Document Type


Date of Original Version



Human Development and Family Science


This study examined the racial/ethnic differences in financial capability controlling for various factors focusing on the role of financial education. Furthermore, we investigated the contributing factors to clarify where such gap stems. Regression results using data from the 2018 U.S. National Financial Capability Study indicated that Whites had a higher level of financial capability across all indicators than other racial/ethnic minority groups. Respondents who participated in the financial education had a higher level of financial capability than those without financial education. Multiple sources, hours and quality of financial education were positively associated with the level of financial capability. Decomposition analyses showed that age, income, negative income shock and banking status contributed to explain the gaps of financial capability between Black and White respondents as well as between Hispanic and White respondents. Financial education was a contributing factor only to explain the Black–White difference and it may narrow the gap. However, we found substantial unexplained gaps between Black and Hispanic respondents attributed by unobservable characteristics. Results of this study provide important insights into the racial/ethnic disparities in financial capability that have implications for consumer policymakers, educators and researchers.