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Amortization plans are well-known financial operations to repay interest-bearing loans through a sequence of periodic payments. Since amortization plans are generally settled according to the compound interest law, some questions arise about the supposed presence of anatocism and the consequent legal matters. In this paper, we derive the traditional amortization plans by means of an alternative approach, based on the concept of fair amortization and without assuming a financial law. We find that the traditional amortization plan with constant installments can be derived in this way and the supposed presence of anatocism is excluded. An investigation on the possible anatocism, in case of delayed payment of interest, completes the discussion.

The purpose of this work is to clarify the causes and circumstances of the negative influence of the compound interest effect in investment processes and to refute the theory of the compound interest effect in the capitalization of dividends. The article considers the peculiarities of the negative effect of the compound interest effect in terms of capitalization of dividends. The reasons and circumstances of the negative value of the corresponding effect in investment processes were specified. It is stated that the effect of compound interest is often not positive at all in case of capitalization of dividends on shares. Dividend tax neutralizes the \"magic of compound interest\" in the case of appropriate capitalization of dividends. The payment of dividends is economically feasible only when the investor plans to direct these funds to consumption and not to capitalization. To improve the conditions of investment processes, the need to reduce the tax on dividends has been proven. It showed the possibility of avoiding the tax on dividends for investors in the case of its relatively large size. The material of the article allows us to refute the theory of the \"compound interest effect\" in the capitalization of dividends.

PurposeThe purpose of this paper is to study how subjective and objective knowledge of finance, behaviour in managing personal finances and socio-economic status affect financial well-being.Design/methodology/approachThe financial well-being score is constructed in quantitative financial literacy survey data from Estonia as the arithmetic mean of four statements on a five-point scale. Four hypotheses are tested in multiple regression analysis.FindingsSubjective knowledge has a stronger relation with financial well-being than objective knowledge. Financial behaviour score and income level correlate with financial well-being.Research limitations/implicationsThe paper contributes to literature on financial literacy, subjective financial knowledge and financial well-being. In future research, psychological factors and future orientated financial well-being should be included, and their relationship to subjective well-being could be analysed further.Practical implicationsThe results highlight the importance of subjective knowledge and sound behaviour for improving financial well-being. Providers of financial services should address these more in the design of their services and communication.Social implicationsPolicymakers developing national strategies for financial education need to address subjective financial knowledge for increasing financial well-being in society.Originality/valueKnowledge, behaviour and subjective knowledge have not been used simultaneously in the analysis of financial well-being in Europe before.

Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers' financial decisions over the last generation. We conduct a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples. Like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention. Correlational studies that measure financial literacy find stronger associations with financial behaviors. We conduct three empirical studies, and we find that the partial effects of financial literacy diminish dramatically when one controls for psychological traits that have been omitted in prior research or when one uses an instrument for financial literacy to control for omitted variables. Financial education as studied to date has serious limitations that have been masked by the apparently larger effects in correlational studies. We envisage a reduced role for financial education that is not elaborated or acted upon soon afterward. We suggest a real but narrower role for \"just-in-time\" financial education tied to specific behaviors it intends to help. We conclude with a discussion of the characteristics of behaviors that might affect the policy maker's mix of financial education, choice architecture, and regulation as tools to help consumer financial behavior. This paper was accepted by Uri Gneezy, behavioral economics.

This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research, which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare, as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.

The decision of the House of Lords in Sempra Metals Ltd. v. Inland Revenue Commissioners 2007 adopted compound interest as the measure of damages for the time period that claimant was deprived of the opportunity to use money. A decade later, the Supreme Court in the Littlewoods v. HMRC, 2017, deferred to statutory simple interest. The majority in Prudential Assurance Company Ltd. v. HMRC, 2018, said that the use value in Sempra is a free-standing cause of action but did not rule on the matter. PAC asserted that the claim to interest is one that is based on the failure to pay a debt by its due date. A close examination of these cases reveals that the theory underpinning the debt analysis is to treat money being held for its use value relative to its function as unit of account, which employs the nominalist view that money has a constant store value, whereas the use value in Sempra treats money being held for its use value relative to its function as a medium ofexchange.