Finance FINANCIAL CAPABILITY AND TECHNOLOGY IMPLICATIONS FOR ONLINE SHOPPING Gentjan Çera1, Quyen Phu Thi Phan2, Armenia Androniceanu3, Edmond Çera4 1 Tomas Bata University in Zlin, Faculty of Management and Economics, Czech Republic, ORCID: 0000-0002-9324-181X, [email protected]; 2 The University of Danang, University of Economics, Faculty of Marketing, Vietnam, ORCID: 0000-0002-4048-1369, [email protected]; 3 Bucharest University of Economic Studies, International Centre for Public Management, Romania, [email protected]; 4 Tomas Bata University in Zlin, Faculty of Management and Economics, Czech Republic, ORCID: 0000-0003-3546-2101, [email protected]. Abstract: To promote online shoppers’ long-term interest, consumers need to have the knowledge and ability to avoid problems with fi nancial issues. Financial capability helps to put consumers on the path to a sustainable fi nancial future. However, previous studies only focused on fi nancial capability in a fi nancial context. To handle personal fi nance systematically and successfully in an online setting, this study extends an enhanced understanding of how fi nancial capability on online consumer behaviour. Based on the data of 690 respondents collected by a face-to-face from eight main regions in Albania, this study employed principal components analysis and logistic regression in order to investigate the effect of consumers’ fi nancial capabilities and technology use on the decision to purchase online. The outcome of this study fi rstly identifi es six dimensions of fi nancial capabilities, namely, digital banking usage, fi nancial service risk, fi nancial advice, payment risk, risk tolerance, and fi nancial attitude. Secondly, the fi nding revealed that individuals who use smartphones and administrate a social media account, are more likely to involve in purchasing through online channels. Moreover, the decision to purchase online is more prone for those individuals who manifest high levels in digital banking usage, fi nancial advice, prior bank experience and technology usage, and low levels in attitude towards payment risk and attitude towards risk tolerance. This paper offers useful insights concerning the determinants of online purchasing by combining individuals’ fi nancial capability, technology and social media usage along with its demographic characteristics. In term of practical contribution, this study provides a useful model by incorporating for measuring and managing consumers’ fi nancial capability to enhance their involvement and to reduce their cognitive dissonance in the online shopping context. This study also contributes to the accumulated knowledge and encourages consumers to use digital banking and consult their fi nancial issues when purchasing online. Keywords: Financial capability, logistic regression, online shopping, prior bank experience, smartphone, social media. JEL Classifi cation: G53, D91. APA Style Citation: Çera, G., Phan, Q. P. T., Androniceanu, A., & Çera, E. (2020). Financial Capability and Technology Implications for Online Shopping. E&M Economics and Management, 23(2), 156–172. https://doi.org/10.15240/tul/001/2020-2-011 Introduction shopping has been widely accepted as a way of The Internet plays a vital role in our daily life purchasing products and services. It provides in that people can easily access our world and a dominant alternative to traditional retail open international borders. Meanwhile, online shopping. Consumers can search for more 156 2020, XXIII, 2 DOI: 10.15240/tul/001/2020-2-011 EEM_2_2020.inddM_2_2020.indd 115656 11.6.2020.6.2020 116:39:486:39:48 Finance information and select to compare product role in their purchase decision towards all and price, more options, convenience. Online products, not only towards fi nancial products. shopping offers more satisfaction to consumers Therefore, in the authors’ knowledge, this is save time (Katawetawaraks & Wang, 2011). the fi rst study that investigates the relationship However, the investigation of online consumer between consumers’ fi nancial capability on behaviour is relatively underdeveloped consumers’ purchase decisions generally in the (Smith et al., 2013). Although online shopping online context. behaviour is not a new topic, the unanswered Financial capability captures people’s question that what determines consumers’ knowledge of fi nancial matters, their ability willingness to purchase a product online have to manage their money and to take control of attracted many researchers. In this line of their income. Based on Sen’s capability theory study, researchers identifi ed factors infl uencing (1993), fi nancial capability refers to the ability on purchase behaviour of the consumer based to act (e.g. people’s knowledge, skills, attitudes, on Theory Planned Behavior (Ajzen, 1991), habits, motivations, confi dence and self- Technology Acceptance Model (Davis, 1989), effi cacy), and opportunity to act (e.g. people’s Stimulus–Organism–Response (Mehrabian awareness of basic fi nancial products they need & Russell, 1974). The fi rst approach focused to manage their money lives) (Collard, 2019). on the direct impact on consumer behaviour. Previous studies of fi nancial capability used For example, Wu and Ke (2015) integrated specialist surveys (Atkinson, McKay, Kempson, a model of personality traits, perceived risk & Collard, 2006; Kempson, Collard, & Moore, and technology acceptance in online shopping 2005; Taylor, 2011). Adopting Sen’s capability behaviour. Another approach focused on the theory (1993), our paper extends existing indirect impact of attitude, trust on consumers’ knowledge about the potential approach purchase behaviour (Al-Debei, Akroush, of measuring key components of fi nancial & Ashouri, 2015; Belás & Gabčová, 2016; capability that relate to consumers’ knowledge, Oluwafemi & Adebiyi, 2018). Nevertheless, attitudes toward risk and fi nancial matters, both approaches focus on consumers’ fi nancial management using responses to behavioural intention as a predictor of actual survey questions in a bank survey about purchase behaviour. This study explores (the consumers’ actual shopping behaviour. While direct impact of consumers’ fi nancial capability most of the previous studies merely focused on on their actual purchase decisions) consumers’ fi nancial capability in fi nancial decision making, actual purchase decisions and its antecedents. this research makes an important contribution Recently, it is acknowledged that with the to the current literature by extending our rise of service delivery, in general, and online knowledge of fi nancial capability on consumer shopping, in particular, some other aspects online shopping decision making. (such as security, trust and perceived risk) In addition, to study the online shopping have become key issues for online behaviour topic, technology and social media usage have (Kim, Ferrin, & Rao, 2008; Mou, Shin, & come into the scholars’ attention (Hubert, Blut, Cohen, 2017; Silva, Pinho, Soares, & Sá, 2019; Brock, Backhaus, & Eberhardt, 2017; Pucci, Suchanek & Kralova, 2018). However, there is Casprini, Nosi, & Zanni, 2019). To be able to limited attention relating to consumers’ fi nancial predict the effects of technology usage on matters while many customers have had very online purchasing, previous studies often little understanding of fi nances, how credit explored the acceptance of technology (Hubert works and the potential fi nancial risk (Lusardi et al., 2017); and several studies focused on & Mitchell, 2014). specifi c technologies such as a smartphone Unlike previous research, this study focuses (Voropanova, 2015), social media (Mikalef, on the potential effect of consumer fi nancial Giannakos, & Pateli, 2013). However, less capability on their online purchase decisions. is known about the reasons that infl uence Additionally, in the fi eld of consumer fi nance, consumers’ actual online shopping about the previous studies focused on the infl uence of wide ranges of technologies available to them fi nancial capability on consumers’ behaviour in their everyday lives. This study focuses on toward fi nancial products/service. In this study, two types of technologies, namely, smartphone we argue that customers’ knowledge and and social media. Additionally, except for understand about fi nancial matters play a vital age, gender, income, occupation as control 2, XXIII, 2020 157 EEM_2_2020.inddM_2_2020.indd 115757 11.6.2020.6.2020 116:39:486:39:48 Finance variables, this study explores the impact of other behaviour by exploring the potential role of demographic (e.g. prior banking experience) on fi nancial capability, technology usage, and prior online shopping. The widespread adoption of the bank experience on actual shopping behaviour. banking sector is strongly linkage in the overall This study also contributes to the literature online environment (Hamidi, Rad, & Jahany, of fi nancial capability by using a unique set 2012), customer with more banking experience of variables to measure fi nancial capability. tend to choose the Internet as a platform for This can be informative for online vendors shopping. However, the impact of prior banking to develop effective fi nancial strategies to experience on actual online purchase has not help tackle consumer fi nancial matters when been thoroughly investigated. The current study shopping online. also fi lls this gap in the literature. Next part of this paper is dedicated to the Furthermore, most of the studies in online literature review and hypotheses development. shopping pivoted on the developed countries’