nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2021‒04‒26
six papers chosen by

  1. On the diffusion of mobile phone innovations for financial inclusion By Asongu, Simplice; Biekpe, Nicholas; Cassimon, Danny
  2. The Role of Institutional Infrastructures in Financial Inclusion-Growth Relations: Evidence from SSA By Ajide, Kazeem; Raheem, Ibrahim; Alimi, Olorunfemi; Asongu, Simplice
  3. Closing the gender profit gap By Catia Batista; Sandra Sequeira; Pedro C. Vicente
  4. An Examination of Demographic Differences in Obtaining Investment and Financial Planning Information By Paul Bechly
  5. Financial education and savings and investment decisions: An analysis of the Survey of financial competences (ECF) By Anna Ispierto Maté, Irma Martínez García, Gloria Ruiz Suárez
  6. Redistribution of Return Inequality By Karl Schulz

  1. By: Asongu, Simplice; Biekpe, Nicholas; Cassimon, Danny
    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: 2020–03
  2. By: Ajide, Kazeem; Raheem, Ibrahim; Alimi, Olorunfemi; Asongu, Simplice
    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
  3. By: Catia Batista; Sandra Sequeira; Pedro C. Vicente
    Abstract: We examine the complementarity between access to mobile savings accounts and improved financial management skills on the performance of female-led micro-enterprises in Mozambique. This combined support is associated with a large increase in both short and long-term firm profits and in financial security, when compared to the independent effect of each of these interventions. This support allowed female-headed micro-enterprises to close the gender gap in performance and financial literacy relative to their male counterparts. The main drivers of improved business performance are increased financial management practices (bookkeeping), an increase in accessible savings and reduced transfers to friends and relatives.
    Keywords: Microenterprise development, management, gender, mobile money, financial literacy, economic development
    Date: 2021
  4. By: Paul Bechly
    Abstract: Financial literacy and financial education are important components of modern life. The importance of financial literacy is increasing for financial consumers because of the weakening of both government and employer-based retirement systems. Unfortunately, empirical research shows that financial consumers are not fully informed and are not able to make proper choices even when appropriate information is available. More research is needed as to how financial consumers obtain investment and financial planning information. A primary data study was conducted to understand the differences between the demographic categories of gender, age, education-level, and income-level with the means of obtaining investment and financial planning information. In this research study, which selected a population from the LinkedIn platform, statistical differences between gender, age, education-level, and income-level were confirmed. These differences helped to confirm prior research in this field of study. Practical opportunities for commercial outreach to specific populations became evident through this type of research. Providers of investment and financial planning information can access their targeted audience more effectively by understanding the demographic profile of the audience, as well as the propensity of the demographic profile of the audience to respond. As this type of research is relatively easy to construct and administer, commercial outreach for providers of investment and financial planning information can be conducted in a cost-efficient and effective manner.
    Date: 2021–04
  5. By: Anna Ispierto Maté, Irma Martínez García, Gloria Ruiz Suárez
    Abstract: This paper is based on the results deriving from the Survey of Financial Competences (ECF) in an attempt to contribute to the improvement of financial education policy designs, and it pursues several objectives: (i) to quantify the financial knowledge of individuals, (ii) to relate this knowledge to available socio-economic characteristics, and (iii) to analyse the effect of financial education on savings and investment decision-making for a broad set of financial assets. The results reveal that financial education plays a particularly important role in the decision to acquire financial assets such as fixed income and equity securities and investment funds. Financial education determines investment decisions in which the valuation of return, risk and investment term predominate and not the decisions of saving or acquisition of assets strongly perceived as hedging products.
    Keywords: Financial Education, Investment, Saving.
    JEL: A20 G21 G23 I21 I22
    Date: 2021
  6. By: Karl Schulz
    Abstract: Wealthier households obtain higher returns on their investments than poorer ones. How should the tax system account for this return inequality? I study capital taxation in an economy in which return rates endogenously correlate with wealth. The leading example is a financial market, where the rich acquire more financial information than the poor. Contrary to conventional wisdom, rather than calling for more redistribution, the presence of this scale dependence provides a rationale for lower marginal tax rates. The endogeneity of returns generates an inequality multiplier effect between wealth and its returns. Therefore, standard elasticity measures that determine the responsiveness of capital to taxes must be revised upwards. At an aggregate level, a rise in redistribution induces a compression effect on the distribution of pre-tax returns. In the financial market, I identify general equilibrium trickle-up externalities that provide a force for more redistribution relative to the partial equilibrium. Finally, I estimate partial and general equilibrium responses and demonstrate the quantitative importance of scale dependence for tax policy.
    Keywords: optimal taxation, capital taxation, heterogeneous returns, wealth inequality, general equilibrium, asset pricing, private information, financial literacy
    JEL: H21 H23 H24 D31 G11 G12 G14 G53
    Date: 2021

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