The effect of financial education on college students’ knowledge and behavior

Abstract

There is a growing literature on the importance of adults’ financial education, especially in developed countries. The literature is scarcer in regards to assessing the effect of financial education programs on the individuals’ financial knowledge and behavior, particularly in developing countries. This article evaluates the conditional means effect of Gestionando mis finanzas (GMF) on the financial knowledge of college students in Peru. With a duration of one month, taking this virtual program of basic financial education is highly correlated with an increase in the students’ financial test score, which raised by 0.42 standard deviations after the program. Women’s gains in financial literacy are equally likely as men’s, while the conditional means effect of the program is smaller for women, though the coefficients are not statistically significant. Further, I observe a greater financial learning in students from the highest socioeconomic levels. In terms of simple correlations, GMF is correlated with gains in self-perception of financial knowledge, as well as on savings behavior. The (positive) correlation with other aspects of healthy financial behavior, such as price comparison before purchasing and budgeting, is modest.