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This book presents selected papers on the factors that serve to influence an individual capacity in financial decision-making. Initial chapters provide an overview of the cognitive factors affecting financial decisions and suggest a link between limited cognitive capacity and the need for financial education. The book then expands on these cognitive limitations to explore the tendency for overconfidence in decision-making and the interplay between rational and irrational factors. Later contributions show how credit card companies benefit from limitations in consumer financial literacy, how gender and cognition intersect to play an important role in financial decision-making, and how to improve financial capacity through financial literacy and education campaigns, including those addressing developed marketplaces. This comprehensive collection of papers will be of value to all readers who seek to better understand the multi-factorial and complex nature of personal financial management in today economic climate.

Annotation

Introduction & BackgroundAccess to affordable credit is essential for individuals living on low incomes to participate in society fully. However, due to their limited credit history and volatile incomes, many cannot access mainstream sources of credit, such as credit cards and personal loans.
As a result, they often must rely on more expensive sources of credit such as payday loans, doorstep loans or rent-to-own loans. This leads to them paying more for credit, also referred to as the poverty premium.
Incurring the poverty premium exacerbates the financial challenges faced by already vulnerable individuals and can lead to a cycle of financial distress. Identifying the behaviours and factors that lead to a need for high-cost credit can help in identifying individuals who are most vulnerable to incurring the poverty premium.
Objectives & ApproachTo achieve this, we rely on anonymized Open Banking transaction data from 100,000 individuals provided by a UK-based social lender.Given the latent nature of vulnerability, we identify indicators of vulnerability to poverty premium which include frequency of overdraft use, previous debt problems, low financial resilience, and indebtedness. We use a copula-based approach to create an index of vulnerability to poverty premium.
This is based on weighting the individual indicators using their Spearman rank correlation coefficient. We use a fixed effects model to identify the factors that contribute to this vulnerability, where the index of vulnerability is the dependent variable.
Relevance to Digital FootprintsWe use a rich and granular dataset on individual financial transactions to address a key social issue. The findings from this study can inform policy and industry efforts to promote greater credit affordability for these vulnerable individuals. This is particularly important due to the renewed concerns regarding the increased use of high-cost credit by individuals living on low incomes due to COVID-19 and the increased cost of living.
ResultsOur findings show that variables related to the financial profile of an individual are important driving factors of the vulnerability to poverty premium. These include the number of salary sources, frequency of salary receipt, benefit receipt and savings frequency. Other variables related to spending behaviour such as gambling, volatility in fixed expenses and high transaction counts all have positive relationships with this vulnerability.
Conclusions & ImplicationsThis study is a first step towards examining the determinants of vulnerability to poverty premium by analyzing an Open Banking transaction data set. The innovative feature of this work is the creation of an index of vulnerability to poverty premiums based on various indicators of financial distress and high-cost credit use.
Our findings on the relationships between the individual's financial profile and the vulnerability to poverty premium suggest that policymakers should consider targeting interventions for individuals with specific profiles to alleviate the need for high-cost credit. For example, programs to promote regular savings or financial education for gamblers and people with volatile spending behaviour can help assist these individuals manage their finances better.

PurposeTo provide an investigation of e‐commerce development via an examination of the forces shaping web site development among intermediaries in an extended supply chain.Design/methodology/approachA two‐stage research design combining qualitative and quantitative methods. Unstructured interviews conducted in the spirit of phenomenology elicited a range of critical incidents of web site development which were further examined via a quantitative survey of intermediaries to test for relationships between critical incidents and web site adoption.FindingsAdopter groups were identified which showed statistically significant differences in terms of the critical incidents driving web site development as well as differences in terms of key company characteristics. The timing of web site adoption was also found to affect the subsequent use of the technology, with early adopters making more advanced use.Research limitations/implicationsLimitations associated with the use of retrospective data and respondents' abilities to recall events, although attempts were made to minimise these through external validation.Practical implicationsProvides useful insights for providers of financial services in understanding how to progress the adoption of web site technology by intermediaries, suggesting the development of networks of relationships involving IT suppliers rather than simply focusing on relationships with preferred intermediaries.Originality/valueAddresses a research gap in terms of business‐to‐business e‐commerce and offers practical guidance on how to widen participation in the financial services supply chain.