Advances in
Financial Education

Concomitant with the development of the mutual fund industry over the last five decades is the evolution of a rich academic literature that addresses a wide variety of mutual fund issues. The purpose of this article is to review the more widely cited studies in the areas of mutual fund performance, market timing, and persistence, and to offer some guidance in these areas for potential future research. In the area of mutual fund performance, more recent findings differ little from earlier results in that they too find that fund managers are generally incapable of outperforming the market. Similarly, the papers on market timing indicate that fund managers, by and large, are unable to time market movements. In the area of persistence, a variety of studies have modified tests based on benchmarks, models, time periods, and combinations of the same. No study to date has presented convincing evidence that there is persistence in mutual fund performance. Currently, mutual fund research appears to be evolving in the following directions: (1) the assessment of mutual fund performance at the fund family level; (2) the investigation of fund managers’ market timing ability using conditional models of performance, which have not yet been fully exploited; and (3) the evaluation of performance persistence relative to both fund flows and to fund families. Other extant factors in the mutual fund industry, such as increased regulation, will also likely affect the direction of future mutual fund research.

Accounting and finance students often question the relevance of concepts taught in individual units in an undergraduate degree. It is not uncommon for them to view their undergraduate degree as a series of twenty-four units, where disciplines are largely unlinked as an educational package. This paper discusses a pilot study of a computer driven Problem Based Learning exercise involving a simulated foreign exchange market that seeks to encourage students to draw on knowledge learned from past units in a cross-disciplinary manner. The pedagogical approach follows that first introduced by Revans and describes the initial cycle in an Action Learning process, to evaluate the relative success of the teaching approach adopted in an elective third year unit at Monash University, Melbourne, Australia. Results of the pilot study indicate that this teaching environment provides an extremely useful learning tool for students who are suddenly forced to confront problems as they occur–with square pegs and round holes, insufficient information, and a need to determine the best solution possible within an immediate time frame. The findings of the pilot study, based on four key critical success indicators; student satisfaction, learning as indicated by performance and participation, report writing and ethical behaviour are extremely positive.

We examine the publication success of papers presented at the seven leading finance conferences. Based on the proportion of conference manuscripts eventually published, we find that conferences are clustered into three tiers of quality. The top quality conferences include the Western Finance Association’s and the American Finance Association’s. High quality conferences include those sponsored by the Southern Finance Association, the Eastern Finance Association, and the Financial Management Association. Of average quality are the South-western Finance Association and the Midwest Finance Association conferences. We find similar results when we control for the quality of the journal in which the manuscripts appeared. Overall, about 33% of conference papers eventually were published. Individual conference publication rates ranged from a low of 16% (Midwest) to a high of about 46% (Western).

We present a new unifying theoretical framework for design and delivery of finance courses. Based on Vygotsky’s sociocultural theory, with its key concepts of assisted learning, community of practice, and zone of proximal development, we develop examples, techniques, and classroom strategies for effective teaching at all levels and for all types of finance courses. This broad framework can be used for developing and implementing an interactive, student-centered finance curriculum for traditional undergraduate, graduate, as well as non-traditional adult and/or part-time students.

Most college students have credit cards but few are aware of the health ramifications of credit card debt. To document the prevalence of credit card knowledge, usage, and usage correlated with health, the authors collected data in a cross-sectional student health survey administered to students enrolled in a course required of all undergraduates. Of those with credit cards, the majority paid their balance themselves, and most frequently used cards for school-related expenses and clothes. Using credit cards was significantly correlated with driving under the influence of alcohol, smoking, using cocaine, contemplating/attempting suicide, playing the lottery, and having sex under the influence of alcohol. Students who carried a credit card balance engaged in additional high-risk behaviors. Colleges and universities should recognize that personal financial management is an essential life skill that demands educating their students regarding the risks associated with freely available credit.