nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒01‒16
seven papers chosen by

  1. Financial Literacy: A Peep into the Literature and Note for Policy By Musah, Alhassan; Yakubu, Ibrahim Nandom; Abagna, Matthew Amalitinga
  2. Sustainability and trust: financial inclusion in the Global South By Úbeda, Fernando; Mendez, Alvaro; Forcadell, Francisco Javier
  3. Digitalization, financial knowledge and financial decisions By Daniela Marconi; Marco Marinucci; Giovanna Paladino
  4. Working and Saving Informally: The Link between Labor Market Informality and Financial Exclusion By Luca Flabbi; Mauricio Tejada
  5. Open banking and customer data sharing: Implications for FinTech borrowers By Nam, Rachel J.
  6. Financial Integration, Inclusion and Stability During Crises: Insights from the MENA Region By Samar Abdelmageed
  7. Globalization of Finance and Fintech in The MENA Region By Franklin Allen

  1. By: Musah, Alhassan; Yakubu, Ibrahim Nandom; Abagna, Matthew Amalitinga
    Abstract: This paper provides a review of the financial literacy literature mostly on definitional issues and some determinants. The paper also explores an emerging genre of research into financial literacy that emphasizes interconnectedness with society and financial systems, in general. The authors employ a literature review to examine the extant literature on the conceptual framework of financial literacy as well as empirical evidence on the causal relationship between financial literacy and efficient financial decision making. We argue that whilst the literature on financial literacy is growing it is far from being exhaustive, with substantial research outputs in other climes other than Africa. There is almost a tidy conclusion from the literature that young people and women are less likely to grasp basic financial concepts. The paper concludes by calling for a reconfiguration of research efforts in financial literacy to reflect context, and for policymakers to properly align the design of financial literacy programmes to meet the needs of key demographic segments in the short term, and to contribute to financial stability in the medium to long term.
    Keywords: Financial literacy, financial knowledge, socioeconomic factors
    JEL: G0 G2 G21
    Date: 2022–10–31
  2. By: Úbeda, Fernando; Mendez, Alvaro; Forcadell, Francisco Javier
    Abstract: Lack of access to banking and financial services appreciably hinders development, particularly in the global South. For this reason, financial inclusion is a crucial objective of the Sustainable Development Goals. One main barrier to financial inclusion is the lack of trust in banking. From a sample of 40 developing countries and 82,724 individuals, we verify that multinational banks can increase trust in banking by incorporating sustainability criteria into their business model.
    Keywords: sustainable banking; finance inclusion; ESG criteria; trust in banking; multinational banks; SDGs
    JEL: F3 G3 N0
    Date: 2023
  3. By: Daniela Marconi (Bank of Italy); Marco Marinucci (Bank of Italy); Giovanna Paladino (Museo del Risparmio-Intesa Sanpaolo)
    Abstract: Is the propensity to save and to invest related to digital skills and financial knowledge? Do digital skills and financial knowledge affect people’s attitudes towards digital payments and digital financial services? Is there a gender gap? This paper addresses these issues by using a new dataset based on around 4, 000 individuals interviewed in two waves between 2019 and 2021. We find that digital and financial skills are fundamental to shaping financial behaviours and attitudes, including those towards digital financial services. But there are some reservations to be made: digital skills complement financial ones in managing personal budgets, monitoring expenses and saving money at the end of the month, as well as helping people realize the benefits of making use digital financial services. On the other hand, digital skills do not affect investment decisions. We also show that both digital and financial skills are positively associated with educational and income levels and are characterized by a significant gender gap.
    Keywords: Financial knowledge, digital skills, financial behavior, digital payments, digitalization, financial inclusion
    JEL: D53 G11 G53 O16
    Date: 2022–12
  4. By: Luca Flabbi; Mauricio Tejada
    Abstract: The high level of informality and the low level of savings observed in developing countries are fundamentally linked because informal workers have limited access to formal financial institutions. We study this link by developing and estimating a labor market model where workers can be employed both formally and informally and agents can save through both formal and informal financial institutions. We estimate the model on nationally representative data for Colombia and use the estimated model to simulate counterfactual experiments. Results show that reaching full financial inclusion of informal workers would increase savings by 3% a month and formal assets by 21%. The same policy would strongly decrease inequality in assets and mildly decrease inequality in consumption.
    Keywords: Informality, financial inclusion, savings, labor market search, structural estimation
    Date: 2022
  5. By: Nam, Rachel J.
    Abstract: With open banking, consumers take greater control over their own financial data and share it at their discretion. Using a rich set of loan application data from the largest German FinTech lender in consumer credit, this paper studies what characterizes borrowers who share data and assesses its impact on loan application outcomes. I show that riskier borrowers share data more readily, which subsequently leads to an increase in the probability of loan approval and a reduction in interest rates. The effects hold across all credit risk profiles but are the most pronounced for borrowers with lower credit scores (a higher increase in loan approval rate) and higher credit scores (a larger reduction in interest rate). I also find that standard variables used in credit scoring explain substantially less variation in loan application outcomes when customers share data. Overall, these findings suggest that open banking improves financial inclusion, and also provide policy implications for regulators engaged in the adoption or extension of open banking policies.
    Keywords: Open banking,FinTech,Marketplace lending,P2P lending,Big data,Customer data sharing,Data access,Data portability,Digital footprints
    Date: 2022
  6. By: Samar Abdelmageed (The British University in Egypt)
    Abstract: The main objective of this paper is to analyze the interrelationships between financial integration, inclusion, and stability in the Middle East and North Africa (MENA) region and the role of crises in these linkages. This is the first study attempting to examine the interrelations among these variables in MENA financial markets. To achieve its objective, the paper starts by assessing regional integration among MENA stock markets using correlational analysis and the DCC GARCH models. Then, it builds a PVAR model to examine the relationships between integration, inclusion, and stability in the MENA region. The results show that regional integration is still limited in the MENA region, despite growing linkages with other international markets. Regional integration in the MENA region is more pronounced among countries that lie within closer geographical proximities. Moreover, crises, whether financial or political, also tend to increase regional correlations and linkages among MENA markets, although the impact of financial crises is higher compared to that of political instabilities. The analysis highlighted the positive short-term impacts of regional integration on inclusion in the MENA region; however, these impacts could not be maintained for longer periods. In contrast, international integration had negative effects on inclusion and stability that diminished over time. No linkages were found between financial inclusion and stability in the MENA region
    Date: 2021–12–20
  7. By: Franklin Allen (Brevan Howard Centre at Imperial College)
    Abstract: Globalization, together with Fintech – in other words, the application of technology to finance – are in the process of revolutionizing the financial services industry. This paper looks at this process in the MENA region and focuses on two sets of countries. The first set comprises the high-income countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The second group consists of the middle-income countries of Algeria, Egypt, Iraq, Jordan, Lebanon, Morocco, and Tunisia. Countries can benefit from fintech to differing degrees in terms of the financial inclusion of both households and firms, especially small- and medium-sized enterprises (SMEs). Advances in credit scoring, digital banking, and peer-to-peer lending have the potential to transform banking if properly implemented. Distributed ledger, blockchain, and cryptocurrency technologies have enabled Initial Coin Offerings (ICOs). These can greatly improve the number of start-ups and their subsequent growth. They also enable Central Bank Digital Currencies (CBDCs) that may significantly improve central banks’ effectiveness of intervening in the financial system and economy. Finally, appropriate cybersecurity and financial regulation are needed to ensure that fintech can achieve these improvements. Policymakers should be accommodative towards fintech innovations to obtain their full potential benefit.
    Date: 2021–09–20

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.