No.26 How Mental Accounting, and Financial Literacy Shape the Financial Situation of Overseas Filipino Workers (OFWs): A Multinomial Logistic Regression Study
This study explores the factors affecting the financial situation of overseas Filipino workers (OFWs), using survey data from 313 OFWs in two rural areas of the Philippines: Dingras and Bansalan. A multinomial logistic regression model was employed to analyze the influence of various aspects, including mental accounting, self-control, human capital, remittance behavior, and financial literacy, on the balance between income and expenditure. The findings indicate that higher education, long-term future orientation, and enhanced self-control contribute positively to better financial management, while participation in financial literacy programs, the presence of loans, and high personal expenditures are associated with poorer financial outcomes. The study introduces a novel method for measuring self-control among OFWs through a hypothetical scenario involving Jollibee, a popular fast-food chain in the Philippines. The paper concludes with policy recommendations to improve financial literacy, loan management, and spending habits, thereby enhancing the financial well-being of OFWs and their families.
Keywords:Overseas Filipino Workers, Mental Accounting, Financial literacy, Remittance Behavior
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