nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2019‒07‒15
six papers chosen by

  1. The Causal Mechanism of Financial Education: Evidence from Mediation Analysis By Fenella Carpena; Bilal Zia
  2. Towards Financial Inclusion in South Asia: A Youth and Gender Perspective By Goksu Aslan
  3. Freeing Financial Education via Tablets: Experimental Evidence from Colombia By Orazio Attanasio; Matthew Bird; Lina Cardona-Sosa; Pablo Lavado
  4. No Household Left Behind: Afghanistan Targeting the Ultra Poor Impact Evaluation By Guadalupe Bedoya; Aidan Coville; Johannes Haushofer; Mohammad Isaqzadeh; Jeremy P. Shapiro
  5. Working Paper 115 – Macroeconomic Policy, Price Stability and Inclusive Growth in Bangladesh By Muhammed Muqtada
  6. Inequality Thresholds, Governance and Gender Economic Inclusion in sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo

  1. By: Fenella Carpena (Oslo Business School, Oslo Metropolitan University); Bilal Zia (World Bank - Development Research Group (DECRG))
    Abstract: This paper uses a field experiment in India with multiple financial education treatments to investigate the causal mechanisms between financial education and financial behavior. Focusing on the mediating role of financial literacy, we propose a broader definition of financial knowledge that includes three dimensions: numeracy skills, financial awareness, and attitudes towards personal finance. We then employ causal mediation analysis to investigate the proportion of the treatment effect that can be attributed to these three channels. Strikingly, we find that numeracy does not mediate any effects of financial education on household outcomes. For simple financial actions such as budgeting, both awareness and attitudes serve as critical pathways, while for more complex financial activities such as opening a savings account, attitudes play a more prominent role. These findings underscore the importance of changing perceptions about financial products and services as a vital mechanism for the success of financial education.
    Keywords: Financial Education, Financial Literacy, Financial Knowledge, Causal Mediation Analysis, Mechanism of Impact, Impact Evaluation
    JEL: C93 D14 G21 O12
    Date: 2018–09–05
  2. By: Goksu Aslan (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West Asia Office)
    Abstract: The youthful population of South Asia, having almost one-third of the population below the age of 15 years old, seems also to have a great share in the future alongside the risk of being NEET with a persisting gender gap. This makes important for South Asian countries to put a gender-responsive policy framework for the youth empowerment at the heart of their efforts towards the 2030 Agenda. Increasing youth’s financial inclusion at the individual level would also provide development benefits especially for developing and least developed countries. This paper, after constructing a multidimensional financial inclusion index, shows evidence on how to increase the formal financial inclusion among the South Asian youth considering also gendered effects and it provides policy recommendations accordingly.
    Keywords: Development, Financial Inclusion, Sustainable Development Goals (SDGs), Youth
    JEL: D14 G28 J16 N25
    Date: 2019–06
  3. By: Orazio Attanasio; Matthew Bird; Lina Cardona-Sosa; Pablo Lavado
    Abstract: Financial knowledge is critical for making sound decisions that foster financial health and protect consumers from predation. A widely-used tool for building this capability is financial education. Yet evidence suggests that conventional approaches which teach concepts in classroom-style settings are ineffective and expensive at scale, especially for lower-income users. More recent findings indicate that customizing financial education to the needs, interests, and location of participants may increase impact, though doing so in a cost-effective and scalable way remains challenging. This randomized evaluation of a tablet-based financial education program with mostly female recipients of a conditional cash transfer (CCT) program in Colombia offers evidence for how to design and scale an effective digital-based financial education program. Results indicate that the LISTA Initiative had significant positive impacts on financial knowledge, attitudes, practices, and performance, increasing for poorer, less educated, and more rural populations, with users exhibiting increased financial health over two years later. Critical mechanisms included well-designed content and a social learning component. Yet the longer-term impact on formal financial inclusion was limited, suggesting the possible benefits of combining supply-side solutions with financial education interventions.
    JEL: D14 D18 G21 I22 I38 O15
    Date: 2019–06
  4. By: Guadalupe Bedoya; Aidan Coville; Johannes Haushofer; Mohammad Isaqzadeh; Jeremy P. Shapiro
    Abstract: The share of people living in extreme poverty fell from 36 percent in 1990 to 10 percent in 2015 but has continued to increase in many fragile and conflict-affected areas where half of the extreme poor are expected to reside by 2030. These areas are also where the least evidence exists on how to tackle poverty. This paper investigates whether the Targeting the Ultra Poor program can lift households out of poverty in a fragile context: Afghanistan. In 80 villages in Balkh province, 1,219 of the poorest households were randomly assigned to a treatment or control group. Women in treatment households received a one-off “big-push” package, including a transfer of livestock assets, cash consumption stipend, skills training, and coaching. One year after the program ended—two years after assets were transferred—significant and large impacts are found across all the primary pre-specified outcomes: consumption, assets, psychological well-being, total time spent working, financial inclusion, and women’s empowerment. Per capita consumption increases by 30 percent (USD 24 purchasing power parity, USD 7 nominal per month) with respect to the control group, and the share of households below the national poverty line decreases from 82 percent in the control group to 62 percent in the treatment group. Using modest assumptions about consumption impacts, the intervention has an estimated internal rate of return of 26 percent, excluding non-monetized improvements in psychological well-being, women’s empowerment, and children’s health and education. These findings suggest that “big-push” interventions can dramatically reduce poverty in fragile and conflict-affected regions.
    JEL: J21 J22 O12 O13
    Date: 2019–06
  5. By: Muhammed Muqtada
    Abstract: During the past two decades, the economy of Bangladesh experienced a fairly sustained macroeconomic stability and was able to achieve substantial growth in gross domestic product (GDP). However, there is evidence to suggest that this growth has neither been inclusive nor has it been able to bring about structural change needed to sustain higher growth. The paper contends that the macroeconomic policymaking would require a re-think in order to meet the above challenges. The present paper reviews the current macroeconomic policy framework and underscores the need for balancing its usual emphasis on stability with the need for structural change and social inclusion. This would in turn require an expansionary macroeconomic policy, albeit cautious, that focuses robustly on stepped-up investment, job growth and reduction of inequality and vulnerability. To this end, the paper explores the critical role of monetary, fiscal, external and financial inclusion policies and how far these could address the above challenges. Macroeconomic policies, focused simply on stability and a status quo budget, cannot deliver the desired employment and inclusion outcomes unless these also address and accommodate various associated sectoral, labour market, and social inclusion measures.
    Keywords: Muhammed Muqtada, Inclusive Growth, Bangladesh, GDP, Growth rate, Inequality, Vulnerability, Budget, Macroeconomic policy, Employment, Job, Unemployment, CPD,
    Date: 2018–07
  6. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: Inequality and gender economic exclusion are major policy concerns facing sub-Saharan Africa in the post-2015 development agenda. The study provides critical masses of inequality that should not be exceeded if governance is to promote gender economic participation. The research focuses on 42 countries in sub-Saharan Africa using annual data spanning from 2004 to 2014. The empirical evidence is based on the Generalized Method of Moments. The following findings are established. First, inequality (i.e. the Gini coefficient) levels that completely nullify the positive effect of governance on female labour force participation are 0.708 for political stability, 0.601 for voice & accountability, 0.588 for government effectiveness, 0.631 for regulatory quality, 0.612 for the rule of law, and 0.550 for corruption-control. Second, inequality thresholds at which female unemployment can no longer be mitigated by governance channels include: 0.561 (for political stability) and 0.465 (for the rule of law). Third, inequality levels that completely dampen the positive impact of governance on female employment are 0.608 for political stability, 0.580 for voice & accountability, 0.581 for government effectiveness, and 0.557 for the rule of law. As the main policy implication, for good governance to promote gender economic inclusion, inequality levels should not exceed established thresholds.
    Keywords: Africa; Gender; Inequality; Inclusive development
    JEL: G20 I10 I32 O40 O55
    Date: 2019–01

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