Construct validity of a financial literacy instrument

Abstract

The aim of the present study was to validate the factorial structure and psychometric properties of a financial literacy instrument in a South African student sample. A total of 265 students completed the measure (58.5% = female; 58.62% = black, 29.3% = white, 13.09 = other; mean age = 21.35 years). Exploratory factor analysis (EFA) of the data yielded two factors: financial knowledge and abilities, and financial behaviour and experiences Both the reliability and validity scores from the financial literacy instrument were acceptable. The results of the study suggest this measuring instrument has construct validity and is usable for research purposes.

Keywords:

• construct validity
• exploratory factor analysis (EFA)
• financial behaviour
• financial decision-making
• financial literacy
• measuring instrument