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Financial literacy and its influence on consumers’ internet banking behaviour

Author

Listed:
  • Panayiotis C. Andreou

    (Cyprus University of Technology and Durham University)

  • Sofia Anyfantaki

    (Bank of Greece and Athens University of Economics and Business)

Abstract

This study examines the level and antecedents of financial literacy and investigates its influence on consumers’ internet banking behaviour. The focus is on Cyprus, a country that experienced an unprecedented financial crisis in 2013 that caused an enormous shrinkage of the banking sector. Ever since then, banks have been investing in financial innovations, such as internet banking (i-banking), aiming to enhance customer service and efficiency in the age of financial digitalization. Notwithstanding, the results show that financial literacy is yet too low in Cyprus, whereby only 37.33% of the study’s survey adults have a good financial knowledge proficiency level. The results indicate that financially literate consumers show a strong preference for frequent use of i-banking, whereby the odds of using i-banking frequently are increased by more than 64% for one standard deviation increase in the respondents’ financial knowledge score. The findings highlight the crucial interplay of digital and financial sophistication, and their positive influence on consumers’ usage of digital financial services. The evidence from Cyprus also points to policy directions according to which digital financial education programs should be a central element in national financial literacy strategies.

Suggested Citation

  • Panayiotis C. Andreou & Sofia Anyfantaki, 2019. "Financial literacy and its influence on consumers’ internet banking behaviour," Working Papers 275, Bank of Greece.
  • Handle: RePEc:bog:wpaper:275
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    Cited by:

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    2. Panagiotis Kostopoulos & Christos Tzovas & Constantinos Chalevas & Nicos Sykianakis, 2022. "Alternative Banking Channels in the Greek Banking Sector," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 12(2), pages 136-168.

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    More about this item

    Keywords

    financial literacy; internet banking; digital literacy; financial education; national strategy.;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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