nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒01‒27
two papers chosen by

  1. Was the Expansion of Housing Credit in Japan Good or Bad? By Yuji Horioka, Charles; Niimi, Yoko
  2. Financial Development and Income Inequality in Indonesia: A Sub-national Level Analysis By Aginta, Harry; Soraya, Debby A; Santoso, Wahyu B

  1. By: Yuji Horioka, Charles; Niimi, Yoko
    Abstract: This paper shows, using data from the Family Income and Expenditure Survey, that housing credit has become increasingly available over time in Japan, especially since 2000, and that this has made it easier for Japanese households to purchase housing and enabled them to do so at an earlier age. However, it also shows that the greater availability of housing credit has increased households’ housing loan repayment burden, which has resulted in their cutting back on their other consumption expenditures and created the potential for retirement insecurity. Another concern is that the increasing availability of housing credit has been accompanied by a pronounced shift from fixed-rate to variablerate housing loans. This is cause for concern given the low level of financial literacy that prevails among the Japanese population and the likelihood that interest rates on variablerate housing loans will be raised sooner or later as monetary policy is tightened.
    Keywords: Homeownership, Housing credit, Housing loans, Mortgages, Household debt, Household liabilities, D14, E21, R21
    Date: 2020–01
  2. By: Aginta, Harry; Soraya, Debby A; Santoso, Wahyu B
    Abstract: It is widely believed that financial inclusion aids inclusive growth and reducing inequality. This study constructs financial inclusion indicator and analyzes the link of financial inclusion and income inequality for 33 provinces in Indonesia. In extension to analyses at national level, estimation has been done by dividing provinces into three categories which are agriculture, manufacture, and mining economies. By using Fixed Effect Panel Model, we find financial inclusion appears to have insignificant effect to inequality at national level. While at sub-national level, adding other variables such as GRDP, years of schooling, and trade openness, we find financial inclusion appears to have negative and significant impact on income inequality in manufacture and mining-based provinces, not in agriculture-based. The results suggest that financial inclusion helps to lower income inequality when economic condition encourage people to utilize financial access for productive purposes. More effective financial inclusion programs in rural area are highly demanded.
    Keywords: Financial development, income inequality, Fixed Effect Panel Model
    JEL: E5 G21 G28 R11 R12
    Date: 2018–12

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