nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒10‒26
five papers chosen by

  1. Identifying financially illiterate groups: an international comparison By Kenneth De Beckker; Kristof De Witte; Geert Van Campenhout
  2. Improving digital financial services inclusion: A panel data analysis By Berdibayev, Yergali; Kwon, Youngsun
  3. The effects of parental involvement in homework. Two randomised controlled trials in financial education By Joana Elisa Maldonado; Kristof De Witte; Koen Declercq
  4. Building a Habit: How Initial Saving Activity Predicts Long-term Account Engagement By Mirpourian, Mehrdad
  5. Financing Sustainable Development in Africa: Taking Stock, and Looking Forward By Oluwabunmi Adejumo; Uchenna Efobi; Simplice A. Asongu

  1. By: Kenneth De Beckker; Kristof De Witte; Geert Van Campenhout
    Abstract: Targeted policy interventions are more effective than one-size-fits-all initiatives. This paper proposes the use of k-means cluster analysis to identify vulnerable groups with respect to financial literacy. Using a rich sample of 12 countries, we distinguish four groups with varying financial literacy levels, and examine their socio-economic characteristics. The results suggest that individuals in the most vulnerable financial illiterate groups are on average, single, less-educated, and unemployed with low incomes. This contrasts with those in the strongest group: individuals with the highest financial knowledge, financial behaviour and financial attitudes scores are on average highly-educated males who live together with a partner. They earn a high income and hold several financial products. Integrating these insights into national strategies which promote financial literacy will not only lead to more effective but also to more efficient policy initiatives by focusing on the particular weaknesses of certain subgroups and by using the appropriate transmission channels.
    Date: 2019–03–26
  2. By: Berdibayev, Yergali; Kwon, Youngsun
    Abstract: The first goal of Sustainable Development Goals (SDGs) is the absence of poverty to be achieved by 2030. Thus, access to and usage of financial services play an important role in achieving this, where ICT and digital technologies are the main tools, that describe it as a digital financial service (DFS). It defines the provision of financial services and products through digital channels (mobile phone, cards, Internet etc.), and where DFS can be used remotely. DFS inclusion means to increase an access and usage of DFS through digital channels. We collected data for two years (Findex, 2014 & 2017) in 120 countries, overall 240 observation, and with depended variable as DFS inclusion, and independent 12 variables, such as GDP per capita, ATMs per adults, basic skills, Internet usage, mobile subscription, mobile 3G & 4G coverages (separately), mobile internet tariffs, handset prices, political stability, control of corruption and cybersecurity. In general, the regression yielded good results. Factors such as GDP per capita, political stability, control of corruption, mobile 4G coverage, ATMs per adults and mobile Internet tariffs are statistically significant factors for DFS inclusion. In addition, the r-squared value shows more than 0.8 in all models (running with 3G coverage, 4G coverage, both and also with dummy variable).
    Keywords: Digital financial service inclusion,Mobile money services,Financial services,Digital finance,Financial inclusion,Digital payments,Mobile money
    Date: 2020
  3. By: Joana Elisa Maldonado; Kristof De Witte; Koen Declercq
    Abstract: Based on two randomised controlled trials with a total of 2,779 students from grade 8 and 9 in Flanders, we provide causal evidence on the effects of parental involvement on students’ learning in a financial education course. Using an experimental design with three treatment groups, the impact of parental involvement in homework is distinguished from the standalone impact of the classroom intervention and homework itself. Intention-to-treat analysis reveals that the intervention effectively improves students’ knowledge and behaviour. The classroom intervention used in conjugation with a homework assignment that the students complete with the help of their parents increases financial literacy scores by 0.37 standard deviations. On average, the added value of involving parents in homework is not significant, but involving parents has significant positive effects on behaviour for disadvantaged students. As a potential underlying mechanism it is observed that the parental involvement intervention significantly increases family communication between students and parents about the course topics.
    Keywords: Financial Literacy; Parental Involvement; Randomised Controlled Trial; Education
    Date: 2019
  4. By: Mirpourian, Mehrdad
    Abstract: In this paper, time-to-event analysis is used to predict the risk of dormancy within financial institution accounts. The hypothesis tested was that a customer’s behavior in the first month of account ownership holds clues to future dormancy, an idea supported by behavioral science literature. In many situations, the initial behavior of an individual can predict future behavior. Individual-level transaction data on a group of customers from one of the largest microfinance banks in Mexico was used to conduct a survival analysis using the Stratified Cox model. While adjusting for two other financial indicators, the team studied frequency of account usage during the first month after account opening and found that customers who use their account more often during that first month have a significantly lower risk of account dormancy than their counterparts.
    Keywords: account dormancy, survival analysis, financial inclusion, risk, savings
    JEL: D03
    Date: 2020–07–30
  5. By: Oluwabunmi Adejumo (Obafemi Awolowo University, Ile-Ife, Nigeria); Uchenna Efobi (Covenant University, Ota, Ogun State, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Financing sustainable development in Africa requires financing options that is best for development in the region without further escalating other societal problems. This chapter takes stock of financing options previously advocated for financing development in the African region such as development assistance and foreign investment. By considering its implication on development outcomes like poverty, inequality, and aggregate human development, some drawbacks still exist. Therefore, the chapter identifies, reconfigures and reinvents other financial flows such as mutual support networks, agricultural cooperatives, crowd funding, fiscal responsibility, other forms of informal banking, and remittances, among others to African countries for efficient provision of structures that can aid in the sustenance of development. We conclude that these alternative means of financing development could be a viable policy option to bridge income and development gaps; thereby mainstreaming the process for financial inclusion and sustainability.
    Keywords: Finance; Sustainable Development
    JEL: G20 I00 O10
    Date: 2020–01

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