nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2021‒01‒18
seven papers chosen by

  1. Savings Groups Reduce Vulberability but have Mixed Effect on Financial Inclusion By Frisancho, Veronica; Valdivia, Martin
  2. Financial Literacy and Retirement Planning of Working-Age People By Tatiyaporn SIRISAKDAKUL
  3. Does PMJDY Scheme Augmented Financial Inclusion in India? Evidence from Indian States By Singh, Bhanu Pratap; Kumari, Annu; Sharma, Tanya; Malhotra, Abhishek
  4. The Role of Institutional Infrastructures in Financial Inclusion-Growth Relations: Evidence from SSA By Kazeem B. Ajide; Ibrahim D. Raheem; Olorunfemi Y. Alimi; Simplice A. Asongu
  5. On the diffusion of mobile phone innovations for financial inclusion By Simplice A. Asongu; Nicholas Biekpe; Danny Cassimon
  6. Digital Payments, the Cashless Economy, and Financial Inclusion in the United Arab Emirates: Why Is Everyone Still Transacting in Cash? By Jeremy Srouji
  7. Fintech Credit Risk Assessment for SMEs: Evidence from China By Yiping Huang; Longmei Zhang; Zhenhua Li; Han Qiu; Tao Sun; Xue Wang

  1. By: Frisancho, Veronica; Valdivia, Martin
    Abstract: This paper evaluates the impact of the introduction of savings groups on poverty, vulnerability, and financial inclusion outcomes in rural Peru. Using a cluster randomized control trial and relying on both survey and administrative records, we investigate the impact of savings groups over a two year period. We find that savings groups channel expensive investments such as housing improvements and reduce households’ vulnerability to idiosyncratic shocks, particularly among households in poorer districts. The treatment also induces changes in households’ labor allocation choices: access to savings groups increases female labor market participation and, in poorer areas, it fosters greater specialization in agricultural activities. Access to savings groups also leads to a four-percentage point increase in access to credit among women, mainly driven by access to the group’s loans. However, the introduction of savings groups has no impact on the likelihood to use formal financial services. On the contrary, it discourages access to loans from formal financial institutions and microfinance lenders among the unbanked.
    Keywords: Banca de desarrollo, Economía, Familia, Finanzas, Investigación socioeconómica, Pobreza, Sector financiero,
    Date: 2021
  2. By: Tatiyaporn SIRISAKDAKUL (Faculty of Liberal Arts and Management Science, Kasetsart University, Thailand Author-2-Name: Butsakorn KHORNJAMNONG Author-2-Workplace-Name: Faculty of Liberal Arts and Management Science, Kasetsart University, Thailand Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - This study aimed to investigate the level of understanding of financial knowledge and the relationship between financial literacy and retirement planning of working-age people. Methodology – The participants of the study were residents of Sakon Nakhon, Nakhon Phanom and Mukdahan, Thailand. The questionnaire is the research tool for collecting data with 1,200 adults, aged between 25-60. This study will use a descriptive statistical analysis to describe frequency, percentage, mean and mode. Ordinary Least Squares (OLS) method is widely used to describe the relationship between financial literacy and retirement planning. Findings – The result show that the level of education has a positive relationship with financial literacy. Most of middle lower income people have a moderate to low level of the basic financial literacy and are not involved in retirement planning. The respondents of women in Sakon Nakhon, Nakhon Phanom and Mukdahan have more understanding of retirement planning than men; this result is different to the previous research undertaken by Lusardi and Mitchell (2011), Bucher-Koenen and Lusardi (2011) Grohmann et al. (2016). Novelty – This paper will study the level of understanding of financial knowledge and the relationship between financial literacy and retirement planning of working-age people. Most of the previous research concentrated on people who live in the big city; there was. little focus on people living in the countryside, especially in the Northeastern part of Thailand. Not too many papers have focused on the working-age people, who in due course will contribute to Thailand becoming an Aging Society. It could help to the government, labor union, Bureau of Financial Inclusion Policy and Development and related departments to know the level of financial knowledge and retirement planning. So, they could provide guidance of financial literacy to community. Type of Paper - Empirical
    Keywords: Financial literacy; Retirement planning; Working-age people
    JEL: E21 G02 I22 J26
    Date: 2020–12–31
  3. By: Singh, Bhanu Pratap; Kumari, Annu; Sharma, Tanya; Malhotra, Abhishek
    Abstract: The study attempts to examine the impact of financial inclusion, promoted through Pradhaan Mantri Jan Dhan Yojna (PMJDY) scheme, on the economic performance across the Indian states. Using the index of financial inclusion developed in Sarma (2008), the current study develops a 3-dimensional FII for 25 major Indian states for the year 2011 and 2016 to assess the status of financial inclusion. Cross-sectional and pooled Ordinary Least Square regression techniques are applied to examine the impact of financial inclusion on the economic performance of the Indian states. The slope and interaction dummies are used to incorporate the effect of PMJDY scheme, which takes value 1 for structural change and 0 for the control period. The major findings of the study suggest the PMJDY scheme failed to augment financial inclusion in India in the short-run. Lack of physical infrastructure, human development and effective governance are the major reasons behind the failure of the PMJDY scheme. Hence, structural reforms are warranted in the regulatory framework for better economic outcomes.
    Keywords: Financial inclusion, Economic growth, PMJDY scheme, Pooled OLS regression
    JEL: G2 G28 O11
    Date: 2020–11–30
  4. By: Kazeem B. Ajide (University of Lagos, Nigeria); Ibrahim D. Raheem (EXCAS, Liège, Belgium); Olorunfemi Y. Alimi (University of Lagos, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This paper investigates the role of institutional infrastructures in the financial inclusion-growth nexus for a panel of twenty countries in sub-Sahara Africa (SSA).Employing the System Generalized Method of Moments (GMM), the following insightful outcomes are established. First, while there is an unrestricted positive impact of physical access to ATMs and ICT measures of financial inclusion on SSA’s growth but only the former was found significant. Second, the four institutional components via economic, political, institutional and general governances were also found to be growth-spurring. Lastly, countries with low levels of real per capita income are matching up with other countries with high levels of real income per capita. The empirical evidence of some negative net effects and insignificant marginal impacts are indication that imperfections in the financial markets are sometimes employed to the disadvantage of the poor. On the whole, we established positive effects on growth for the most part. The positive effects are evident because the governance indicators compliment financial inclusion in reducing pecuniary constraints hindering credit access and allocation to the poor that deteriorate growth.
    Keywords: Financial Inclusion; Economic Growth; Governance; System Generalized Method of Moments (GMM)
    JEL: G20 I10 O40 P37
    Date: 2020–01
  5. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas Biekpe (University of Cape Town, Cape Town, South Africa.); Danny Cassimon (University of Antwerp, Belgium)
    Abstract: “Replications are an important part of the research process because they allow for greater confidence in the findings†(McEwan, Carpenter & Westerman, 2018, p. 235). This study extends Lashitew, van Tulder and Liasse (2019, RP) by addressing the concern of multicollinearity that affects the signs and significance of estimated coefficients. This article investigates nexuses between innovations in mobile money and financial inclusion in developing countries. Demand and supply factors that affect the diffusion of mobile services as well as macro-level institutional and economic factors are taken on board. The empirical evidence is based on Tobit regressions. The study finds that when the empirical analysis is robust to multicollinearity, two main tendencies are apparent: the significant findings of Lashitew et al. (2019) are confirmed and many new significant estimated coefficients emerge. While this study confirms the findings of the underlying research, it also goes further to improve the harmony in narratives between the predictors and the outcome variables. Accordingly, by accounting for multicollinearity, the earlier findings are now more consistent across the set of predictors (i.e. demand and supply factors) and the attendant financial inclusion outcomes (i.e. mobile money accounts, mobile used to send money and mobile used to receive money).
    Keywords: Mobile money; technology diffusion; financial inclusion; inclusive innovation
    JEL: D10 D14 D31 D60 O30
    Date: 2020–01
  6. By: Jeremy Srouji (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, ISS - International Institute of Social Studies (ISS), Erasmus University Rotterdam)
    Abstract: Since the oil price downturn of 2015, the United Arab Emirates and fellow Gulf Cooperation Council countries have worked hard to expand digital payments in the interest of improved tax and revenue collection, transparency, and security. Yet despite a deep transformation and diversification of their payment ecosystems and the formalization of plans to become "cashless economies" modelled on South Korea and Sweden, cash continues to dominate payments in both countries. While industry players typically attribute the prevalence of cash in the region to questions of infrastructure readiness, transaction costs, and cyber-security, this paper finds that plans to expand digital payments at the expense of cash may not be well-adapted to countries with high levels of socioeconomic inequality. It proposes a link between socioeconomic inequality and use of cash in emerging economies, and concludes that it may be better to not view the relationship between cash and digital payments in binary zero-sum terms, until there is a better understanding of the socioeconomic , technological, and policy context in which countries like South Korea and Sweden have managed to reduce their reliance on cash in favor of a diversified digital payments ecosystem .
    Keywords: digital payments,cashless economy,financial inclusion,complementary currencies,inequality,non-cash transactions,Gulf Cooperation Council,oil economies,remittances
    Date: 2020–10–30
  7. By: Yiping Huang; Longmei Zhang; Zhenhua Li; Han Qiu; Tao Sun; Xue Wang
    Abstract: Promoting credit services to small and medium-size enterprises (SMEs) has been a perennial challenge for policy makers globally due to high information costs. Recent fintech developments may be able to mitigate this problem. By leveraging big data or digital footprints on existing platforms, some big technology (BigTech) firms have extended short-term loans to millions of small firms. By analyzing 1.8 million loan transactions of a leading Chinese online bank, this paper compares the fintech approach to assessing credit risk using big data and machine learning models with the bank approach using traditional financial data and scorecard models. The study shows that the fintech approach yields better prediction of loan defaults during normal times and periods of large exogenous shocks, reflecting information and modeling advantages. BigTech’s proprietary information can complement or, where necessary, substitute credit history in risk assessment, allowing unbanked firms to borrow. Furthermore, the fintech approach benefits SMEs that are smaller and in smaller cities, hence complementing the role of banks by reaching underserved customers. With more effective and balanced policy support, BigTech lenders could help promote financial inclusion worldwide.
    Keywords: Fintech;Machine learning;Bank credit;Loans;Credit risk;WP,credit history,Fintech firm,house ownership,internet company,real-time customer rating
    Date: 2020–09–25

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