nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2018‒01‒08
six papers chosen by

  1. Financial literacy and voluntary savings for retirement in Slovakia By Zuzana Brokesova; Andrej Cupak; Gueorgui Kolev
  2. Inequality in Financial Inclusion and Income Inequality By Goksu Aslan; Corinne Deléchat; Monique Newiak; Fan Yang
  3. Social media instruments and the promotion of financial inclusion in Peruvian rural areas By Martin Valdivia; Alberto Chong
  4. What Determines Financial Inclusion in the Philippines? Evidence from a National Baseline Survey By Llanto, Gilberto M.; Rosellon, Maureen Ane D.
  5. Decomposition of Gender Income Gap in Rural Informal Micro-enterprises: An Unconditional Quantile Approach in the Handloom Industry. By Hazarika, Bhabesh
  6. Financial literacy and political orientation in Great Britain By Alberton Montagnoli; Mirko Moro; Georgios A Panos; Robert E Wright

  1. By: Zuzana Brokesova (University of Economics in Bratislava); Andrej Cupak (National Bank of Slovakia); Gueorgui Kolev (Middlesex University London)
    Abstract: We utilise recent Household Finance and Consumption Survey microdata to report first causal effects of financial literacy on voluntary private pension schemes participation for Slovakia. Savings for retirement in the supplementary pension schemes are positively associated with financial literacy after controlling for a set of relevant socio-economic variables. One additional correctly answered financial literacy question leads to a 6 percentage points increase in the probability of having a voluntary pension savings plan in our ordinary least squares estimates. The causal impact of financial literacy increases to 16 percentage points when we address potential endogeneity problem by novel to the literature instrumental variables. Interestingly, we find less significant effects of financial literacy on the probability of individuals having employer-supported private pension savings plans. Our findings inform policy and suggest how policymakers can promote the voluntary retirement savings behaviour of individuals in Slovakia and in other Central and Eastern European countries in times of decreasing benefits of state pensions.
    Keywords: Financial literacy, Retirement savings, Survey data, Endogeneity, Instrumental variables, Slovakia
    JEL: D14 D91 I2
    Date: 2017–12
  2. By: Goksu Aslan; Corinne Deléchat; Monique Newiak; Fan Yang
    Abstract: We investigate the link between gender inequality in financial inclusion and income inequality, with three contributions to the recent literature. First, using a micro-dataset covering 146,000 individuals in over 140 countries, we construct novel, synthetic indices of the intensity of financial inclusion at the individual and country level. Second, we derive the distribution of individual financial access “scores” across countries to document a “Kuznets”-curve in financial inclusion. Third, cross-country regressions confirm that our measure of inequality in financial access is significantly related to income inequality, above and beyond other factors previously highlighted in the literature.
    Keywords: Income inequality;Financial inclusion;Sub-Saharan Africa;financial development, gender inequality, Other, Economics of Gender, Macroeconomic Analyses of Economic Development
    Date: 2017–11–08
  3. By: Martin Valdivia; Alberto Chong
    Abstract: This study seeks to evaluate the use of short soap operas as a mechanism to promote the use of formal savings accounts among poor rural women that have been secularly excluded from healthy interactions with the formal financial sector. We developed a short soap opera (telenovela), named Josefa, which transmitted pro-savings messages using characters and stories that could generate a level of identification with the intended audience. We used an experimental design that randomly assigned eligible villages of Huancavelica, the poorest department in Peru, to treatment and control groups, and organized special viewing sessions inviting all beneficiaries of Juntos, the Peruvian CCT program, in the eligible villages. A year later, we found that women who were exposed to the treatment have an improved knowledge and attitude towards formal savings, especially for precautionary motives. We did not find a significant change at the end of bimester savings balances until the July-August bimester, which we interpret as evidence that the improved pro-savings attitude remained latent for several months, until right about the time cash surpluses are likely, due to post-harvest season. In searching for the underlying mechanisms, we find no income effect, but a strong empowerment effect within the household, mainly for economic and financial decisions, and especially among the women under 40, which is also the group that shows more robust temporary savings effects. Overall, we interpret these results as evidence that the edutainment approach can have an important contribution to the financial inclusion of poor rural women that have faced secular exclusion from formal financial institutions like the ones from the Peruvian Southern Sierra.
    Keywords: Social media
    Date: 2017
  4. By: Llanto, Gilberto M.; Rosellon, Maureen Ane D.
    Abstract: This paper contributes to the literature on financial inclusion in the Philippines by examining three key financial services, namely, savings, credit, and insurance, and identifying individual socioeconomic characteristics that are associated with access to these financial services. Financial inclusion is also analyzed in the context of four geographical areas in the Philippines--National Capital Region, balanced Luzon, Visayas, and Mindanao--which provides more insights and a better understanding of financial inclusion. Using data collected from the national baseline survey of financial inclusion, estimation results indicate that sociodemographic characteristics such as age, sex, civil status, education, employment, and income are associated significantly with accessing various financial products and services. Findings also suggest similarities in the socioeconomic profiles of users and nonusers of financial services in the four geographic areas, while differences appear to be related to the presence of banks and other formal financial institutions. These results provide useful inputs to policy and strategies for attaining inclusive finance.
    Keywords: Philippines, financial inclusion, inclusive finance
    Date: 2017
  5. By: Hazarika, Bhabesh (National Institute of Public Finance and Policy)
    Abstract: There exists a noteworthy gender income gap in the micro-entrepreneurial activities, and typically the females earn lower than the males. While such gender income gap in wage employment is well-documented, the aspect needs attention in the context of the micro-entrepreneurship, particularly in the informal sector. It is important to analyze how differently the gender difference in endowments affect the income of the male and the female micro-entrepreneurs. The present study, based on primary data, analyses gender income gap and its compositions throughout the income distribution of the handloom micro-entrepreneurs in Assam. On an average, the female micro-entrepreneurs earn 51 percent lesser than their male counterpart. The unconditional quantile decomposition reveals that the gender income gap increases along the income distribution. The differences in the productive characteristics (endowment effects) explain much of the income gap at the median level and beyond than the heterogeneous returns to such characteristics (discriminatory effects). The endowment effects related to education, financial literacy, risk attitude, SHGs membership, and technology adoption are found in favor of the male micro-entrepreneurs. The results suggest that poor management of entrepreneurial activities of the female results in wider gender gap throughout the income distribution. The study urges for policy prescriptions towards dissemination of technological, financial, and managerial know-how to make the females more organized towards addressing the gender income gap.
    Keywords: Micro-entrepreneurs ; Handloom ; Gender ; Income Gap ; Unconditional Quantile Decomposition
    JEL: L26 L67 D13 D33 D63
    Date: 2017–12
  6. By: Alberton Montagnoli; Mirko Moro; Georgios A Panos; Robert E Wright (Department of Economics, University of Strathclyde)
    Abstract: This study examines the relationship between financial literacy and political orientation in Great Britain. Using novel data from the British Election Survey in 2014, we employ two distinct measures of political orientation, capturing individual self-assessment on a left-right axis and party preferences. We find that financially-literate individuals are some 11-19 percent more likely to orientate at the centre-left or the centre-right. Moreover, they are some 30 percent less likely not to know their political orientation. The results are robust when rich sets of public-attitude and public-value variables are accounted for. Financially-literate individuals are also more likely to have a stable political orientation over time and they are some 15-23 percent less likely to change attitudes radically towards the left or the right across different waves of the study. We interpret our findings as indicative that greater financial literacy is conducive to greater stability of moderate political views and orientation.
    Keywords: Financial literacy, political orientation, attitudes, polarization, Great Britain
    JEL: D14 D63 D72 I24
    Date: 2016–09

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