nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2022‒03‒07
ten papers chosen by

  1. Rethinking Digital Financial Inclusion: Evidence from Bangladesh By Aziz, Abdul; Naima, Umma
  2. Financial Inclusion and Economic Growth : Evidence in the Digital Environment of Developing Countries By Tarna Silue
  3. E-money, Financial Inclusion and Mobile Money Tax in Sub-Saharan African Mobile Networks By Tarna Silue
  4. The rise of digital finance: Financial inclusion or debt trap By Pengpeng Yue; Aslihan Gizem Korkmaz; Zhichao Yin; Haigang Zhou
  5. Poverty, wealth inequality, and financial inclusion among castes in Hindu and Muslim communities in Uttar Pradesh, India By Tiwari, Chhavi; Goli, Srinivas; Siddiqui, Mohammad Zahid; Salve, Pradeep
  6. Financial Literacy and the Timing of Tax-Preferred Savings Account Withdrawals By Marianne Laurin; Pierre-Carl Michaud; Derek Messacar
  7. Financial Inclusion Across the United States By Motohiro Yogo; Andrew Whitten; Natalie Cox
  8. The role of inclusive education in governance for inclusive economic participation: gender evidence from sub-Saharan Africa By Asongu, Simplice; Odhiambo, Nicholas
  9. Can cryptocurrency tap the Indian market? Role of having robust monetary and fiscal policies By Palit, Biswajit; Mukherjee, Sakya
  10. The political implication of women and industrialisation in Africa By Tii N. Nchofoung; Simplice A. Asongu; Vanessa S. Tchamyou

  1. By: Aziz, Abdul; Naima, Umma
    Abstract: A growing body of literature is advancing the impact of financial inclusion and digital finance on marginalized populations. However, mainstream scholarship has not focused on understanding the potential drivers and challenges of digital approaches to financial inclusion. This study aims to investigate the mismatch between assumptions implicit in the financial inclusion discourse and ideas of access and use of digital technologies and seeks to move the discourse forward through a comprehensive framework for digital financial inclusion. Our study showed that the social dynamics of financial engagement with new technologies require a move beyond a simple individualistic adopter/non-adopter binary framework and ‘supply oriented’ financial infrastructure. We conclude that although digital services have eased and bridged the gap of physical access to financial services, such services have not been utilised due to lack of basic connectivity, financial literacy and social awareness. This article theoretically contributes to digital financial services adoption literature by offering a significant critical overview and a new perspective on both digital finance and financial inclusion mechanisms.
    Date: 2021–02–24
  2. By: Tarna Silue (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: The paper focuses on the relationship between economic growth and financial inclusion in developing countries. One of the main innovations of the analysis is to report on the contribution to developing new digital financial services such as mobile money. To do this, I first realize a simple endogenous growth model in which the role of the financial sector is to provide sources of investment to included population. The model indicates that consumption could be the main channel through financial inclusion, contributing to growth. Then, the empirical estimation realized using the Generalized Method of Moments (GMM) with 57 countries over 2007-2017 evaluates the impacts of traditional and digital inclusion on growth. The results confirm the positive effect of financial inclusion on growth. For formal inclusion, estimators reveal that the financial system deposits contribute to growth in developing countries. Concerning digital inclusion, we note that an active mobile money account has a higher positive impact on growth than standard inclusion.
    Keywords: Endogenous growth,Financial inclusion,Mobile money,GMM System
    Date: 2021–07
  3. By: Tarna Silue (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: E-money and financial inclusion are both development challenges for developing countries, the former contributing to improving tax mobilization and the latter to achieving particular sustainable development objectives. However, one of the central financial inclusion and e-money services providers is mobile network operators using mobile money. The latter is subject to numerous taxes that can affect their operations. The paper studies the incidence of the new mobile money excise duty in the mobile networks sector on the adoption of electronic money and the advancement of financial inclusion through digital services in sub-Saharan countries. It appears that the introduction of the tax leads to an increase in user fees, which has a positive impact on demand for cash, and it is only in the presence of the latter that MM reduces the demand for cash for studied countries. In addition, the study assumes that tax administrations in these countries would raise more revenue without this excise because the tax is not conducive to the full adoption of e-money.
    Keywords: Financial inclusion,Mobile money,Tax incidence
    Date: 2021–07
  4. By: Pengpeng Yue; Aslihan Gizem Korkmaz; Zhichao Yin; Haigang Zhou
    Abstract: This study focuses on the impact of digital finance on households. While digital finance has brought financial inclusion, it has also increased the risk of households falling into a debt trap. We provide evidence that supports this notion and explain the channel through which digital finance increases the likelihood of financial distress. Our results show that the widespread use of digital finance increases credit market participation. The broadened access to credit markets increases household consumption by changing the marginal propensity to consume. However, the easier access to credit markets also increases the risk of households falling into a debt trap.
    Date: 2022–01
  5. By: Tiwari, Chhavi; Goli, Srinivas; Siddiqui, Mohammad Zahid; Salve, Pradeep
    Abstract: This study estimates poverty, wealth inequality, and financial inclusion, for the first time, at the sub-caste level in both Hindus and Muslims using a unique survey data collected from 7124 households in Uttar Pradesh, India, during 2014-2015. The results confirm the existing hypothesis that Brahmins, Thakurs, and other Hindu general castes have higher wealth accumulation, lower poverty, and lesser exclusion from formal financial services than Dalits. Exclusion from formal financial services forces Dalits to depend primarily on informal financial sources for borrowing—which leads to financial misfortune and further dragging them into a vicious cycle of poverty.
    Date: 2022–01–04
  6. By: Marianne Laurin; Pierre-Carl Michaud; Derek Messacar
    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. Les déductions fiscales sur les contributions aux véhicules d'épargne enregistrés sont un outil politique commun utilisé par les gouvernements de nombreux pays industrialisés pour encourager les gens à épargner pour leur retraite. Cependant, ces plans ne bloquent généralement pas les fonds, ce qui signifie que les épargnants peuvent également retirer leurs fonds avant la retraite lorsque leur taux d'imposition marginal est encore élevé et renoncer à l'avantage fiscal. Dans cet article, nous étudions dans quelle mesure les retraits d'épargne avant la retraite répondent à des changements dans l'avantage net d'impôt du retrait et si ce comportement dépend de la littératie financière de l'épargnant. À cette fin, nous relions les répondants d'une enquête sur les capacités financières représentative au niveau national au Canada à plus de 15 ans de données fiscales administratives. Nos résultats montrent que la corrélation entre les retraits d'épargne et le taux d'imposition marginal effectif est négative pour les personnes ayant une meilleure culture financière, mais beaucoup plus faible et parfois statistiquement non significative pour les personnes ayant une moindre culture financière. Les résultats suggèrent que la littératie financière est un déterminant important de la mesure dans laquelle les plans d'épargne déductibles de l'impôt sont utilisés efficacement.
    Keywords: tax-preferred savings accounts,retirement savings,financial literacy, comptes d'épargne à fiscalité privilégiée,épargne-retraite,éducation financière
    JEL: G53 G51 D14
    Date: 2021–09–21
  7. By: Motohiro Yogo (Princeton University and NBER); Andrew Whitten (U.S. Department of the Treasury); Natalie Cox (Princeton University)
    Abstract: We document new facts about bank and retirement account participation, based on the universe of U.S. households with a member aged 50 to 59 in administrative tax data. Financial participation is much higher than that reported in survey data, especially for low-income households. However, financial participation declines among low-income households from 2008 to 2018. Geographic variation in financial participation relates to income rather than racial composition or access to financial services. Based on instrumental variables, we estimate a large impact of access to employer retirement plans on retirement account participation for low- and middle-income households.
    Keywords: Financial participation, Household finance, Inequality, Racial disparities, Tax policy
    JEL: D14 G51
    Date: 2021–12
  8. By: Asongu, Simplice; Odhiambo, Nicholas
    Abstract: This study investigates the relevance of inclusive education in moderating the effect of good governance on female economic inclusion in sub-Saharan Africa. First, inclusive tertiary education modulates: (i) government effectiveness to induce a positive net effect on female labour force participation; (ii) political stability and corruption-control to induce negative net effects on female unemployment; (iii) government effectiveness for a positive net effect on female unemployment and (iv) regulation quality and the rule of law for positive net impacts on female employment. Second, inclusive secondary education moderates: (i) corruption-control for a positive net effect on female labour force participation; (ii) “voice and accountability”, government effectiveness and corruption-control for negative net impacts on female unemployment; (iii) the rule of law for a positive net effect on female unemployment; (iv) “voice and accountability”, government effectiveness and corruption-control for positive net effects on female employment. Policy implications are discussed. Inclusive education thresholds for complementary policy policies are also computed and discussed. At these thresholds, inclusive education becomes a necessary but not a sufficient condition to complement governance in order to promote female economic inclusion.
    Keywords: Africa; Gender; Inclusive development
    JEL: G20 I10 I32 O40 O55
    Date: 2021–01
  9. By: Palit, Biswajit; Mukherjee, Sakya
    Abstract: The growing debate and discussions about legalizing digital currency- raises a significant question does the market have the withstanding power to include people from all segments of society for its usage. In such a nexus, India, when compared to its Asian counterparts is endowed with a booming crypto industry. However, due to many macro-economic and regulatory reasons which come parallel with the crypto trade, the Government of India is taking cognizance of regulating and rationing cryptocurrency trade. Cryptocurrency not only has prospects but at the very moment is enveloped with lots of apprehensions. Countries around the world are using blockchain technology to manoeuvre their development, coupled with swift payment modus operandi, low transaction fees absence of a mediator during transactions make the brighter side of this rapid digital currency. At the same time, unlike other currencies, cryptos are famously detached from any central banks or financial institutions and thereby received a completely decentralized status. On one side, this can free the investors from being beholden by the institution but on the flip side, there arise legal complications. Exposure to too much volatility and severe cases of fraudulent activities are prone to make investors apprehensive of this practice. We find, having a robust financial inclusion system, backed by proper monetary and fiscal policies is one of the necessary conditions to ensure that cryptocurrency taps the Indian market. By dissecting market phases into Accumulation, Pure Buy, Distribution and Pure Sell, we employ Robust Regression to test our proposition. Therefore, for crypto to finely blend in the Indian market and cause endogenous growth, the financial backbone of the economy needs to have a tremendous withstanding potential which comes when the country has vigorous financial inclusions and institutions.
    Keywords: Cryptocurrency, Regulatory Measures, Financial Inclusion.
    JEL: E2 E4 G1
    Date: 2022–02–05
  10. By: Tii N. Nchofoung (University of Dschang, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: This study examines the effect of political implications of women on industrialisation in Africa. The results after controlling for cross-sectional dependency show that women political implication Granger causes industrialisation in Africa. Besides, the Fixed effect Driscoll/Kraay standard error estimator reveal that women political empowerment negatively affect industrialisation in Africa. These negative effects are nullified by high economic freedom and high female economic participation in the economy. The investment freedom thresholds require for the negative net effects to be nullified are 52.30469, 55.51639, 49.324895, and 55.594059 respectively for the women political empowerment index, women civil liberty, women political participation and women civil society participation interactions; while when women economic participation rates of 43.0777, 35.82, and 46.9 are attained for women political empowerment index, women civil liberty and women civil society participation respectively, complementary policies are needed for a positive effect on industrialisation. The study implores policy makers to improve on the economic freedom of the countries and to elaborate on policies that favour women economic inclusion, if policy towards political inclusion is foreseen in the industrialisation agenda.
    Keywords: political empowerment; women; industrialisation; Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2021–10

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