Decomposition of the Financial Capability Construct: A Structural Model of Debt Knowledge, Skills, Confidence, Attitudes, and Behavior

Abstract

Based on a nationally representative sample of adult Poles (N = 1,004), we examined structural relationships between financial knowledge, skills, confidence, attitudes, and behavior in debt-domain. We found that financial confidence—at least regarding debt-related issues—is tied to debt attitudes and behavior beyond the extent to which the attitudes and behaviors are linked to objective debt knowledge. Moreover, the relationship between objective knowledge and confidence turned out to be insignificant in our study. These findings suggest that confidence should be used as a separate marker of financial capability. Having established that skills correlate with behavior and attitudes differently than objective knowledge, we argue also to include them separately in financial capability measurements.