nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒04‒06
seven papers chosen by

  1. Canadian Gender Gap in Financial Literacy: Confidence Matters By Raquel Fonseca; Simon Lord
  2. Financial literacy and self-control in FinTech: Evidence from a field experiment on online consumer borrowing By Bu, Di; Hanspal, Tobin; Liao, Yin; Liu, Yong
  3. Know more, spend more? : The impact of financial literacy on household consumption By M. Dinkova; A.S. Kalwij; Rob Alessie
  4. I know (and) I can and I do? : The role of Multi-dimensional financial literacy in explaining pension information behavior By M. Dinkova
  5. Sex, language, and financial inclusion By Osei-Tutu, Francis; Weill, Laurent
  6. Adoption and use of mobile banking by low-income individuals in Senegal By François-Seck Fall; Luis Orozco; Al‐mouksit Akim
  7. Thresholds of income inequality that mitigate the role of gender inclusive education in promoting gender economic inclusion in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo

  1. By: Raquel Fonseca; Simon Lord
    Abstract: We construct a financial literacy index as well as a financial confidence index in order to evaluate the effect of confidence on financial literacy, and more specifically, on the gender gap in financial literacy. Results confirm the existence of a gender gap in financial literacy in Canada, and show that having a higher confidence in one’s financial skills and knowledge is indeed a factor that increases one’s financial literacy. Financial confidence is found not to track actual financial skills very closely across different ages, especially for women, and at older ages. We also find evidence that financial literacy and decision making are related to the relative education level of spouses. Using the Oaxaca-Blinder decomposition, confidence is also found to explain 14.15% of the gender gap in financial literacy, while being self-employed explains 19% of the gap, and taking part in the financial planning accounts for 16.76% of the gender gap difference. We find that most of the gap remains unexplained by differences in coefficients of men and women.
    Keywords: Gender, Financial Literacy, Financial Confidence.
    JEL: G0 I22 H00
    Date: 2019
  2. By: Bu, Di; Hanspal, Tobin; Liao, Yin; Liu, Yong
    Abstract: We report the results of a longitudinal intervention with students across five universities in China designed to reduce online consumer debt. Our research design allocates individuals to either a financial literacy treatment, a self-control training program, or a zero-touch control group. Financial education interventions improve test scores on general financial literacy but only marginally affect future online borrowing. Our self-control treatment features detailed tracking of spending and borrowing activity with a third-party app and introspection about individuals' consumption with a counselor. These sessions reduce future online borrowing, delinquency charges, and borrowing for entertainment reasons - and are driven by the male subjects in the sample. Our results suggest that self-regulation can affect financial behavior in e-commerce platforms.
    Keywords: Financial literacy,online borrowing,Consumer credit,Self-control,FinTech,China
    JEL: D14 D18 G23 G21
    Date: 2020
  3. By: M. Dinkova; A.S. Kalwij; Rob Alessie
    Abstract: This paper examines the relationship between household consumption and financial literacy for Dutch households. The economic framework is a simple life-cycle model of consumption in which financial literacy affects the rate of return on assets. The theoretical predictions are that financial literacy and consumption levels are positively correlated for plausible values of the intertemporal elasticity of substitution and that financial literacy and consumption growth are positively correlated. We use Dutch data from the LISS household panel to empirically test our theoretical predictions. Our results provide evidence for a strong positive association between couples’ non-durable consumption and the level of the male partner’s financial literacy. We did not find evidence for an association between consumption growth and financial literacy. Our results are robust to including household assets, interest in financial literacy and to examining different stages of the life-cycle.
    Keywords: life-cycle model, financial literacy, self-assessed financial literacy, household consumption
    Date: 2019–08
  4. By: M. Dinkova
    Abstract: This paper assesses whether financial literacy can explain the likelihood of people delving into their pension situation. I suggest to use a financial literacy construct that, next to the usual financial literacy questions assessing numeracy and knowledge of financial concepts, also includes perceived financial knowledge, questions on pension-specific knowledge and a vocabulary test. A survey was distributed amongst employees and customers of a large insurance company in order to elicit participants’ financial literacy level, some relevant behavioural factors and demographics. I linked participants’ login behaviour in their respective digital pension environment (DPE) to their financial literacy level and behavioural factors including attitudes towards pension information, need for cognition and future time perspective. People with higher pension knowledge and knowledge about the concept of interest compounding were more likely to log in to the DPE. Attitudes, need for cognition and future time perspective are directly related with login behaviour. The relationship between financial literacy and login behaviour is not affected by behavioural factors.
    Keywords: pension communication, pension information, tailoring, financial literacy, pension attitudes, Cognitive factors
    Date: 2019–04
  5. By: Osei-Tutu, Francis; Weill, Laurent
    Abstract: Reference to gender in language can lead individuals to draw distinctions between genders and reinforce traditional views of gender roles. To test our hypothesis that language gender-marking exerts an influence on the gender gap in financial inclusion, we draw on data for 117 countries in the World Bank’s Global Findex database and perform logit estimations at the individual level. We find the gender gap in the probability of owning a formal account, having access to a formal credit, as well as having savings in a formal financial institution is higher for countries with gendered languages than for countries with genderless languages. These findings are confirmed in robustness checks that control for alternative measures of culture and estimations at the country level.
    JEL: G21 Z13
    Date: 2020–04–01
  6. By: François-Seck Fall (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT1 - Université Toulouse 1 Capitole - UT2J - Université Toulouse - Jean Jaurès - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville); Luis Orozco (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT1 - Université Toulouse 1 Capitole - UT2J - Université Toulouse - Jean Jaurès - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville); Al‐mouksit Akim (World Bank Group, LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The wide use of mobile phones is increasing low-income individuals' access to a large range of services. One of these services is mobile banking (m-banking). Today, m-banking represents a key vector of financial inclusion in many countries in Sub-Saharan Africa, especially in Senegal. Based on technology adoption theories applied to households in developing countries, this paper studies the determinants of the adoption and use of m-banking. We distinguish between possession or adoption from actual use of m-banking and examine the interdependence between these two decisions by using a Heckman sample selection model, through a sample of 1052 individuals in the suburbs of Dakar. Our main results are that the two decisions (adoption and use) are not independent from each other. Individual characteristics, such as education, possession of a bank account, and family network effects, are determinants of the adoption, and age, gender, and being a member of a tontine are determinants of the use. A major result of this study concerns women's low propensity to adopt m-banking because of their low levels of education. However, compared with men, when women adopt m-banking, they have a stronger propensity to use it.
    Keywords: Mobile banking,mobile technologies,technology adoption,financial inclusion,individual characteristics,Senegal
    Date: 2020
  7. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study provides thresholds of inequality that should not be exceeded if gender inclusive education is to enhance gender inclusive formal economic participation in sub-Saharan Africa. The empirical evidence is based on the Generalised Method of Moments and data from 42 countries during the period 2004-2014. The following findings are established. First, inclusive tertiary education unconditionally promotes gender economic inclusion while the interaction between tertiary education and inequality is unfavourable to gender economic inclusion. Second, a Gini coefficient that nullifies the positive incidence of inclusive tertiary education on female labour force participation is 0.562. Second, the Gini coefficient and the Palma ratio that crowd-out the negative unconditional effects of inclusive tertiary education on female unemployment are 0.547 and 6.118, respectively. Third, a 0.578 Gini coefficient, a 0.680 Atkinson index and a 6.557 Palma ratio are critical masses that wipe-out the positive unconditional effects of inclusive tertiary education on female employment. Findings associated with lower levels of education are not significant. As the main policy implication, income inequality should not be tolerated above the established thresholds in order for gender inclusive education to promote gender inclusive formal economic participation. Other implications are discussed in the light of Sustainable Development Goals. This research complements the existing literature by providing inequality thresholds that should not be exceeded in order for gender inclusive education to promote the involvement of women in the formal economic sector.
    Keywords: Africa; Inequality; Gender; Inclusive development
    JEL: G20 I10 I32 O40 O55
    Date: 2019–01

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