nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2021‒11‒22
five papers chosen by

  1. Financial inclusion and legal system quality: are they correlated? By Ozili, Peterson Kitakogelu
  2. Fintech and Financial Inclusion in Latin America and the Caribbean By Mrs. Marina V Rousset; Frederic Lambert; Jose Torres; Luis Herrera; Grey Ramos; Mr. Dmitry Gershenson
  3. Trading Stocks Builds Financial Confidence and Compresses the Gender Gap By Jha, Saumitra; Shayo, Moses
  4. What Drives Financial Sector Development in Africa? Insights from Machine Learning By Isaac K. Ofori; Christopher Quaidoo; Pamela E. Ofori
  5. The Synergy between Governance and Economic Integration in Promoting Female Economic Inclusion in Sub-Saharan Africa By Pamela E. Ofori; Simplice A. Asongu; Vanessa S. Tchamyou

  1. By: Ozili, Peterson Kitakogelu
    Abstract: This study investigates the correlation between financial inclusion and legal system quality among developed countries from 2004 to 2012. The findings reveal a positive correlation between financial inclusion and legal system quality. The findings suggest that improvements in legal system quality goes hand in hand with improvements in the level of financial inclusion. More specifically, higher supply of ATM per 100,000 adults is correlated with stronger insolvency resolution framework among G7, European and non-European countries. Also, the number of bank branch per 100,000 adults is positively correlated with strong rule of law and legal rights in non-European countries. Also, the number of ATMs per 100,000 adults is positively correlated with strength of insolvency resolution framework and negatively correlated with the time it takes to resolve insolvency before, during and after the global financial crisis.
    Keywords: Law, development, financial inclusion, ATM, bank branch, legal rights, legal system, rule of law, insolvency resolution.
    JEL: G20 G21 G28 K00 K12 K23 K40 K42 K49
    Date: 2021–12
  2. By: Mrs. Marina V Rousset; Frederic Lambert; Jose Torres; Luis Herrera; Grey Ramos; Mr. Dmitry Gershenson
    Abstract: Despite some improvement since 2011, Latin America and the Caribbean continue to lag behind other regions in terms of financial inclusion. There is no clear evidence that fintech developments have supported greater financial inclusion in LAC, contrary to what has been observed elsewhere in the world. Case studies by national policy experts suggest that barriers to entry in the financial sector, along with a constraining regulatory environment, may have hindered a faster adoption of fintech. However, fintech development seems to have accelerated in the wake of the COVID-19 pandemic and with the support of recent policy initiatives.
    Keywords: fintech development; policy initiative; financial product; cash transfer program; ACH Colombia; electronic cash; per capita income; credit card payment; Financial inclusion; Fintech; Financial sector; Caribbean; Middle East and Central Asia; Central America; South America; Asia and Pacific
    Date: 2021–08–20
  3. By: Jha, Saumitra (Stanford University); Shayo, Moses (Hebrew University of Jerusalem)
    Abstract: Many studies document low rates of financial literacy and suboptimal levels of participation in financial markets. These issues are particularly acute among women. Does this reflect a self-reinforcing trap? If so, can a nudge to participate in financial markets generate knowledge, confidence, and further increase informed participation? We conduct a large field experiment that enables and incentivizes working-age men and women--a challenging group to reach with standard financial training programs--to trade stocks for four to seven weeks. We provide no additional educational content. We find that trading significantly improves financial confidence, as reflected in stock market participation, objective and subjective measures of financial knowledge, and risk tolerance. These effects are especially strong among women. Participants also become more self-reliant and consult others less when making financial decisions.
    Date: 2021–02
  4. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Christopher Quaidoo (University of Professional Studies, Accra, Ghana); Pamela E. Ofori (University of Insubria, Varese, Italy)
    Abstract: This study uses machine learning techniques to identify the key drivers of financial development in Africa. To this end, four regularization techniques— the Standard lasso, Adaptive lasso, the minimum Schwarz Bayesian information criterion lasso, and the Elasticnet are trained based on a dataset containing 86 covariates of financial development for the period 1990 – 2019. The results show that variables such as cell phones, economic globalisation, institutional effectiveness, and literacy are crucial for financial sector development in Africa. Evidence from the Partialing-out lasso instrumental variable regression reveals that while inflation and agricultural sector employment suppress financial sector development, cell phones and institutional effectiveness are remarkable in spurring financial sector development in Africa. Policy recommendations are provided in line with the rise in globalisation, and technological progress in Africa.
    Keywords: Africa, Elasticnet, Financial Development, Financial Inclusion, Lasso, Regularization, Variable Selection
    JEL: C01 C14 C52 C53 C55 E5 O55
    Date: 2021–01
  5. By: Pamela E. Ofori (University of Insubria, Varese, Italy); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: The debate on the need for Sub-Saharan African (SSA) countries to increase female participation in the economic sector has intensified the coming into force of the African Continental Free Trade Area (AfCFTA) and good governance. This study investigates the joint effects of governance (comprising of political, economic and institutional governance) and economic integration on female economic participation in sub-Saharan Africa (SSA). The study employs panel data of 42 countries in SSA spanning 1996-2020 for the analysis. The empirical strategy uses the dynamic System Generalized Method of Moments (SGMM) estimation technique. The findings reveal that the single effect of economic integration on female economic participation is necessary but not sufficient. Hence, complementing economic integration with good governance further enhances female economic participation in SSA. In general, the joint effect of economic integration and good governance should be a concern for policymakers to promote female economic inclusion.
    Keywords: economic integration; governance; female economic participation; sub-Saharan Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2021–10

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