Financial self‐efficacy, financial literacy, and gender: A review

• Published date: 01 June 2022
• Author: Elise Frølich Furrebøe,Ellen Katrine Nyhus
• Date: 01 June 2022
• DOI: http://doi.org/10.1111/joca.12436

SPECIAL ISSUE

Financial self-efficacy, financial literacy, and

gender: A review

Elise Frølich Furrebøe | Ellen Katrine Nyhus

School of Business and Law, University of

Agder, Kristiansand, Norway

Correspondence

Elise Frølich Furrebøe, School of

Business and Law, University of Agder,

Postboks 422, Kristiansand, 4604,

Norway.

Email: elise.f.furreboe@uia.no

Abstract

Recognizing that gender differences in financial

literacy and financial self-efficacy (FSE) are sources of

power imbalance and gender inequality, we seek to

expand this field of research. Through, a semi-

systematic review, we describe and synthesize the latest

research regarding the role of self-efficacy in relation to

financial literacy and gender. We give an overview of

how FSE is conceptualized and measured, and identify

strengths and limitations regarding approaches used in

investigating FSE. We identify several issues that

should be addressed in future research. First, there are

conceptual ambiguities to be solved before a coherent

theoretical basis can be reached. Second, the variety of

measures of FSE used obstructs generalizability, calling

for more validation studies. Third, there is a lack of

studies obtaining causal inferences. Finally, few of the

reviewed studies focus specifically on gender differ-

ences or sources of variation in FSE. These issues

should be further investigated.

KEYWORDS

financial literacy, financial self-efficacy, gender differences

1|INTRODUCTION

The purpose of the present study is to assess the latest developments and advances in the

research area of financial self-efficacy (FSE) and gender, and its relevance to gender differences

Received: 9 March 2021 Revised: 20 September 2021 Accepted: 11 December 2021

DOI: 10.1111/joca.12436

© 2022 American Council on Consumer Interests.

J Consum Aff. 2022;56:743–765. wileyonlinelibrary.com/journal/joca 743

in financial literacy. The study is motivated by the growing number of studies showing gender

differences in financial literacy (Bucher-Koenen et al., 2017) as well as in FSE (Bannier &

Schwarz, 2018; Chan et al., 2017; Rothwell & Wu, 2019). Research further indicates that formal

financial education is insufficient for improved financial behavior (Fernandes et al., 2014;

Lührmann et al., 2015; Lusardi & Mitchell, 2007; Stolper & Walter, 2017), and that the transfor-

mation from financial knowledge to financial behavior relies on complex processes influenced

by factors, such as FSE (Asaad, 2015; Ranta & Salmela-Aro, 2018; Rothwell et al., 2016; Serido

et al., 2013). The understanding of FSE's role in financial literacy may be key to the develop-

ment of efficient strategies for financial education (OECD/INFE, 2012), and to reducing the

gender gap in financial literacy and financial behavior. With this literature review, we clarify

the latest research regarding the function and role of self-efficacy in relation to financial literacy

and gender. Moreover, to build knowledge about FSE, financial literacy, and gender, it is neces-

sary to establish clear concepts and validated measures as common bases. An overview of the

latest literature will reveal to what extent these necessary conditions are achieved. Finally, an

overview will identify important future directions for research in this area in terms of scope and

approach in order to increase our insights about the role of financial efficacy. While, there are

literature reviews on, for instance, academic self-efficacy (Manzano-Sanchez et al., 2018;

Usher & Pajares, 2008) and entrepreneurial self-efficacy (e.g., Newman et al., 2019), we have

not been able to find a literature review that specifically concerns FSE and gender.

1.1 |Financial self-efficacy defined

Self-efficacy refers to a person's perceived ability to accomplish a task (Bandura, 1982) given

past performance and expectations. Typically, self-efficacy determines, whether people will

avoid or pursue a certain action or how persistent they will be in pursuing a difficult task

(Bandura, 1982). For instance, a strong sense of self-efficacy boosts effort and (unless self-

efficacy is unreasonably strong) may enhance performance. A weak sense of self-efficacy

impairs performance. Self-efficacy is sometimes interpreted as equivalent to the colloquial term

“confidence,”however, there are important distinctions. While, confidence reflects a general

strength of belief, self-efficacy relates to specific behaviors. In addition, self-efficacy involves

both strength of belief and affirmation of the capability (Bandura, 1997). Thus, self-efficacy is a

multidimensional construct encompassing belief, control, and performance. Ajzen elaborates

on the control aspect, when describing the concept of perceived behavioral control (PBC). PBC

is based on Banduras self-efficacy concept and means “…the perceived ease or difficulty of per-

forming the behaviour”(Ajzen, 2002, p. 665). In other words, there is an emphasis on the indi-

vidual's power to produce desired behavior (Bandura, 2000). The behavior, and the

corresponding experience of success (or failure), may in turn contribute to increased

(or decreased) self-efficacy. A person experiencing behavioral control will likely attribute failure

or setbacks to insufficiencies that are subject to improvement, and therefore will persist in their

attempt to succeed. A person with low self-efficacy is associated with lack of control and a focus

on failure rather than success (Lown, 2011). Self-efficacy is a continuous evolvement of the

interaction between the cognitive and behavioral aspects that affect accomplishments.

The perceived abilities can be accurate or faulty; regardless, it affects a person's prospective

performance (Bandura, 1982), which in turn builds or reduces self-efficacy. It follows that self-

efficacy itself is modifiable, for example, through a series of successful mastery experiences

(Ouweneel et al., 2013). There are also indications of gender differences in self-efficacy

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