Theses and Dissertations

Date of Award


Document Type


Degree Name

Master of Science (MS)



First Advisor

Dr. Amie Bostic

Second Advisor

Dr. Salvatore Restifo

Third Advisor

Dr. Steven Foy


Financial literacy is important to individuals as well as to the economy. It is touted as crucial for individuals because it allows them to make informed decisions on credit and saving products. To the economy, it is the bedrock upon which micro-and macro-policies are embedded. Financial literacy is said to be a springboard to financial capability, enhancing a person’s ability to manage their monies, make informed investment decisions, and take control of their financial advancement. Low financial literacy is often associated with larger unbanked or underbanked populations. According to 2019 NFEC data, after administering a financial literacy test, only 66% of the responses were correct. They concluded there to be a ‘financial illiteracy epidemic’ in the United States. Recent studies have noted that financial literacy is especially low among minorities/people of color compared to whites. Different explanations have emphasized limited financial literacy education as the leading cause of this gap, yet further research indicates minorities are the primary recipients of financial literacy education programs.

Although there has been a concerted effort by federal and state governments in developing and executing different financial literacy programs targeting minorities and women, the financial literacy gap persists. Recently, research studies have focused on family background, neighborhoods, and income to explain the financial literacy gap, but there is still a missing link. Many people rely on financial advisors as experts on financial matters to enhance their financial decision-making, yet because these are professional advisors, they typically charge for their services; due to the cost implication or skepticism of their impartiality, these services may be out of reach or underutilized among minorities. Instead, minorities may rely on their social and informal networks to gather needed financial information. In this paper, we investigate racial/ethnic differences in sources of financial information, even when levels of financial literacy may be equal.

Using the 2016 wave of the Survey of Consumer Finances via the Luxembourg Wealth Study, we investigate how sources of financial information vary by racial/ethnic group, particularly related to the use of financial professionals and social networks for investing and borrowing decisions. Preliminary analyses indicate White respondents are more likely to utilize financial professionals. In contrast, Black respondents are more likely to use social networks, even when controlling for financial literacy and self-assessed financial knowledge. Furthermore, white respondents are more likely to utilize financial professionals as their financial literacy increases. In contrast, black and Hispanic respondents see little change in their probability of using professionals as financial literacy increases. We interpret these findings are part of the missing link between financial literacy and financial capability, with minorities being less capable or less willing to turn to financial professionals for information.


Copyright 2022 Catherine Wacera Muriuki. All Rights Reserved.

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