nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2017‒08‒06
two papers chosen by

  1. To Trust is Good, but to Control Is Better: How Investors Discipline Financial Advisors'Activity By Calcagno, Riccardo; Giofré, Maela; Urzì-Brancati, Maria Cesira
  2. Access to Formal Financial Services: A Cross Country Study By Rigzin Yangdol

  1. By: Calcagno, Riccardo; Giofré, Maela; Urzì-Brancati, Maria Cesira (University of Turin)
    Abstract: Using a survey of clients from one of the largest Italian banks, we ?nd that investors with low level of trust in professional advisors seek ?nancial counselling, but make their decisions autonomously. We investigate whether these investors exert some form of control over the recommendations they receive, and, if so, which one. Investors can push advisors to provide better recommendations either by asking for a second expert?s opinion, such as in the case of credence services, or by monitoring closely the advisor?s activity themselves. We ?nd that three quarters of investors do not exert any control on advisors. Di¤erent types of ?nancial competence ? self-assessed or test-based ? serve di¤erent purposes. The investors featuring higher self-assessed ?nancial competence are more likely to control the advisor?s activity. The mechanism through which investors exert control over the advisors? activity depends instead on the investors? degree of test-based ?nancial literacy. Investors with high ?nancial literacy directly monitor the advisors?activity. Investors with low ?nancial literacy are more likely to seek a second professional opinion in support of the recommendations previously received. Our ?ndings suggest that improving investor ?nancial knowledge may foster direct control of the advisor?s activity. Moreover, facilitating the comparison between ?nancial products by standardized and centralized information may be very e¤ective to protect poorly literate investors.
    Date: 2017–05
  2. By: Rigzin Yangdol (Jawaharlal Nehru University)
    Abstract: The importance of an inclusive financial system in the overall growth and development of an economy is well recognised. This paper empirically analyses the factors affecting access to finance at an individual level making extensive use of latest Global Findex database of World Bank. The paper uses three indicators of financial inclusion and several explanatory variables that include country-specific factor (GDP per capita), individual characteristics and individual economic circumstances of adult individuals from different countries. We find that individual characteristics and economic circumstances like education level, income level, employment, government transfers and saving behaviour are more likely to positively impact financial inclusion indicators than gender, age, payment status and borrowing behaviour of individuals.Length: 20 pages

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