Papers by Kyoung Tae (KT) Kim
Journal of Financial Counseling and Planning, Apr 7, 2021
This study investigated the role of financial education on a basic level of estate planning of U.... more This study investigated the role of financial education on a basic level of estate planning of U.S. households. Results from the 2018 National Financial Capability Study (NFCS) dataset showed that financial education is positively associated with one's basic estate planning, proxied by having a will. Multiple exposures to financial education over time had stronger positive associations with having a will. One notable finding was that those receiving financial education offered by an employer only or jointly by an employer and other sources (high school and/or college) were more likely to have a will. In addition, among those who received financial education, the number of hours and the overall quality were positively associated with the likelihood of having a will. Additional analyses from Propensity Score Matching (PSM) and similar regressions across generations reveal that results were robust. The results provide meaningful insights for financial educators and practitioners.
Journal of Family and Economic Issues
This study used data from the 2018 National Financial Capability Study to investigate the associa... more This study used data from the 2018 National Financial Capability Study to investigate the association between financial hardship and retirement planning behaviors. Results from logistic regressions showed that respondents with high difficulty making ends meet were more likely to calculate retirement needs and more likely to own a non-employer sponsored retirement plan. The perceived over-indebtedness was positively associated with owning an employer-sponsored account while negatively associated with owning a non-employer-sponsored account. Financial fragility was associated with a lower likelihood of calculating retirement needs and having a retirement account. The results of additional generational analyses revealed that the difficulty making ends meet and the perceived over-indebtedness showed different patterns with retirement planning behavior across three generations. In contrast, financial fragility showed consistent and negative associations with the retirement planning behaviors across generations.
Applied Economics Letters, 2014
ABSTRACT Economists conducting normative analyses of household financial decisions typically assu... more ABSTRACT Economists conducting normative analyses of household financial decisions typically assume specific values of parameters of the household utility function. We review 12 normative analyses and discuss justifications for the personal discount rates assumed. None of the normative articles cited an independent estimate of the personal discount rate. Instead, the authors made arbitrary assumptions or cited another article’s assumption. We conclude with recommendations for assumptions about the personal discount rate in normative analyses of household financial decisions. link: http://lnkd.in/dRiVrDh
Fudenberg's (2006) model of bounded rationality posits that greater complexity should result in h... more Fudenberg's (2006) model of bounded rationality posits that greater complexity should result in households being less likely to achieve rational outcomes. Some households have higher complexity in retirement planning because expected retirement income varies during retirement. Based on 1995 to 2007 Survey of Consumer Finances datasets, about 73% of households have more than one stage. When income stages are taken into account, the proportion of households with retirement adequacy overall increased from 44% in 1995 to 58% in 2007, and in each year the proportion was much lower than estimates ignoring income stages. The combined stage adequacy proportion ranges from 44% to 58% with stage partition. Our multivariate analysis shows that households with more than one stage are more likely to have an adequate retirement than households with only one stage, contrary to Fudenberg's model, perhaps because of unmeasured differences in characteristics of households with multiple retirement stages. Controlling for other variables, retirement adequacy does not vary significantly during the 1995 to 2007 period.
Journal of family and economic issues, Jul 3, 2021
This study used data from the 2018 National Financial Capability Study to investigate the associa... more This study used data from the 2018 National Financial Capability Study to investigate the association between financial hardship and retirement planning behaviors. Results from logistic regressions showed that respondents with high difficulty making ends meet were more likely to calculate retirement needs and more likely to own a non-employer sponsored retirement plan. The perceived over-indebtedness was positively associated with owning an employer-sponsored account while negatively associated with owning a non-employer-sponsored account. Financial fragility was associated with a lower likelihood of calculating retirement needs and having a retirement account. The results of additional generational analyses revealed that the difficulty making ends meet and the perceived over-indebtedness showed different patterns with retirement planning behavior across three generations. In contrast, financial fragility showed consistent and negative associations with the retirement planning behaviors across generations.
Journal of Family and Economic Issues , 2022
This study used data from the 2018 National Financial Capability Study to investigate the associa... more This study used data from the 2018 National Financial Capability Study to investigate the association between financial hardship and retirement planning behaviors. Results from logistic regressions showed that respondents with high difficulty making ends meet were more likely to calculate retirement needs and more likely to own a non-employer sponsored retirement plan. The perceived over-indebtedness was positively associated with owning an employer-sponsored account while negatively associated with owning a non-employer-sponsored account. Financial fragility was associated with a lower likelihood of calculating retirement needs and having a retirement account. The results of additional generational analyses revealed that the difficulty making ends meet and the perceived over-indebtedness showed different patterns with retirement planning behavior across three generations. In contrast, financial fragility showed consistent and negative associations with the retirement planning behaviors across generations
International Journal of Consumer Studies , 2022
This study explores gender differences in financial knowledge overconfidence among older adults u... more This study explores gender differences in financial knowledge overconfidence among older adults using the 2016 Health and Retirement Study. We find that older females have relatively lower objective financial knowledge than do older males, while they evaluate themselves to be as financially knowledgeable as older males. Further, several measures of overconfidence in financial knowledge are higher in older females than older males. A number of robustness checks, including a propensity score matching method, use of a polygenic risk scores, and a test of reproduction using the Survey of Consumer Finances corroborate these gender differences. Results from decomposition analyses of overconfidence indices show that relatively lower crystallized intelligence of older females is one of the main reasons that widens the gender gap among older adults. Lower likelihoods of attaining a college education degree and being in a relationship are additional contributing factors that explain the gender gap. This study provides insights into understanding the gender gap in financial knowledge and its implications for government education or intervention programs to support older adults' wellbeing in retirement.
Journal of Family and Economic Issue, 2022
Financial knowledge is often referred to as the key to improving one’s financial decisions. Becau... more Financial knowledge is often referred to as the key to improving one’s financial decisions. Because of the evident racial/ethnic disparities in wealth, income, and financial wellbeing, it is important to understand the differences in the level of financial knowledge as well. This study examined whether there is a racial/ethnic gap and to understand what might account for potential differences with OLS regression and Blinder-Oaxaca decomposition analyses. The results from the 2018 National Financial Capability Study, with the analytic sample of 21,038 observations showed significant racial/ethnic gaps in objective and subjective financial knowledge, as well as overconfidence in financial knowledge. The level of overconfidence was greatest among Black respondents, followed by Hispanic, White, and Asian/Other. According to the decomposition analyses’ results, individual characteristics explained the majority of the gap in Hispanic-White and Asian/Other-White overconfidence. Other key factors that helped explain the disparities in financial knowledge measures included sociodemographic variables, such as age, marital status, education, and occupation, and financial variables, such as income, homeownership, and financial hardship. With a deeper understanding of the factors related to racial/ethnic differences, policymakers and educators could improve their strategies to enhance financial knowledge and narrow the knowledge and wealth gap among racial/ethnic groups.
Springer Publishing Connect, 2022
This study explores financial knowledge patterns from 2009 to 2018, focusing on objective and sub... more This study explores financial knowledge patterns from 2009 to 2018, focusing on objective and subjective knowledge, overconfidence in financial knowledge, and “Don’t know” responses. We used four waves of National Financial Capability Study (NFCS) datasets. Objective financial knowledge was lower in 2018 than in 2009, and the proportion of individuals who were overconfident was higher in 2018 than in 2009. The mean number of “Don’t know” responses to objective knowledge questions increased consistently over the period. Most of these patterns persisted when we controlled for household characteristics in regressions. The lack of increases in financial knowledge despite formal and informal educational efforts raises the question as to whether existing efforts for formal and informal education are sufficient.
Financial Services Review, 2022
This study examined the association between financial professional use and financial well-being u... more This study examined the association between financial professional use and financial well-being using the 2016 National Financial Well-Being Survey. We tested financial well-being across various sources of financial advice such as financial professionals, family, employer, community, financial institution, and government. Results from the logistic regression showed that those who received advice from financial professionals had higher levels of financial well-being than those who did not receive advice from a financial professional. Additional analyses with those who received financial advice from any source also showed that use of a financial professional had a stronger positive asso- ciation with financial well-being. This study provides important insights to help consumers and edu- cators better understand the value of financial professionals.
International Journal of Bank Marketing, 2023
The purpose of this study is to investigate the racial/ethnic differences in mobile payment use a... more The purpose of this study is to investigate the racial/ethnic differences in mobile payment use and to explore the contributing factors to the differences.
Journal of Family and Economic Issues, 2023
This study leverages two national datasets to assess the changing value perceptions of higher edu... more This study leverages two national datasets to assess the changing value perceptions of higher education. Human capital and social contract theories are used to frame the analysis and discussion around the shifting perceptions. The study finds that, in 2016, approval rates for education borrowing dropped to the lowest level since 1992. Respondents who are younger, have debt, and are more willing to take risks are more likely to approve of borrowing. Women and Blacks are more likely to approve of borrowing. Women are more likely to indicate that the cost of higher education is not worth it. Income, education, and homeownership were associated with the belief that education was worth the cost, while having student loans was associated with the belief that education was not worth the cost. The results indicate that the social contract regarding higher education may be fracturing for specific groups in the US—specifically for women and those who need to borrow to finance their education. Implications for policymakers are discussed.
Applied Economics Letters , 2023
This study investigates retail investors’ behaviour when the US stock market dropped precipitousl... more This study investigates retail investors’ behaviour when the US stock market dropped precipitously by 10% in early February 2018. Results show that investors with higher investment literacy were more likely to buy additional stocks and less likely to sell their stocks, which indicates that they expected a quick recovery of the market. We also find that older investors and investors with greater risk aversion were more likely to hold their positions without buying or selling stocks. Similar evidence is found in reactions to a 20% hypothetical market drop. This study sheds light on the meagre literature on retail investors’ behaviour during market crash.
Journal of Financial Counseling and Planning, 2023
International Journal of Bank Marketing , 2023
The COVID-19 pandemic has caused hundreds of thousands of people to suffer severe illness or die ... more The COVID-19 pandemic has caused hundreds of thousands of people to suffer severe illness or die and has had severe effects on individuals’ financial well-being as well. Unfortunately, it is very likely that the pandemic has had a disproportionate effect, particularly on vulnerable and underserved groups, including immigrants in the USA. This study aims to examine the association between perceived health risk and perceived financial risk attributable to COVID-19, and focuses on their heterogeneous effects depending upon immigrant status.
Journal of Family and Economic Issues , 2023
Financial Services Review, 2023
This study explores short-term and long-term financial behaviors of military and civilian house- ... more This study explores short-term and long-term financial behaviors of military and civilian house- holds in the United States. We investigate the role of financial knowledge and financial education on financial behaviors. Using the 2018 National Financial Capability Study (NFCS), results indicated military households had higher financial knowledge scores, greater receipt of financial education, and higher financial behaviors. Multivariate analyses show that objective and subjective financial knowledge were associated positively with short-term and long-term financial behaviors of military and civilian households. Experiencing financial education was positively associated with the long- term behaviors of military households. This study provides insights for policymakers and financial practitioners.
Journal of Consumer Affairs, 2023
Survey protocols measuring financial knowledge typically offer a don't know (DK) response option ... more Survey protocols measuring financial knowledge typically offer a don't know (DK) response option along with factual statements about personal finance. The potential problem of this practice is that a DK response could capture something other than financial knowledge and mislead empirical research on the association between financial knowledge and behavioral outcomes. In this study, we examined whether the current scales are contaminated by systemic personality effects and how reduced validity influences analytical modeling of the knowledge effect. Two studies with different national datasets were conducted in this investigation. Study 1 found that personality types and emotions are partially correlated with the propensity to give a DK response. Study 2 showed that controlling for DK response options alters the association between financial knowledge and behaviors in regression analyses. Our findings suggest that a DK response reduces construct validity of the financial knowledge score.
Applied Research Quality Life , 2023
The positive association between financial capability and financial wellbeing is well-established... more The positive association between financial capability and financial wellbeing is well-established in the literature. However, research is limited in examining the association from a long-term perspective with multi-year national data. This study attempted to fill this gap and examined the association between financial capability and financial wellbeing using pooled cross-sectional data from all five waves of National Financial Capability Studies (NFCS) conducted between 2009 and 2021, covering periods both before and after the onset of the COVID-19 pandemic. Financial capability was assessed using both a financial capability index and a set of financial capability components. Descriptive statistics revealed that financial wellbeing, as measured by financial satisfaction, showed an upward trend from 2009 to 2021. The financial capability index also exhibited an upward trend, with a dip in 2015. Four financial capability components showed different trends over the 12-year period. The results of multiple regression analyses conducted on the pooled sample and yearly samples indicated that, overall, the financial capability index was positively associated with financial wellbeing. Specifically, financial capability components, including subjective financial knowledge, desirable financial behavior, and perceived financial capability, were positively related to financial wellbeing. However, objective financial knowledge was negatively associated with financial wellbeing, consistent with findings from previous studies. The results suggested that the potential positive effects of the financial capability index on financial wellbeing increased over the survey years, primarily driven by the effects of subjective financial knowledge.
International Journal of Bank Marketing, 2023
Purpose – Financial inclusion can be proxied by banking status. The purpose of this study is to i... more Purpose – Financial inclusion can be proxied by banking status. The purpose of this study is to investigate the
potential effects of financial capability on the financial fragility of US adults with various banking statuses
during the COVID-19 pandemic.
Design/methodology/approach – This study utilized the 2021 National Financial Capability Study (NFCS)
dataset to investigate the relationship between financial capability and financial fragility among consumers
with different banking statuses. The analysis controlled for employment shocks, health shocks and other
consumer characteristics. Banking statuses included fully banked, under-banked (utilizing both banking and
alternative financial services) and unbanked individuals. Logistic regression analyses were conducted on both
the entire sample and subsamples based on banking statuses.
Findings – The results showed that financial capability was negatively associated with financial fragility. The
magnitude of the potential negative effect of financial capability was the greatest among the fully banked
group, followed by the underbanked and unbanked groups. Respondents who were underbanked or unbanked
were more likely to experience financial fragility than those who were fully banked. Additionally, respondents
who were laid off or furloughed during the pandemic were more likely to experience financial fragility than
those without employment shocks. The effect size of financial capability factors was greater than that of
COVID-19 shock factors. These results suggest that higher levels of both financial capability and financial
inclusion may be effective in reducing the risk of financial fragility.
Originality/value – This study represents one of the first attempts to examine the potential effects of
financial capability on financial fragility among consumers with various banking statuses during the
COVID-19 pandemic. Furthermore, this study offers new evidence to determine whether COVID-19 shocks, as
measured by health and employment status, are associated with financial fragility. Additionally, the effect size
of financial capability factors is greater than that of COVID-19 shock factors. The results from the 2021 NFCS
dataset provide valuable insights for banking professionals and public policymakers on how to enhance
consumer financial wellbeing.
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Papers by Kyoung Tae (KT) Kim
potential effects of financial capability on the financial fragility of US adults with various banking statuses
during the COVID-19 pandemic.
Design/methodology/approach – This study utilized the 2021 National Financial Capability Study (NFCS)
dataset to investigate the relationship between financial capability and financial fragility among consumers
with different banking statuses. The analysis controlled for employment shocks, health shocks and other
consumer characteristics. Banking statuses included fully banked, under-banked (utilizing both banking and
alternative financial services) and unbanked individuals. Logistic regression analyses were conducted on both
the entire sample and subsamples based on banking statuses.
Findings – The results showed that financial capability was negatively associated with financial fragility. The
magnitude of the potential negative effect of financial capability was the greatest among the fully banked
group, followed by the underbanked and unbanked groups. Respondents who were underbanked or unbanked
were more likely to experience financial fragility than those who were fully banked. Additionally, respondents
who were laid off or furloughed during the pandemic were more likely to experience financial fragility than
those without employment shocks. The effect size of financial capability factors was greater than that of
COVID-19 shock factors. These results suggest that higher levels of both financial capability and financial
inclusion may be effective in reducing the risk of financial fragility.
Originality/value – This study represents one of the first attempts to examine the potential effects of
financial capability on financial fragility among consumers with various banking statuses during the
COVID-19 pandemic. Furthermore, this study offers new evidence to determine whether COVID-19 shocks, as
measured by health and employment status, are associated with financial fragility. Additionally, the effect size
of financial capability factors is greater than that of COVID-19 shock factors. The results from the 2021 NFCS
dataset provide valuable insights for banking professionals and public policymakers on how to enhance
consumer financial wellbeing.
potential effects of financial capability on the financial fragility of US adults with various banking statuses
during the COVID-19 pandemic.
Design/methodology/approach – This study utilized the 2021 National Financial Capability Study (NFCS)
dataset to investigate the relationship between financial capability and financial fragility among consumers
with different banking statuses. The analysis controlled for employment shocks, health shocks and other
consumer characteristics. Banking statuses included fully banked, under-banked (utilizing both banking and
alternative financial services) and unbanked individuals. Logistic regression analyses were conducted on both
the entire sample and subsamples based on banking statuses.
Findings – The results showed that financial capability was negatively associated with financial fragility. The
magnitude of the potential negative effect of financial capability was the greatest among the fully banked
group, followed by the underbanked and unbanked groups. Respondents who were underbanked or unbanked
were more likely to experience financial fragility than those who were fully banked. Additionally, respondents
who were laid off or furloughed during the pandemic were more likely to experience financial fragility than
those without employment shocks. The effect size of financial capability factors was greater than that of
COVID-19 shock factors. These results suggest that higher levels of both financial capability and financial
inclusion may be effective in reducing the risk of financial fragility.
Originality/value – This study represents one of the first attempts to examine the potential effects of
financial capability on financial fragility among consumers with various banking statuses during the
COVID-19 pandemic. Furthermore, this study offers new evidence to determine whether COVID-19 shocks, as
measured by health and employment status, are associated with financial fragility. Additionally, the effect size
of financial capability factors is greater than that of COVID-19 shock factors. The results from the 2021 NFCS
dataset provide valuable insights for banking professionals and public policymakers on how to enhance
consumer financial wellbeing.