break-even analysis” or “marketing math”) without having to add any significant class
time to the curriculum. Dowell and Small (2011) found that college students’ incorporating
online resources into their self-regulated learning strategies can significantly improve
engagement and outcomes. Lusardi and Mitchell (2014) indicated that videos can be
particularly compelling at improving financial literacy and Henager and Cude (2016)
suggested that young people specifically respond to new and creative self-directed learning
options. We hope this research contributes to the growing literature on packaging learning
modules for millennials and delivering them online through YouTube and social media
(Alwehaibi, 2015; Phillips and Trainor, 2014).

Two private university professors were tasked with finding approximately one hour of
video micro-lectures that could be easily aggregated into a module that students could
download, free of charge, at their own convenience. This specific time length coupled with a
short, financial literacy measurement tool would equate to the time of a single class period in
a three or four credit-hour course. College students were expected to have a shortened
attention span, one that is echoed by nearly all consumers who “spend very little time
processing financial information” (Huhmann, 2017, p. 757).

To test the efficacy of the module, financial literacy levels were assessed across cohorts
receiving the treatment (module) vs those not receiving the treatment. Financial literacy
scores were also compared across several majors and several other classes (introduction to
business), something not done in previous research. Finally, the researchers analyzed the
impact of a previous personal finance course on their students’ financial literacy.

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To minimize demand effects and not “teach to the test,” the researchers at the private
institution were not given the measurement tool. They were given the GAO (2012) definition,
several “popular press” articles on financial literacy and its decline among US students, and
two other construct definitions as a guide for selecting the micro lectures to be included in the
module (Jump$tart, 2014; Marcolin and Abraham, 2006). The total module length ended up at
67:36 – and the links can be accessed at: https://youtu.be/7cvDExdTKsw. The module was
pre-tested with over a dozen undergraduate and MBA students to get feedback in terms of
optimal length, concept clarity and the “level of boredom” as it was assumed (correctly,
unfortunately, etc.) that undergraduate business students would have a limited attention span
for some of these concepts. The pre-testing helped to inform the final length and video choices.

Experimental protocol and composition
The use of several introductory courses with multiple sections allowed the researchers to
reach a wider variety of majors than otherwise possible. The researchers included a
question allowing them to assess if a student had previously taken personal finance. We
were agnostic as to how differing majors and previous exposure to personal finance might
impact the experimental results, although it was expected that those students that had
taken such a course in the past would score higher on measures of financial literacy.
Students in the experimental group were given the link to the video and asked to view it
within a two-week period before Spring break. Both the control and experimental
groups were asked immediately after spring break to fill out a questionnaire in class for
extra credit – providing an interval of time between viewing the module and measuring
financial literacy. There were no discussions of financial literacy in any of the classes. No
details about the study were provided until after all students had completed the survey.

A total of 244 students were involved in the research, all were given a financial literacy
test. Of these, 122 were asked to watch the video, while 122 were not. The viewing data
provided by the YouTube video indicated that there were 107 unique views of the video.
Approximately 50 percent watched the entire video or most of it, while 13 percent watched
less than 2 min of the video. The remaining 37 percent were exposed to varying amounts of
viewing. We were unable to parse out performance on the test based upon viewing time. Of
the 244 students, 12 declined to provide their major, the remaining 183 identified business
majors were as follows: marketing 23.4 percent, management 45.4 percent, accounting
22.9 percent and finance 8.3 percent. The majority of respondents had not taken a personal
finance course (72 percent), while 28 percent had, ten of the students declined to answer the
question. The majority of students were male (63 percent), had a GPA between 2.5 and 3.5
(62 percent) and were mostly juniors (54 percent) and seniors (33 percent). The 49 percent of
the students had $1,000 or less of credit card debt, 29 percent had $1,000 to $3,000 and
22 percent had over $3,000. In total, 62 percent of the students anticipated having less than
$5,000 in student loans, while 28 percent anticipated loans between $5,000 and $30,000, and
22 percentage anticipated loans over $30,000 with 5 percent of these students estimating
loans of more than $50,000. The majority of the students were white (70 percent), with
13 percent African-American, 11 percent Hispanic and 6 percent other (including Asian and
Native American).

Experimental findings
The primary research finding was that the relatively short (just over one hour)
video treatment had a significant positive effect upon financial literacy scores for the
students – across all majors (see Table I). The video treatment had a stronger positive effect
than a previously taken personal finance course (since most of these students are juniors,
many of them would have recently taken the personal finance course – or even taking it
concurrently). The most important finding is that those students exposed to the video

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https://youtu.be/7cvDExdTKsw

module scored significantly higher than those who did not receive the treatment (po0.001;
F-statistic ¼ 20.03). Having had a personal finance course also had a stronger positive
effect (po0.03, F-statistic ¼ 4.64) but curiously there was not a significant interaction
effect (p ¼ 0.21).

A two-factor ANOVA model with fixed effects for the two main variables of interest
(video treatment and personal finance course) and their interaction was used to analyze
results. To explore student/major effects, marketing …