nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2021‒03‒15
six papers chosen by

  1. The medium is the message: learning channels, financial literacy, and stock market participation By Hermansson, Cecilia; Jonsson, Sara; Liu, Lu
  2. Room to improve: a review of switching activity in the Irish mortgage market By Byrne, Shane; Devine, Kenneth; McCarthy, Yvonne
  3. Financial Literacy Learning for Primary Education By Setiawan, Adib Rifqi; Saputri, Wahyu Eka
  4. Lucky You: Income Risk, Precautionary Saving, and Loss Aversion – An Empirical Test By Marcela Ibanez; Sebastian O. Schneider
  5. Do social enterprises walk the talk? Assessing microfinance performances with mission statements By Roy Mersland; Samuel Anokye Nyarko; Ariane Szafarz
  6. Financial inclusion, technology and their impacts on monetary and fiscal policy: theory and evidence By Robert Oleschak

  1. By: Hermansson, Cecilia (Department of Real Estate and Construction Management, Royal Institute of Technology); Jonsson, Sara (Stockholm University); Liu, Lu (Stockholm University)
    Abstract: This paper investigates the effects of learning channels on stock market participation. More specifically, we investigate the direct effects of learning about financial matters from one’s private network, financial advisors, and the media, as well as the interactive effects of financial literacy and these learning channels. Analyzing a unique cross-section data that combine survey data and bank register data on retail investors, we find that media are the only learning channel that increases the likelihood of stock market participation. Interactions point to the joint importance of financial literacy and media as a learning channel for individuals’ stock market participation. Constructing theme–based literacy measures, we conclude that only financial knowledge related to investments in risky assets affects stock market participation. Our findings suggest implications to policymakers when designing financial education programs.
    Keywords: stock market participation; learning channels; private network; financial advisors; media; financial literacy
    JEL: D14 D83 G41 G51 G53
    Date: 2021–02–27
  2. By: Byrne, Shane (Central Bank of Ireland); Devine, Kenneth (Central Bank of Ireland); McCarthy, Yvonne (Central Bank of Ireland)
    Abstract: In this Letter, we provide a detailed review of switching in the Irish mortgage market and identify the potential for savings among mortgage holders. Our estimates show that three in every five ‘eligible’ mortgages for principal dwelling homes stand to save over €1,000 within the first year if they switch, and more than €10,000 over their remaining term. We find that just 2.9 per cent of mortgages switched provider during H2 2019. Our analysis points to a range of explanations for mortgage switching inertia. A significant proportion of mortgage holders report a lack of knowledge or worry about the prospect of switching, in addition, gender, education, financial literacy and behavioural characteristics can help explain the degree of reported inhibition towards switching. This highlights the relevance of behavioural insights in informing consumer policy design.
    Date: 2020–10
  3. By: Setiawan, Adib Rifqi; Saputri, Wahyu Eka
    Abstract: This research constructs learning design to guide primary education students on achieving financial literacy. The approach used is mixed method sequential exploratory model. This results shows that validity and reliability of this design in general on the category can be used.
    Date: 2021–02–05
  4. By: Marcela Ibanez (University of Goettingen); Sebastian O. Schneider (Max Planck Institute for Research on Collective Goods)
    Abstract: This paper empirically examines the behavioral precautionary saving hypothesis by Koszegi and Rabin (2009) stating that uncertainty about future income triggers saving because of loss aversion. We extend their theoretical analysis to also consider the internal margin, i.e., the strength, of loss aversion, and empirically study the relation between income risk, experimentally elicited loss aversion and precautionary savings. We do so using a sample of 640 individuals from the low-income population of Bogotá, characterized by limited financial education and subject to substantial income risk. In line with the theoretical predictions, we find that an increase in income risk is associated with higher savings for loss-averse individuals, and that this increase in savings grows with the degree of loss aversion. Thus, as suggested by Koszegi and Rabin (2009), but contrarily to common assumptions, our findings establish that loss aversion is not necessarily an obstacle to saving, and thus identify new approaches of increasing saving among individuals with low financial education.
    Keywords: Reference-dependent utility, expectations, consumption plans, precautionary savings, loss aversion, risk preferences, income risk, low-income, Bogotá, experiment
    JEL: D11 D14 D15 D81 D90 G40 J65 O16
    Date: 2021–03–04
  5. By: Roy Mersland; Samuel Anokye Nyarko; Ariane Szafarz
    Abstract: We study mission drift in social enterprises by examining whether these organizations stick to the actual mission enshrined in their mission statements. We use data from microfinance organizations (MFOs), a homogeneous group of social enterprises which have been scrutinized—and sometimes criticized—for mission drift. We focus on three publicly recognized and non-mutually-exclusive microfinance social missions identified by previous studies: poverty alleviation, women's empowerment, and rural financial inclusion. Based on hand-collected data from 199 MFOs worldwide, our results suggest strong coherence between social missions and actual practices. Hence, we argue that, with respect to MFOs' own stated social missions, mission drift is no serious concern. The trustworthiness of social mission statements makes them suitable evaluation tools for social enterprises.
    Keywords: Content analysis; Microfinance; Mission drift; Mission statement; Social enterprise
    Date: 2019–06
  6. By: Robert Oleschak
    Abstract: In economies with a low level of financial inclusion (FI), most activities are settled in cash and are thus more difficult to trace, record, and tax. I show theoretically that economies with inefficient financial technologies exhibit low levels of FI and of tax revenue and that using an inflation tax as an additional source of income improves welfare. Improvements in technology lead to a higher level of FI, increased tax revenue and lower (optimal) inflation. I test this prediction using panel data from a broad set of countries. The data show a strong and robust negative link between FI and inflation and a positive link between FI and tax revenue for developing countries.
    Keywords: Financial inclusion, financial technology, monetary policy, fiscal policy
    JEL: C12 C22 E31 E41 G21 H21
    Date: 2021

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