Financial capability, financial socialisation and professional skills of Accounting students studying in KwaZulu-Natal universities.

Abstract

The global discourse on financial capability and financial socialisation has gained momentum in recent times. Professional skills gradually become an issue that prospective employers say most graduates are missing. This has aroused policymakers and academics’ interest in the importance of financial capability, financial socialization and professional skills in maintaining economic and financial stability. The global financial crisis of 2007/2008 was a consequence of the lack of such capability. At local and international level, much attention has been paid to financial capability and little has been done on financial socialisation and professional skills, especially when it comes to financial decision making and related skills. Both young and old have been affected by poor financial decision making which has negatively affected the economy. What further complicates the poor financial decision making is the fact that there is also bad influence coming from external sources and lack of requisite skills for sustainability. However, it remains unclear whether university students enrolled in financially related courses, particularly accounting students in the KwaZulu-Natal Province of South Africa, have higher financial capability levels as measured by financial knowledge, financial attitudes, numeracy skills and financial behaviour. It also remains an unknown factor whether what role external factors play in financial decision measure by parental influence, peer influence and social media play a critical role in the financial decision making. It is also not known whether students studying for accounting degrees in professionally accredited institutions are more financially capable than their counterparts in non-accredited institutions. Finally, there is a lack of clarity on whether financial knowledge, numerical skills, financial attitudes and financial behaviour as components of financial capability can be influenced by financial socialisation.

This study was motivated by the existence of these grey areas in the current literature. It aimed to provide empirical evidence on these issues that will inform curriculum development and policy formulation on financial literacy matters in South Africa.

Self-administered questionnaires were utilised to collect primary data from undergraduate accounting students studying at the University of KwaZulu-Natal (UKZN), Mangosuthu University of Technology (MUT) and Durban University of Technology (DUT). The Statistical Package for the Social Sciences (SPSS 25) was used to analyse the data. Descriptive statistics, Bivariate regression analysis and One-way Analysis of Variance (ANOVA) were employed to investigate the financial capability of accounting students and confirmatory and exploratory factor analysis was used to identify the factors that influence such capability. Cross Tabulation and Regression analysis were used to ascertain the relationship between level of study and financial capability and factor analysis was employed to determine the factors that influence the accounting students’ financial capability, financial socialisation and professional skills. Regression analysis was also used to evaluate the difference in professional skills and financial capability between UKZN (SAICA accredited) and DUT and MUT (non-SAICA accredited). Finally, Chi-square was employed to establish the relationship among the financial capability, financial socialisation and professional skills of accounting students.

The results revealed that more of the respondents were female than male. The overall analysis of the financial capability of the accounting students indicated that most of the respondents (n=1416; 89.5%) have high financial capability. However, only (n=229; 14.5%) were found to have high levels of financial knowledge. With (n=1513; 95.6%), (n=1286; 81.3%), and (n=1394; 88.1%), it was found that most of the respondents have positive financial attitudes, good financial behaviour, and high numeracy skills, respectively. The computations in relation to financial socialisation and professional skills showed that most of the respondents are not influenced by social media, while most have excellent professional skills, with (n=1149; 72.6%) and (n=1506; 95.2%), respectively.

The financial capability of the accounting students is high compared to the results of previous studies conducted among the general population. However, the results for financial knowledge (a component of financial capability) are low, which is consistent with the findings of other studies. The finding that financial attitudes, financial behaviour and numeracy skills significantly influence financial capability is a unique feature of this study, as it has not been reported in the literature reviewed. As expected, the numeracy skills of the accounting students were high compared to previous research. Nonetheless, much remains to be done to improve the financial knowledge of students in general and accounting students in particular.