nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2022‒08‒29
four papers chosen by

  1. Financial inclusion in Nigeria: an overview By Ozili, Peterson Kitakogelu
  2. Labor informality and financial inclusion transitions: Evidence from Peru By Gasmi, Farid; Aurazo, Jose
  3. Banking on Transparency for the Poor: Experimental Evidence from India By Erica M. Field; Natalia Rigol; Charity M. Troyer Moore; Rohini Pande; Simone G. Schaner
  4. Credit and Saving Constraints in General Equilibrium: A Quantitative Exploration By Granda-Carvajal, Catalina; Hamann, Franz; Tamayo, Cesar E.

  1. By: Ozili, Peterson Kitakogelu
    Abstract: This paper analyse the level of financial inclusion in Nigeria using data from the global findex indicators. The findings reveal that Nigeria witnessed growth in several financial inclusion indicators in the early years of financial inclusion in 2014 but the benefits were not sustained in the later years especially in 2017. Nigeria’s level of financial inclusion is very low compared to the World average. In the population group analysis, it was observed that the female, poorest, male, older and uneducated population were worse-off in all indicators of financial inclusion in 2017. The implication of the observed decline in the level of financial inclusion in 2017 suggest that there are barriers to financial inclusion in the post-2014 years.
    Keywords: formal account, borrowing, sustainable development, Nigeria, financial inclusion, access to finance, financial institutions, credit cards, debit cards, account ownership, female, savings.
    JEL: G21 G23 G28 G29
    Date: 2022
  2. By: Gasmi, Farid; Aurazo, Jose
    Abstract: Considered as a cornerstone of development, financial inclusion has become a universal goal, in particular for developing countries that happen to be characterized by a high degree of labor informality. Our aim in this paper is twofold. First, we study how labor informality affects financial inclusion in a static framework. Second, we argue that financial inclusion must be treated as a dynamic process and investigate the effect of movements between formal and informal jobs on the probabilities of entry to and exit from the financial system. We find evidence that financial inclusion is an auto-regressive process and that labor informality reduces the probability of entry to the financial system by 8% whereas it increases the probability of exit from it by 9.3%. As to transitions in the labor market, we find that, relative to workers who get stuck in informal jobs, for those who have and stay with formal jobs, the probability that they enter the financial system is higher by 9% and the probability that they exit from it is lower by 12%. As to the workers who move into labor formality, we find that they are more likely to enter the financial system by 9.7% and less likely to exit from it by 7.1%. Our results add to the many well documented spillover effects of labor formality in developing countries to encourage policies that promote it.
    Keywords: Financial inclusion; labor informality; transition probabilities; dynamic randomeffect panel probit
    JEL: C23 D14 E26 I31 O17
    Date: 2022–07–28
  3. By: Erica M. Field; Natalia Rigol; Charity M. Troyer Moore; Rohini Pande; Simone G. Schaner
    Abstract: Do information frictions limit the benefits of financial inclusion drives for the rural poor? We evaluate an experimental intervention among recently banked poor Indian women receiving government cash transfers via direct deposit. Treated women were provided automated voice calls confirming details of transactions posted to their accounts. The intervention increased women's knowledge of account balances and trust in their local banking agent. Indicative of improved consumption-smoothing by income-constrained women, administrative data show that treated women accessed government transfers faster when the service was active, with treatment effects dissipating after the notifications were discontinued. On average, other aspects of account use remained unchanged. However, consistent with account information benefiting those with high transaction costs more, the intervention increased account use among women who lived more than an hour from the kiosk.
    JEL: G21 O12
    Date: 2022–07
  4. By: Granda-Carvajal, Catalina; Hamann, Franz; Tamayo, Cesar E.
    Abstract: In this paper we build an incomplete-markets model with heterogeneous households and firms to study the aggregate effects of saving constraints and credit constraints in general equilibrium. We calibrate the model using survey data from Colombia, a developing country in which informal saving and credit frictions are pervasive. Our quantitative results suggest that reducing savings costs increases selection into formal saving, but the effect on aggregate outcomes and welfare is dwarfed by that of a policy which ameliorates borrowing constraints. Such a policy improves resource allocation and increases returns to capital and labor, resulting in higher savings and welfare gains for both households and firms.
    Keywords: saving constraints; credit constraints; financial inclusion; misallocation; savings; formal and informal financial markets
    JEL: E21 E44 G21 O11 O16
    Date: 2022–08

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