nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒04‒20
five papers chosen by

  1. Financial Inclusion in High-Income Countries: Gender Gap or Poverty Trap ? By Anastasia Cozarenco; Ariane Szafarz
  2. Remittance Investment Climate Analysis: Framework and Methods to Ascertain the Local Development Potential of Overseas Remittances By Jeremaiah M. Opiniano; Alvin P. Ang
  3. Financial Inclusion and Inclusive Growth : What Does It Mean for Sri Lanka? By Arandara,Tisarani Rathnija; Gunasekera,Shanuki
  4. Financial Inclusion and Economic Growth: The Role of Governance in Selected MENA Countries By Emara, Noha; El Said, Ayah; Pearlman, Joseph
  5. Increasing Financial Inclusion in the Muslim World : Evidence from an Islamic Finance Marketing Experiment By Karlan,Dean S.; Osman,Adam Mohamed; Shammout,Nour Musallam

  1. By: Anastasia Cozarenco; Ariane Szafarz
    Abstract: Little is still known about the determinants of financial inclusion in high-income countries. Using the Findex dataset, we focus on two regions: The Euro area and North America. We detect important differences between the two regions in the financial inclusion of women and poor households. In the Euro area, access to financial services can be challenging for women, while in North America, poor households are particularly underserved. We explore potential explanatory factors for the gender and poverty gaps using public social expenditures, inequality and gender discrimination measures, and labor market characteristics. As expected, the region-wise poverty gaps in financial inclusion are aligned with inequality measures. Yet, the factors connected with gender gaps are less intuitive. Our preliminary analysis shows that the gender gaps in financial inclusion are related more to (un)employment characteristics than to the level of institutional gender discrimination. This evidence in turn suggests a link between financial inclusion and the need for consumption smoothing. We therefore speculate that, in high-income countries, gendered financial exclusion is driven more by demand-side factors than by supply-side ones.
    Keywords: Financial inclusion; High-Income Countries; Gender; Poverty; Euro Area; North America
    JEL: G21 O11 O15 J16 I32
    Date: 2020–04–03
  2. By: Jeremaiah M. Opiniano; Alvin P. Ang
    Abstract: ABSTRACT This paper presents the integrated mixed methods results and findings of four community-based studies on the local development potential of overseas remittances. We developed a Remittance Investment Climate (ReIC) analytical framework that outlines what the rural origins of overseas migrants need to see for their remittances to make productive contributions locally. This ReIC framework was piloted through a mixed methods tool called the Remittance Investment Climate Analysis in Rural Hometowns (RICART) and was conducted over a four-year period in four rural municipalities in the Philippines. The interactions between remittance owners (remitters abroad and their families) and their rural hometowns’ investment climate conditions were analyzed. The results and findings on remittances being saved, invested and parked as operational enterprises locally are contextualized per municipality. We find that the interventions by local authorities to improve investment conditions are important actions, but so are improving rural residents’ financial literacy levels, and their practices surrounding financial inclusion and financial functioning. The local development potential of remittances thus rests on conjoint actions to improve local investment climate conditions and regulations, and the financial capabilities of rural residents.
    Keywords: Overseas remittances, migration and development, hometown investing, Remittance Investment Climate Analysis in Rural Hometowns, mixed methods
    Date: 2020–04
  3. By: Arandara,Tisarani Rathnija; Gunasekera,Shanuki
    Abstract: This paper uses data from the National Financial Inclusion Survey 2018 to understand the determinants of financial inclusion in Sri Lanka and their significance for inclusive growth. The findings highlight that gender, education, and formal employment are important determinants of financial inclusion in the country. The results indicate that being a male, having better education, and having formal employment increase a person's access to, and usage of, formal finance. The results also suggest that despite high levels and gender parity in education, Sri Lankan women seem to access more informal finance (and less formal finance) compared with men. There is a general lack of familiarity and low use of digital finance among women. Comparative analysis using the World Bank Group?s Global Financial Inclusion (Global Findex) Database 2017 indicates that although Sri Lanka leads its regional peers in access to finance, it lags its more aspirational East Asian counterparts in usage of savings and credit products as well as digital finance. The paper's findings complement recent policy initiatives such as the National Financial Inclusion Strategy for Sri Lanka. The findings also help in designing targeted actions to address the remaining gaps in financial inclusion in Sri Lanka.
    Date: 2020–04–07
  4. By: Emara, Noha; El Said, Ayah; Pearlman, Joseph
    Abstract: Financial Inclusion - access to financial products by households and firms - is one of the main albeit challenging priorities, both for Advanced Economies (AEs) as well as Emerging Markets (EMs), even more so for the latter. Financial inclusion facilitates consumption smoothing, lowers income inequality, enables risk diversification, and tends to positively affect economic growth. Financial stability is another rising priority among policy makers. This is evident in the re-emergence of macroprudential policies after the global financial crisis, minimizing systemic risk, particularly risks associated with rapid credit growth. However, there are significant policy trade-offs that could exist between both financial inclusion and financial stability, with mixed evidence on the link between the two objectives. Given the importance of macroprudential policies as a toolbox to achieve financial stability, we examine the impact of macroprudential policies on financial inclusion - a potential cause for financial instability if not carefully implemented. Using panel regressions for 67 countries over the period 2000-2014, our results point to mixed effects of macroprudential policies. The usage (and tightening) of some tools, such as the debt-to-income ratio, appear to reduce financial inclusion whereas others, such as the required reserve ratio (RRR), increase it. Specifically, both institutional quality and financial development appear to increase the effectiveness of macroprudential policies on financial inclusion. Institutional quality helps macroprudential policies boost financial inclusion, with mixed effects as a result of financial development, but the results are more significant when we include either institutional quality or financial development. This leads us to believe that macroprudential policies conditional on better institutional quality and financial development improves financial inclusion. This has important policy implications for financial stability.
    Keywords: Financial Inclusion; Governance; Financial Stability; MENA; Macroprudential Policies
    JEL: C21 C23 O4
    Date: 2019
  5. By: Karlan,Dean S.; Osman,Adam Mohamed; Shammout,Nour Musallam
    Abstract: Low utilization of household credit in developing countries may be partially due to religious considerations. In a randomized marketing experiment in Jordan, this paper estimates the effect of sharia-compliant loan features on demand for credit. To comply with Islamic law, the sharia-compliant product uses a bank fee rather than an interest payment structure, while keeping the rest of the product features very similar. Sharia-compliance increased the application rate for loans from 18 percent to 22 percent, an increase in demand that is equivalent to a 10 percent decrease in interest rates. This study also randomly varied the price of the sharia-compliant loan and finds that less religious individuals are twice as elastic with respect to price as the more religious. By comparing reasons for refusal across treatment groups, this paper estimates that survey measures that try to assess the importance of religious objections to conventional credit overestimate the importance of this type of objection by a third.
    Date: 2020–04–02

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