nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2021‒12‒13
nine papers chosen by

  1. Digital and Financial Literacy as Determinants of Digital Payments and Personal Finance. By Lo Prete, Anna
  2. Impacts of Interest Rate Cap on Financial Inclusion in Cambodia By Dyna Heng; Serey Chea; Bomakara Heng
  3. Preferences, Financial Literacy, and Economic Development By Davoli, Maddalena; Rodríguez-Planas, Núria
  4. The Impact of Financial Inclusion on Household Health Expenditures in Africa By Ofeh M. Edoh; Tii N. Nchofoung; Ofeh E. Anchi
  5. COVID-19 Global Pandemic, Financial Development and Financial Inclusion By Nathanael Ojong; Simplice A. Asongu
  6. Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda By John Kuada
  7. Does Access to Bank Accounts as a Minor Improve Financial Capability? Evidence from Minor Bank Account Laws By J. Michael Collins; Jeff Larrimore; Carly Urban
  8. Tourism management for financial access in Sub-Saharan Africa: inequality thresholds By Simplice A. Asongu; Mushfiqur Rahman; Okeoma J-P Okeke; Afzal S. Munna
  9. Kaivik: A Free Online Asset Market Cellphone Interface Experiment with Financial Bubbles By Kyle Hampton; Paul Johnson

  1. By: Lo Prete, Anna (University of Turin)
    Abstract: This work documents that, across countries, the use of digital payment tools and platforms is associated to higher digital literacy, at all levels of financial literacy. More informed personal finance choices, instead, are associated to higher financial literacy, at all levels of digital literacy. The results from this preliminary analysis suggest that digital and financial literacy should be considered together when assessing the implication of digitalization for individual investors, who can access digital financial products and markets in the absence of financial literacy.
    Date: 2021–11
  2. By: Dyna Heng; Serey Chea; Bomakara Heng
    Abstract: Interest rate caps, despite their intended objective of broadening financial inclusion, can have undesirable effects on financial inclusion under certain conditions. This paper examines the effect of microfinance-loan interest rate caps on financial inclusion in Cambodia. Based on a difference-in-difference analysis on bank and microfinance supervisory data, results show some unintended impact on financial inclusion. The cap led to a significant increase in non-interest fees charged on new loans following the introduction of an annual cap. Microfinance borrowers declined immediately, amid an increase in credit growth, as microfinance institutions targeted larger borrowers at the expense of smaller ones. Microfinance institutions, responded differently to the cap, considering their own operation and funding costs, and client base. Two years after the cap, institutions resumed lending to a wider group of borrowers with lower funding and operation costs brought by mobile payment development.
    Keywords: Financial Inclusion, Interest Rate Caps, Banking Sector; microfinance borrower; microfinance-loan interest rate caps; operation cost; supervisory data; impact of interest rate cap; Loans; Interest rate ceilings; Microfinance; Financial inclusion; Credit; Global
    Date: 2021–04–29
  3. By: Davoli, Maddalena (Goethe University Frankfurt); Rodríguez-Planas, Núria (Queens College, CUNY)
    Abstract: Using data from 74 countries, we uncover important differences in the association between financial literacy and preferences by the level of economic development. We find that patience is only salient in wealthier countries, i.e. countries with their GDP per capita above the sample median. In such cases, countries with higher level of patience display higher levels of financial literacy. Importantly, this association is not driven by a multitude of institutional or cultural factors known to be related to financial literacy. In impoverished countries, we document a higher level of financial literacy in countries with higher levels of risk-taking but with lower levels of trust, positive reciprocity, and altruism. Countries' legal origin drives most of the association with risk-taking and about two fifths of the relationship with trust and positive reciprocity. At the same time, the country's religious composition drives the association between altruism and financial knowledge. Our findings underscore that financial education programs need to be tailored to the cultural aspect of group preferences and suggest what type of traits policies and programs ought to be reinforced in poorer countries.
    Keywords: financial literacy, preferences, and economic development
    JEL: D14 E2 I22
    Date: 2021–09
  4. By: Ofeh M. Edoh (University of Dschang, Cameroon); Tii N. Nchofoung (University of Dschang, Cameroon); Ofeh E. Anchi (University of Bamenda, Cameroon)
    Abstract: This study examines the impact of financial inclusion on household health expenditure in 17 African countries. It argues that financial inclusion is an active influencer of individuals’ health demand and that Gross Domestic Product (GDP) per capita and voluntary health insurance schemes tend to be active transmission channels through which financial inclusion affects household health expenditures. The study used an instrumental variable (2SLS) technique for the analysis over a period from 2008 to 2017.Results from the study show that being financially included leads to increase household health expenditures. Suggestions for policy emerging from this study to governments in Africa are on the aspect of fostering financial inclusion to a wider population alongside enhancing the Universal Health Coverage (UHC) plan to ease the burden of out-of-pocket payments on households.
    Keywords: Financial inclusion, Health expenditure, Out-of-pocket (OOP) payments, 2SLS
    JEL: G15 I13 C23
    Date: 2021–01
  5. By: Nathanael Ojong (York University, Toronto, Canada); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This chapter examines how the Covid-19 pandemic has affected financial development and financial inclusion in African countries. The study provides both broad perspectives and country-specific frameworks based on selected country cases studies. Some emphasis is placed on the achievement of sustainable development goals (SDGs) that are related to financial inclusion. The study aims to understand what immediate challenges the COVID-19 pandemic has represented to the economies and societies on the one hand and on the other, the effect of the COVID-19 on the interconnected financial systems in terms of consequences of the pandemic. The relevance of the study builds on the importance of these insights in helping both scholars and policy makers understand how the effect of the pandemic on the financial system and by extension, the global economy can be mitigated for more financial inclusion.
    Keywords: Covid-19 pandemic; financial development; Financial inclusion; Africa
    Date: 2021–01
  6. By: John Kuada (Aalborg, Denmark)
    Abstract: Purpose – The purposes of this paper are to review the streams of studies that link financial inclusion to small enterprise growth in Sub-Sahara Africa (SSA), to identify the research gaps they provide, and to prepare an agenda for future research in the field. Design/methodology/approach – The study employs systematic literature search method to identify relevant literature from journals. It then adopts a narrative approach for the review, highlighting the findings from the prior studies and gaps requiring research attention. Findings – The discussions reveal that there is a need for future studies that can unpack small enterprise growth determinants, identify growth-enabling entrepreneurial characteristics and examine the contextual variabilities that shape their effectiveness. Originality/value – There is currently no comprehensive/integrated review exploring the link between financial inclusion and small enterprise growth in SSA. This review therefore provides insights that contribute to the development of this stream of research.
    Keywords: Financial inclusion, entrepreneurship, small businesses, enterprise growth, Africa
    Date: 2021–01
  7. By: J. Michael Collins; Jeff Larrimore; Carly Urban
    Abstract: Banking the unbanked is a common policy goal, but should this include access to bank accounts for minors? This study estimates how teenagers' access to bank accounts affects their financial development. Using variation in state laws, we show policies that permit access to independently-owned accounts increase account ownership at age 16 through age 19, although by age 24 those young adults are banked at similar rates to teens who grew up in states that do not allow minors to own accounts independently. Teens who had access to independently-owned accounts use fewer high-cost alternative financial services (like payday loans) through age 20—but are then more likely to use AFS, particularly check-cashing services, from age 21 through 24. Using credit records, we show that access to non-custodial accounts has no effects on credit scores in the short-run, but lower credit scores and more loan delinquencies at ages 21 through 24. While these state laws promote financial inclusion for teenagers, the young people who take on accounts may experience negative consequences in the longer run.
    Keywords: Unbanked; Financial Inclusion; Bank Regulation; Financial Capability
    JEL: D14 D18 G18 G21 G28
    Date: 2021–11–19
  8. By: Simplice A. Asongu (Yaounde, Cameroon); Mushfiqur Rahman (London, UK); Okeoma J-P Okeke (London, UK); Afzal S. Munna (London, UK)
    Abstract: The study provides insights into how tourism can be managed to improve financial access in sub-Saharan Africa. The empirical evidence is based on the generalised method of moments. To make this assessment, inequality dynamics (i.e. the Gini coefficient, the Atkinson index and Palma ratio) are interacted with tourism (tourism receipts and tourists’ arrivals) to establish inequality levels that should not be exceeded in order for tourism to promote financial access in the sampled countries. From the findings, inequality levels that should not be exceeded for tourism to promote financial access are provided: (i) 0.666 of the Atkinson index and 5.000 of the Palma ratio for tourism receipts to promote financial access and (ii) for tourist arrivals to enhance financial access, 0.586, 0.721 and 6.597 respectively, of the Gini coefficient, the Atkinson index, and the Palma ratio. Policy implications are discussed.
    Keywords: Tourism; Management; Financial access; Inequality; Africa; Sustainable Development
    JEL: O10 O40 Z3 Z32
    Date: 2021–01
  9. By: Kyle Hampton (Department of Economics, University of Alaska Anchorage); Paul Johnson (Department of Economics, University of Alaska Anchorage)
    Abstract: The authors present Kaivik, a free online asset auction classroom experiment platform that works with cellphones. Students use cellphones to trade units of a financial asset (shares in a single company) by submitting bid and ask prices plus the number of asset units they are offering to buy or sell per transaction. In this “order book†system the liquidity of the asset market at any point in time is variable. Trading can generate asset market bubbles. Instructors set key experiment parameters. Results are recorded and can be presented on a screen for discussion. Students are given an experiment report template to complete.
    Keywords: Economic Education and Teaching of Economics, Portfolio Choice, Investment Decisions, Financial Bubbles, Asset Markets, Information and Market Efficiency
    JEL: A2 G22 G17
    Date: 2021–11

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