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Financial literacy and crime incidence
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Justin Jin 
, Suyi Liu, Khalid Nainar
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
Financial literacy is a determinant of individual wealth accumulation and social well-being. In this study, we examine the relationship between financial literacy and crime incidence using financial literacy data and crime data in the U.S. from 2009 to 2018. We posit that citizens’ financial literacy is negatively associated with the crime rate because financially literate citizens are better at managing their wealth and improving their economic condition. They are less likely to have unfulfilled basic needs, and thus are less prone to crimes, especially crimes driven by economic need. We find that the financial literacy of citizens is negatively associated with crime rates. Furthermore, examining on a disaggregated basis, financial literacy is negatively associated with violent crimes and property crimes. Our findings reveal the necessity of mandating financial education programs in workplaces and highlighting the role of financial literacy in corporate governance. This study is the first to empirically address the criminological consequences of low financial literacy and underline the way to improve social security by increasing people’s financial condition.
Keywords: Financial Literacy, Crime Incidence, Violent Crimes, Property Crimes
Authors’ individual contribution: Conceptualization — J.J., S.L., and K.N.; Methodology — J.J., S.L., and K.N.; Writing — Original Draft — J.J., S.L., and K.N.; Writing — Review & Editing — J.J., S.L., and K.N.; Supervision — J.J., S.L., and K.N.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: A20, D14, D63, G10, G41, I26
Received: 30.05.2022
Accepted: 09.08.2022
Published online: 12.08.2022
How to cite this paper: Jin, J., Liu, S., & Nainar, K. (2022). Financial literacy and crime incidence. Corporate Ownership & Control, 19(4), 72–79. https://doi.org/10.22495/cocv19i4art7
