nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2022‒11‒14
nine papers chosen by

  1. Challenges for financial inclusion: the role for financial education and new directions By Magda Bianco; Daniela Marconi; Angela Romagnoli; Massimiliano Stacchini
  2. Financial literacy, numeracy and schooling: evidence from developed countries By Sara Lamboglia; Massimiliano Stacchini
  3. The sustainable practices of multinational banks as drivers of financial inclusion in developing countries By Úbeda, Fernando; Mendez, Alvaro; Martínez, Francisco Javier Forcadell
  4. Fintechs and the financial inclusion gender gap in Sub-Saharan African countries By Aurelien K. Yeyouomo; Simplice A. Asongu
  5. The Financial literacy of micro-entrepreneurs: evidence from Italy By Paolo Finaldi Russo; Ludovica Galotto; Cristiana Rampazzi
  6. Which Financial Inclusion Indicators and Dimensions Matter for Income Inequality? A Bayesian Model Averaging Approach By Rogelio V. Mercado, Jr.; Victor Pontines
  7. Financial education: premises, policies and experience of the Bank of Italy By Riccardo De Bonis; Marilisa Guida; Angela Romagnoli; Alessandra Staderini
  8. Micro-entrepreneurs’ financial and digital competences during the pandemic in Italy By Alessio D'Ignazio; Paolo Finaldi Russo; Massimiliano Stacchini
  9. Aspirations and Financial Decisions : Experimental Evidence from the Philippines By Mckenzie,David J.; Mohpal,Aakash; Yang,Dean

  1. By: Magda Bianco (Bank of Italy); Daniela Marconi (Bank of Italy); Angela Romagnoli (Bank of Italy); Massimiliano Stacchini (Bank of Italy)
    Abstract: Financial inclusion has received growing attention over the years as an enabling factor for promoting growth, reducing inequalities, and addressing poverty. In order to support policy choices aimed at enhancing financial inclusion, we investigate its main drivers, with a special focus on demand-side factors; more specifically, we enquire as to whether financial education may enhance financial inclusion. A cross-country analysis shows that, controlling for per capita GDP, higher levels of participation of individuals in economic life, greater financial knowledge and the existence of financial education strategies reduce the likelihood of a country being in the low financial inclusion segment. Moreover, as digitalization offers great opportunities to expand inclusion (but also some challenges), we provide evidence on the relationship between financial literacy and digital skills, showing that (at least in more advanced countries) digital skills are positively correlated with financial literacy from a young age. Based on our findings, we suggest some directions for future research, measurement and data collection, and policy actions.
    Keywords: Financial inclusion, financial literacy, financial education
    JEL: D14 G53 O38
    Date: 2022–10
  2. By: Sara Lamboglia (Bank of Italy); Massimiliano Stacchini (Bank of Italy)
    Abstract: Financial literacy is low among young people and their uninformed choices may have costly and long-lasting consequences. This paper uses information on approximately 52,000 fifteen-year-old students participating in the 2018 OECD Programme for International Student Assessment (PISA) to provide fresh evidence on two drivers for youth financial skills: maths skills and students’ exposure to financial education at school. Our results are threefold. First, mathematical skills have a positive impact on financial skills, and to a greater extent than reading skills. Second, an extension based on the 2012 wave of PISA suggests that the transfer of competences from mathematics to financial literacy can be enhanced when teaching strategies focus more on stimulating “cognitive activation†. Third, we show how the percentage of students having the chance to receive financial education at school varies widely across countries, and how having such an opportunity positively influences financial achievements.
    Keywords: Financial literacy, Schooling, PISA 2018
    JEL: G53 H52
    Date: 2022–10
  3. By: Úbeda, Fernando; Mendez, Alvaro; Martínez, Francisco Javier Forcadell
    Abstract: Lack of access to banking generates inequality in the developing world; therefore, financial inclusion is a crucial objective of the Sustainable Development Goals. We investigate the impact of sustainable practices of multinational banks (MNBs) on financial inclusion. A sample of 275 MNBs, 16 developing countries, and 16,618 individuals yield robust evidence confirming the positive effect of such practices on financial inclusion. Specifically, we find that as MNBs become sustainable, the use of mobile banking intensifies. This finding is consequential because mobile banking is one of the most powerful means to achieve financial inclusion in the developing world.
    Keywords: sustainable banking; multinational banks; financial inclusion; mobile banking; sustainable development goal; Elsevier deal
    JEL: G00 G20 G21 Q01 Q56 D63
    Date: 2022–08–24
  4. By: Aurelien K. Yeyouomo (University of Yaoundé 2, SOA, P.O. Box 1365); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study addresses the issue of financial innovation in developing countries, focusing specifically on the role fintechs have in closing the gender gap of financial inclusion in Sub-Saharan Africa (SSA) over the period 2011-2017. The empirical evidence is based on the multilevel tobit regression model fitted to panel data. The results of this study show that fintechs reduce the financial inclusion gender gap by mitigating the gender gap in access to and use of financial services. Furthermore, they cast doubt on the ability of fintechs development to bridge this gap on its own, and hint on the joint importance of targeted policy initiatives aimed at directly closing the gender gap to this end. These findings have important economic policy implications and provide evidence of improved economic conditions for women in terms of financial inclusion leading to a narrowing of the gender gap.
    Keywords: Fintechs development, financial inclusion gender gap, Tobit, SSA
    Date: 2022–10
  5. By: Paolo Finaldi Russo (Banca d'Italia); Ludovica Galotto (Banca d'Italia); Cristiana Rampazzi (Banca d'Italia)
    Abstract: Entrepreneurs, including those who run very small businesses or sole proprietorships, are often assumed to have sound financial skills as they make frequent financial decisions. This paper explores the issue by analysing the level of financial literacy (FL) of Italian micro-entrepreneurs in comparison with other countries and other Italian adults. The results, based on the 2020 Survey on the Financial Literacy of Italian Adults conducted by the Bank of Italy according to the OECD/INFE methodology, are threefold. First, Italian micro-entrepreneurs have quite low levels of FL by international standards. Second, compared with other Italians, business owners have only a slightly higher level of FL; this is mainly attributable to their higher income and more frequent use of financial services. Third, thanks to their slightly more advanced financial skills, micro-entrepreneurs are more likely to make better financial decisions than other adults. These findings suggest that strengthening the financial literacy of micro-entrepreneurs can have a positive impact on their ability to make better financial decisions and ultimately on the resilience and growth of their businesses.
    Keywords: financial literacy, financial behaviour, micro-entrepreneurs, SMEs
    JEL: G53 L26 J24
    Date: 2022–10
  6. By: Rogelio V. Mercado, Jr. (South East Asian Central Banks (SEACEN) Research and Training Centre); Victor Pontines (South East Asian Central Banks (SEACEN) Research and Training Centre)
    Abstract: This paper employs Bayesian model averaging (BMA) and uses posterior inclusion probability (PIP) values to evaluate which financial inclusion indicators, dimensions, and other determinants of income inequality should be considered in an empirical specification assessing the relationship between financial inclusion and income inequality, given model uncertainty. The results show that for the low-income country group, financial access and usage indicators and dimensions are the most relevant indicators. Unfortunately, nowhere in our baseline results and in almost all our sensitivity tests do we find PIP values higher than our set threshold value for any of our financial depth indicators and dimension. These results suggest that theoretical models linking financial inclusion nd income inequality could well focus on the role of financial access and usage by providing theoretical foundations on the mechanics as to how these two dimensions of financial inclusion impact income inequality.
    Keywords: Bayesian model averaging, financial inclusion, income inequality, Bayesian inference
    JEL: C11 C52 O15 O16
    Date: 2022–10
  7. By: Riccardo De Bonis (Bank of Italy); Marilisa Guida (Bank of Italy); Angela Romagnoli (Bank of Italy); Alessandra Staderini (Bank of Italy)
    Abstract: The paper provides a literature review on financial education; it summarizes the results of the surveys held in Italy, as well as the challenges of measuring financial literacy, and offers an overview of the international policy debate. The paper also describes the initiatives undertaken by the Bank of Italy, with special focus on methodology and on the programs launched by the Institute, both for the youth and for adults, in the last 15 years; lastly, it suggests some directions for future progress.
    Keywords: financial education, measurement of financial literacy, Bank of Italy financial education initiatives
    JEL: A20 D91 G53 I22
    Date: 2022–10
  8. By: Alessio D'Ignazio (Bank of Italy); Paolo Finaldi Russo (Bank of Italy); Massimiliano Stacchini (Bank of Italy)
    Abstract: We analyse new survey data from a representative sample of about 2,000 Italian micro-entrepreneurs to assess their level of financial and digital competences and to investigate whether these skills help them cope with unexpected shocks. We find that the financial literacy and digital skills of Italian micro-entrepreneurs are quite limited, especially for one-person businesses and owners with a lower level of education. By controlling for several business characteristics, we also find that financial literacy is significantly correlated with the transition to more digitalized business models and with greater resilience to external shocks: financially savvy entrepreneurs were better able to build liquidity buffers prior to the COVID-19 crisis and access government aid during the pandemic. As for the role of digital skills in supporting businesses during the crisis, empirical evidence is less clear-cut.
    Keywords: financial literacy, digitalization, micro-firms, Covid 19
    JEL: G53
    Date: 2022–10
  9. By: Mckenzie,David J.; Mohpal,Aakash; Yang,Dean
    Abstract: A randomized experiment among poor entrepreneurs tested the impact of exogenously inducing higher financial aspirations. In theory, raising aspirations could have positive effects by inducing higher effort, but could also reduce effort if unmet aspirations lead to frustration. Treatment resulted in more ambitious savings goals, but nearly all individuals fell far short of reaching these goals. Two years later, treated individuals had not saved more, and actually had lower borrowing and business investments. Treatment also reduced belief in the amount of control over one’s life. Setting aspirations too high can lead to frustration, leading individuals to reduce their economic investments.
    Keywords: Educational Sciences,Inequality,Rural Microfinance and SMEs,Microfinance,Financial Sector Policy,Financial Literacy
    Date: 2021–03–17

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