nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2021‒09‒27
three papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. How Risk Aversion and Financial Literacy Shape Young Adults’ Investment Preferences By Stoian, Andreea; Vintila, Nicoleta; Iorgulescu, Filip; Cepoi, Cosmin Octavian; Dina Manolache, Aurora
  2. Gender Inclusive Intermediary Education, Financial Stability and Female Employment in the Industry in Sub-Saharan Africa By Asongu, Simplice; Nounamo, Yann; Njangang, Henri; Tadadjeu, Sosson
  3. Financial Literacy and the Timing of Tax-Preferred Savings Account Withdrawals By Marianne Laurin; Derek Messacar; Pierre-Carl Michaud

  1. By: Stoian, Andreea; Vintila, Nicoleta; Iorgulescu, Filip; Cepoi, Cosmin Octavian; Dina Manolache, Aurora
    Abstract: This study investigates the relationship between risk aversion, financial literacy, and investment preferences of young adults in higher education in Romania. For this purpose, we conducted a survey that measured the basic, advanced and overall financial literacy, risk aversion, and parental financial behaviours. We had 479 respondents and a similar number of useable surveys. Resorting to OLS and IV econometric methods, we show that financial literacy, regardless of its level, contributes to reducing risk aversion quantified by the risk premium. Moreover, positive financial behaviours of parents also decrease the risk aversion. This finding is invalid in the case of a self-assessed risk tolerance. We also found that young adults' investment preferences are influenced by the self-assessed risk tolerance and not by the risk aversion. However, financial literacy increases the probability of young adults to select bonds or funds as investment options, but does not have a statistically significant influence on the selection of stocks, which is mainly driven by the self-assessed risk profile as well as bank deposits.
    Keywords: financial literacy, risk aversion, risk premium, investment choices, survey methods
    JEL: C83 G11
    Date: 2021–08
  2. By: Asongu, Simplice; Nounamo, Yann; Njangang, Henri; Tadadjeu, Sosson
    Abstract: The study examines how financial stability modulates the effect of inclusive intermediary education on female employment in the industry for the period 2008-2018 in Sub-Saharan Africa. The empirical evidence is based on Tobit, Ordinary Least Squares (OLS) and Quantile regressions. There are positive interactive or conditional effects between inclusive intermediary education and financial stability in the Tobit, OLS and bottom quantiles estimations. A net positive (negative) effect is apparent in the 10th quantitle (median) of female employment in the industry distribution. Implications are discussed.
    Keywords: inclusive education; financial sustainability, gender economic inclusion
    JEL: E23 F21 F30 L96 O55
    Date: 2021–01
  3. By: Marianne Laurin; Derek Messacar; Pierre-Carl Michaud
    Abstract: Tax deductions on contributions to registered savings vehicles are a common policy tool used by governments in many industrialized countries to encourage people to save for retirement. However, these plans do not typically lock in funds, which means savers may also withdraw before retirement when their marginal tax rates are still high and forgo the tax benefit. In this paper, we investigate the extent to which pre-retirement savings withdrawals respond to changes in the net-of-tax benefit of withdrawing and whether such behavior depends on the saver’s financial literacy. To that end, we link respondents of a nationally representative financial capability survey from Canada to over 15 years of administrative tax data. Our results show that the correlation between savings withdrawals and the effective marginal tax rate is negative for those with higher financial literacy, but much weaker and sometimes statistically insignificant for those with lower financial literacy. The findings suggest that financial literacy is an important determinant of the extent to which tax-deductible savings plans are used efficiently.
    Keywords: tax-preferred savings accounts, retirement savings, financial literacy.
    JEL: G53 G51 D14
    Date: 2021

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