The financial literacy in higher education institutions in Portugal: sensitivity analysis of its determinants

Abstract

This paper applies the artificial neural networks’ techniques to model financial literacy in higher education institutions in Portugal. The modeling of financial literacy of students enrolled in higher education was accomplished through the measurement of their financial knowledge on credit cards, loans and savings plans, as well as through the analysis of the determinants of that knowledge.
The results indicate that knowledge on credit cards is significantly dependent on the students’ enrollment year, age group and possession of a cellular phone price plan; a strong relevance was also obtained between the permanency with a cellular phone price plan and the knowledge level of the respondents on credit cards (n=666; 11.39%; 10.76% and 10.13%, respectively).
The research demonstrates that Portuguese students’ knowledge on credit cards is very good in less than 1% of the sample and very limited in more than 60% of the sample. Concerning knowledge on loans and savings plans, the results indicate that more than 70% of the respondents present a high level of financial illiteracy.
The most relevant and determinant factors for this study were: age, the fact of living in their own house, the fact of possessing a cellular phone price plan or being a credit card holder.