Financial Literacy as a Barrier to Entrepreneurial Ambitions? Students from Disadvantaged Backgrounds

Overview

Previous UK Governments have set out their ambitions to increase the level of financial literacy through training within the UK, but there is mixed evidence of its success. International evidence suggests that those from disadvantaged groups may also be left behind, even when considering a sub-sample of educationally more successful young people that are studying at university.

The consequences of this could be important in terms of alleviating wider deprivation as financial literacy is associated with engagement with entrepreneurship  and better performance where enterprises are started. Entrepreneurship has been perceived as one way of alleviating deprivation, but existing support has been less successful in assisting those from disadvantaged groups. More recent periods of higher rates of inflation leading to rising costs make financial literacy all the more important for the enterprises started by disadvantaged groups which are often more marginal in the first place.

Building on the work of previous studies the research will seek to further explain the lower financial literacy of those from disadvantaged groups, but also the consequences for the entrepreneurial aspirations of these groups. In gaining more insight into both the relationship of lower financial literacy with entrepreneurial aspirations, but also the causes of this lower financial literacy, more effective interventions can be devised to boost financial literacy in a manner that boosts entrepreneurship. The focus will be on those from disadvantaged groups who are more highly educated and are studying on university courses, representing an underexploited pool of entrepreneurial potential.

In order to undertake the research, it is envisaged that the project would build from the ‘Student Financial Literacy: Skills and Awareness’ survey conducted at Nottingham Trent University and De Montfort University, but incorporating insights from models of entrepreneurial motivation and aspiration pertinent to deprived areas. This will allow statistical analysis of the relationships between the perceptions held, advice sought, financial literacy skills developed, and entrepreneurial motivation/aspirations to be explored, using approaches such as regression analysis or structural equation models (SEMs).

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