nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒04‒13
six papers chosen by

  1. Financial inclusion in Nigeria: determinants, challenges and achievements By Ozili, Peterson K
  2. Financial Inclusion and Extreme Poverty in the MENA Region: A Gap Analysis Approach By Emara, Noha; Moheildin, Mahmoud
  3. Financial Inclusion and Economic Growth: The Role of Governance in Selected MENA Countries By Emara, Noha; El Said, Ayah
  4. Determinants of inter-regional financial inclusion heterogeneities in the Philippines By Burguillos, Je-Al; Cassimon, Danny
  5. Low-Income Consumers and Payment Choice By Oz Shy
  6. Inequality and Gender Inclusion: Minimum ICT Policy Thresholds for Promoting Female Employment in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo

  1. By: Ozili, Peterson K
    Abstract: This article analyse several indicators of financial inclusion in Nigeria. The findings reveal that people with at least a secondary education and unemployed people had higher levels of debit card ownership, higher levels of account ownership of any type, and higher levels of account ownership in a financial institution. Also, people with at least a secondary education had higher levels of borrowings from a bank or another type of financial institution, and had lower levels of savings at a financial institution. On the other hand, savings using a savings club or persons outside the family decreased among females, poor people and among people with a primary education or less. Furthermore, there were fewer credit card ownership by unemployed people while credit card ownership increased among employed people, the richest people and among people with at least a secondary education. Also, borrowings from family or friends decreased for most categories in 2014 and 2017. Finally, the econometric estimation shows that borrowings and savings outside financial institutions (using family, friends or saving clubs) significantly contributed to economic growth than borrowing and savings through financial institutions. The findings have implications.
    Keywords: financial inclusion, access to finance, financial exclusion, development, economic growth, poverty reduction, Nigeria, digital finance, cashless policy, financial education, financial literacy, Africa, robo advisor, regulatory sandbox
    JEL: G20 G21 G28 O31 O43 O55
    Date: 2020–03
  2. By: Emara, Noha; Moheildin, Mahmoud
    Abstract: Eradicating extreme poverty remains one of the most significant and challenging Sustainable Development Goals (SDGs) in the Middle East and North African (MENA) region. The latest World Bank statistics from 2018 show that extreme poverty in MENA increased from 2.6% to 5% between 2013 and 2015. MENA ranks third among developing regions for extreme poverty, and fell short of halving extreme poverty by 2015 – the target established by the United Nations’ Millennium Development Goals, the precursor to the SDGs. Using system General Method of Moments dynamic panel estimation methodology on annual data for 11 MENA countries and 23 emerging markets (EMs) over the period 1990 – 2017, this study begins by estimating the impact of financial inclusion – using measures of access and usage – on the eradication of extreme poverty by 2030, the first goal of the SDGs. The results of the study indicate that, on one hand, financial access measures have a positive, statistically significant impact on reducing extreme poverty for the full sample as well as the MENA region. On the other hand, financial usage measures are only statistically significant in reducing extreme poverty for the full sample, but not for the MENA region. The second part of the study employs a gap analysis against four poverty targets—0%, 1.5%, 3%, and 5%—and shows that no MENA country and few EM countries will be able to close the extreme poverty gap and reach the target of 0% by 2030 by depending solely on improvements in financial access. These targets are based on the two benchmarks set by the World Bank and the UN, with intermediaries to capture error and give a fuller picture of what is possible. However, if improvements in financial inclusion alone can bring every EM and MENA country except Djibouti and Romania to bring the most accessible target of reducing global extreme poverty to no more than 5% by 2030. Policy considerations can be directed towards developing and promoting the infrastructure needed for the widespread delivery and usage of financial services, especially for the MENA and EM countries lagging behind the extreme poverty target. Special attention should be paid to the support of digital financial inclusion for its ability to help individuals cope with shocks without reducing consumption. Delivery and usage of financial technology is predicted to magnify the impact of financial inclusion on poverty reduction both directly – as shown in this paper – and indirectly – through channels related to other SDGs. Additionally, governments in the MENA region must take data quality and availability more seriously if they expect to reverse the acceleration of extreme poverty in the digital age.
    Keywords: Financial Inclusion; Extreme Poverty; MENA Region SDGs; Gap Approach
    JEL: C23 G21 O43
    Date: 2020–03–15
  3. By: Emara, Noha; El Said, Ayah
    Abstract: Financial inclusion, whether in terms of adoption or usage, is one of the main, but challenging priorities in the MENA region. The paper empirically investigates the relationship between financial inclusion and economic growth in selected MENA countries. A system GMM dynamic panel model technique is employed on yearly data for the period 1965-2016, using a number of measures of financial inclusion covering the households and the firms access to finance. Particularly, the study uses indicators such as the number of bank accounts (per 1000 adult population), bank accounts for corporates/enterprises, and the number of bank branches and ATMS (per 100,000 people), percentage of firms using banks to finance investments, the percentage of firms using bank loans to finance working capital, and the percentage of firms using banks to finance investments. The results of the study indicate that financial inclusion positively impacts GDP per capita growth in the selected countries. Financial inclusion measured by the household’s financial access index has a positive and statistically significant impact on economic growth in the MENA region, but requires supervisory and regulatory regimes with backing of the rule of law, judicial independence, contract enforcement, control of corruption, and political stability. The effect firms’ access to finance is only significant in the presence of strong institutions. The results were insignificant for the general financial inclusion measure.
    Keywords: Financial Inclusion; Governance; Economic Growth; MENA; Financial Development
    JEL: C23 G21 O43
    Date: 2019–10–17
  4. By: Burguillos, Je-Al; Cassimon, Danny
    Abstract: This study explores the key factors that affected the deepening of financial inclusion across the 17 regions of the Philippines from 2013-2017. Using the regional multidimensional financial inclusion index (FII) developed by the BSP, the study finds out that significant heterogeneities exist among regions, and that they persist over time, suggesting most importantly that the least financially inclusive regions do not show significant progress. Moreover, using different panel estimation techniques, we try to determine the possible factors that affect this inter-regional financial inclusion heterogeneities. Overall, we show that regional GDP per capita, population, a proxy for the availability of physical infrastructure, and the degree of mobile penetration are among the robust factors explaining the financial inclusion variations across regions.
    Keywords: financial inclusion, financial development, inter-regional disparities, the Philippines
    JEL: I30 G18 O53 R11
    Date: 2020–04
  5. By: Oz Shy
    Abstract: Low-income consumers are not only constrained with spending, but also with the type and variety of payment methods available to them. Using a representative sample of the U.S. adult population, this paper analyzes the low possession (adoption) of credit and debit cards among low-income consumers who are also unbanked. Using a random utility model, I estimate the potential welfare gains associated with policy options suggested in the literature to provide subsidized and unsubsidized debit cards to this consumer population.
    Keywords: consumer payment choice; household income; diversity; unbanked consumers; random utility analysis; unbanked; financial inclusion; consumer surveys; consumer behavior
    JEL: D90 E42
    Date: 2020–02–01
  6. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The study assesses how ICT modulates the effect of inequality on female economic participation in a panel of 42 countries in sub-Saharan Africa over the period 2004-2014. Three inequality indicators are used, namely: the Gini coefficient, the Atkinson index and the Palma ratio. The adopted ICT indicators are mobile phone penetration, internet penetration and fixed broadband subscriptions. Three gender economic inclusion indicators are also used for the analysis, namely: female labour force participation, female unemployment and female employment. The Generalised Method of Moments is employed as empirical strategy. The findings show that enhancing ICT beyond certain thresholds is necessary for ICT to mitigate inequality in order to enhance gender economic participation. First, for female labour force participation, a minimum threshold of 165.714 mobile phone penetration per 100 people is required for the Palma ratio. Second, minimum ICT thresholds for the reduction of female unemployment are: (i) 87.783, 107.486 and 152.500 mobile phone penetration per 100 people for respectively, the Gini coefficient, the Atkinson index and the Palma ratio; (ii) 39.618 internet penetration per 100 people for the Atkinson index and (iii) 4.500 fixed broadband subscriptions for the Palma ratio. Third, the corresponding ICT thresholds for the promotion of female employment are: (i) 120.369 and 85.533 mobile phone penetration per 100 people for respectively, the Gini coefficient and the Atkinson index and (ii) 30.005 internet penetration per 100 people for the Gini coefficient. The established thresholds make economic sense and can be feasibly implemented by policy makers in order to induce favourable effects on gender economic inclusion dynamics.
    Keywords: Africa; ICT; Gender; Inclusive development
    JEL: G20 I10 I32 O40 O55
    Date: 2019–01

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