2014 Conference

For the last three decades, technology innovation changes U.S. households’ finance substantially. Financial technology including both electronic banking and computer software helps households to increase the possibility of achieving higher lifetime utility through engaging more positive financial behaviors. However, little is known about which type of financial technology can improve households’ financial behavior. Using Survey of Consumer Finances 2010 data to explore the impacts of financial technologies on positive financial behaviors, we find that about 80% respondents used an ATM card, 73% respondents used a credit card, 81% respondents used direct deposit, 51% respondents used preauthorized debit, 21% respondents used phone banking, 62% respondents used computer banking, and 20% respondents used computer software to manage their household finance. In our multivariate analysis, we find that households who use direct deposit and computer software are more likely to have positive financial behaviors while households who use ATM cards, credit cards, phone banking, and computer banking are less likely to have positive financial behaviors. The findings of our study suggest that not all currently used financial technologies are helpful. Sophisticated financial technology such as computer software, which requires more specific human capital to use, may be very efficient in households’ finance management.