nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2018‒02‒12
four papers chosen by

  1. The major bottlenecks of micro and small scale enterprises’ growth in Ethiopia: An econometric analysis By Ermias Engida; Mekdim Dereje; Ibrahim Worku; Saba Yifredew; Feiruz Yimer
  2. A Bank Run in a Classroom: Do Smart Depositors Withdraw on Time? By Maria Semenova
  3. Financial Literacy and Intra-Household Decision Making: Evidence from Rwanda By Antonia Grohmann; Annekathrin Schoofs
  4. Financial Inclusion and Digital Financial Services: Empirical evidence from Ghana By Agyekum, Francis; Locke, Stuart; Hewa-Wellalage, Nirosha

  1. By: Ermias Engida; Mekdim Dereje; Ibrahim Worku; Saba Yifredew; Feiruz Yimer
    Abstract: Development of Micro and Small enterprises (MSEs) is one mechanism for alleviating unemployment, especially for women. Ethiopia has developed policy as part of the Growth Transformation and Plan (GTP) to develop MSEs to generate employment at the initial stage and transform the enterprises into medium and large enterprises in the long run. However, contrary to this objective, the growth of these enterprises has been very slow by every standard. This study evaluates the factors behind the slow growth of the enterprises by estimating the enterprise growth model captured by employment growth over the span of the period that the firm has operated. We find that women owners, in particular, face more severe credit, market and working premises constraints. We also find that while enterprise growth is inversely related to initial size, financial literacy and desirable managerial qualities of owners and managers positively contribute to enterprise growth.
    Date: 2017
  2. By: Maria Semenova (National Research University Higher School of Economics)
    Abstract: This paper discusses whether being smart makes depositors less prone to get involved in a panic bank run. We conduct a series of experiments with undergraduate and graduate students from Moscow and Saint-Petersburg, modelling the a-la Diamond-Dybvig deposit market with liquidity shocks, changing macroeconomic conditions and risk-based investment technologies. Our results suggest that withdrawing on time is profitable, as the average returns of depositor investments are higher, especially if the other depositors in the bank also withdraw on time. Smarter depositors – those having better academic achievements – choose the strategy of avoiding early withdrawals more frequently: each additional grade point (out of ten) adds 9 p.p. to the share of rounds where a depositor withdraws on time. This result adds to the evidence that financial literacy – even measured in a very simple way – may prevent a coordination failure in the deposit market. Our results also suggest that panic withdrawals are more probable in markets with poorer economic conditions (liquidity shocks, less profitable or less liquid investments, costly financial information), but depositors show weak sensitivity to the risks of bank investments. Depositors of medium-sized banks withdraw on time more frequently compared to those in small or large banks
    Keywords: Banks run, Experiment, Financial literacy, Academic achievements
    JEL: G21 C91
    Date: 2018
  3. By: Antonia Grohmann; Annekathrin Schoofs
    Abstract: Despite considerable policy efforts, women continue to be underrepresented in positions of power and decision making. As an important aspect of women empowerment, we examine women’s participation in intrahousehold financial decision making and how this is affected by financial literacy. Using both OLS and IV regression analysis, we show that women with higher financial literacy are more involved in household financial decisions. In line with the literature, we further find that women are less financially literate than men. Results from decomposition analysis show that education and personality traits (openness, happiness, and depression) drive this financial literacy gender gap.
    Keywords: financial literacy, women empowerment, intra-household decision making
    JEL: D14 J16 G02
    Date: 2018
  4. By: Agyekum, Francis; Locke, Stuart; Hewa-Wellalage, Nirosha
    Abstract: The paper examines the relationship between increasing accessibility to digital financial services (DFS) and financial inclusion in lower income countries (LICs). Banks and non-bank organisations use DFS and the analysis indicates non-bank-based DFS emerges as the most efficient means of delivering cost effective financial services to the previously unbanked. Mobile cellular penetration and internet usage are mutually inclusive means through which digital financial services foster financial inclusion. Analysis of data for Ghana, as a case study, uses ordinary least squares and logistic regression models. The results in Difference-In-Difference method confirms the positive significant trend of mobile money usage and negative trend of bank-based DFS facilities over the period 2011-2014 in Ghana. Unambiguous policy ramifications are emphasised, paying attention to technological deepening stimulate positive outcomes of a broader and inclusive financial system.
    Keywords: Digital financial services (DFS), financial inclusion, Logistic regression, Difference-in-Difference, LICs, Ghana.
    JEL: G2 O30 O5
    Date: 2016–11–30

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