Financial Knowledge and Short- and Long-Term Financial Behavior Across Gender and Generations: Evidence from Japan

This study investigates the causal effect of financial knowledge on short- and long-term financial behaviors across gender and age groups in Japan. Using a comprehensive survey conducted by the Bank of Japan, we construct financial knowledge and short- and long-term financial behavior indicators. Our results show that financial knowledge positively impacts short- and long-term financial behaviors. The evidence indicates that women are generally more financially responsible than men, although they are less likely to invest in financial assets. We also find that older individuals tend to practice more responsible financial behavior than younger ones. Additionally, the effects of financial knowledge on most financial behaviors decline as age increases, except for asset investment. We also find that the gender gap in financial behaviors is lower among those with higher financial knowledge. Our findings have significant policy implications for designing financial education programs. Plain language summary Financial knowledge and short- and long-term financial behavior across gender and generations: evidence from Japan This study investigates how financial knowledge influences short- and long-term financial behaviors across gender and age groups in Japan. Using a comprehensive survey conducted by the Bank of Japan, we developed indicators for financial knowledge and short- and long-term financial behaviors. Our results indicate that financial knowledge has a positive impact on both short- and long-term financial behaviors. We also find that women generally exhibit more responsible financial behaviors than men, although they are less likely to invest in financial assets. Additionally, older individuals are more likely to engage in more prudent financial behaviors than younger individuals. As age increases, however, the influence of financial knowledge on most financial behaviors tends to diminish. Moreover, we find that the gender gap in financial behaviors narrows among those with higher levels of financial knowledge. These findings highlight the importance of financial education programs in shaping individuals’ financial behaviors and carry important implications for policy development.