nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒01‒23
eight papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Fault Lines in Financial Inclusion By Ozili, Peterson K
  2. Institutional theory of financial inclusion By Ozili, Peterson K
  3. CBDC, Fintech and cryptocurrency for financial Inclusion and financial stability By Ozili, Peterson K
  4. Financial inclusion and sustainable development: an empirical association By Ozili, Peterson K
  5. Achieving financial inclusion: whatever it takes By Ozili, Peterson K
  6. eNaira central bank digital currency (CBDC) for financial inclusion in Nigeria By Ozili, Peterson K
  7. The role of governance in the effect of the internet on financial inclusion in sub-Saharan Africa By Armand F. Akpa; Simplice A. Asongu
  8. Does pension information impact savings? By Najat El Mekkaoui; Bérangère Legendre

  1. By: Ozili, Peterson K
    Abstract: Financial inclusion has been a global development policy priority over the last two decades. Financial inclusion involves providing access to basic financial services and the use of basic financial services to improve the welfare of individuals, households, and businesses. This article identifies the fault lines or vulnerabilities in the way financial inclusion is achieved. These fault lines or vulnerabilities arise from the over-reliance on profit-oriented financial institutions to achieve financial inclusion, the multiple self-interest in the financial inclusion agenda, the unsustainability of policy-induced demand for basic financial services, the lack of safety net to protect poor banked adults from systemic risk events, and the prevalence of financial inclusion-washing that allow agents to misrepresent their support for financial inclusion. The article argued that the world needs to pay serious attention to these fault lines and seek solutions that promote financial inclusion in a sustainable way. The ideas in this article can help policymakers, academics, practitioners, and researchers in assessing the fault lines created by financial inclusion policies and strategies as this is the first step to finding solutions to address the fault lines.
    Keywords: Access to finance, banked adults, fault lines, financial inclusion, financial institutions, formal account.
    JEL: G21 G28 I31
    Date: 2022
  2. By: Ozili, Peterson K
    Abstract: This article advocates a new addition to the theories of financial inclusion which is the institutional theory of financial inclusion. The case for a new theory arises from the role of institutions or non-market structures in influencing the level of financial inclusion. Postulating an institutional theory of financial inclusion is important due to the need to understand financial inclusion from the context of institutions and non-market structures that people have a great deal of trust in. The institutional theory of financial inclusion has the capacity to generate a wide range of testable hypotheses, and can provide the social scientist with tools that are relevant for understanding the broad spectrum of financial inclusion in society.
    Keywords: financial inclusion, institutions, institutional theory, access to finance, non-market structure, culture, unbanked adults, financial exclusion.
    JEL: G21 I31 P37
    Date: 2023
  3. By: Ozili, Peterson K
    Abstract: This article presents a discussion of the role of central bank digital currency (CBDC), Fintech and cryptocurrency for financial inclusion and financial stability. We show that Fintech, CBDC and cryptocurrency can increase financial inclusion by providing an alternative channel through which unbanked adults can access formal financial services. CBDC and Fintech services have the potential to preserve financial stability while cryptocurrency presents financial stability risks that can be mitigated through effective regulation. The paper also identified some problems of CBDC, Fintech and cryptocurrency for financial inclusion and financial stability. The paper offered some insight about the future of financial inclusion and the future of financial stability. Although CBDC, Fintech or cryptocurrency can extend financial services to unbanked adults and offer cost-efficient advantages, there are risk considerations that need to be taken into account when using CBDC, Fintech and cryptocurrency to increase financial inclusion and to preserve financial stability.
    Keywords: CBDC, Fintech, cryptocurrency, financial inclusion, financial stability, blockchain, central bank digital currency.
    JEL: E40 E51 E58 E59 G21 O31
    Date: 2023
  4. By: Ozili, Peterson K
    Abstract: This paper investigates the association between financial inclusion and sustainable development in a global context. The findings show that high levels of financial inclusion (in terms of higher commercial bank branches per 100, 000 adults) is significantly associated with high levels of sustainable development (in terms of higher electricity production from renewable sources, higher industry productivity, higher adult literacy rate and higher renewable electricity output). Also, higher financial inclusion is significantly associated with low combustible renewables and waste. There is uni-directional granger causality between global interest in sustainable development information and global interest in financial inclusion information particularly in the period after the global financial crisis (GFC) but before the COVID-19 pandemic. The results support global calls for greater financial inclusion and the attainment of the sustainable development goals for the good of all people, the environment and for the planet.
    Keywords: financial inclusion, sustainable development goals, access to finance, energy, renewables, adult literacy, industry, electricity, access to finance, unbanked adults, environment, research and development.
    JEL: G21 I31 Q56
    Date: 2022
  5. By: Ozili, Peterson K
    Abstract: This paper presents some policy ideas on how to achieve high levels of financial inclusion. It explores a number of policy options that can be used to achieve greater levels of financial inclusion. The paper argues that high levels of financial inclusion can be achieved by reducing interest rate; introducing conditional low interest rate; supporting monetary policies with welfare payments; reducing taxes; using targeted government spending; supporting fiscal policies with tax rebate, tax holiday or tax exemption; grant tax rebate to financial institutions; financial inclusion-environment decoupling; and de-risking the financial system.
    Keywords: financial inclusion, unbanked adults, interest rate, monetary policy, fiscal policies, environment, financial system, financial institutions, digital finance, tax.
    JEL: G21 G28
    Date: 2022
  6. By: Ozili, Peterson K
    Abstract: There is much interest in central bank digital currency (CBDC) among central banks around the world. African countries have also joined the league of nations that are conducting research into CBDC. The launch of the eNaira CBDC in Nigeria has drawn substantial interest from observers around the world including central banks. The eNaira CBDC is envisaged to bring many benefits, and financial inclusion is considered to be one of such benefits. This paper explores the eNaira CBDC and its potential to increase financial inclusion in Nigeria. I show that the eNaira CBDC can increase financial inclusion by (i) offering an easy account opening process for greater financial inclusion (ii) enabling digital access to diverse financial services in the financial system, (iii) offering low-cost financial products and services, (iv) avoiding unexplained bank charges that causes financial exclusion, (v) attracting people who have lost confidence in banks, (vi) introducing interest-bearing eNaira, and (vii) using offline channels to access the eNaira.
    Keywords: Nigeria, eNaira, central bank digital currency, CBDC, financial inclusion, eNaira wallet.
    JEL: E50 E52 E58 G21
    Date: 2023
  7. By: Armand F. Akpa (Université d’Abomey-Calavi, Benin); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Financial inclusion is a necessary condition for the population to get access to credit. Despite the efforts made by governments and policy makers, the rate of financial inclusion in Sub-Saharan African (SSA) countries remains low. The internet can be one of the options to increase the rate of financial inclusion in SSA. But the use of internet in SSA remains low due to the poor quality of the internet and to its high cost. So, good governance quality can consolidate internet infrastructure in order to promote the internet. This paper analyses the role of governance quality in the relationship between internet and financial inclusion in Sub-Saharan African countries. The study utilises data from the International Monetary Fund (IMF) database for indicators of financial inclusion, World Development Indicators (WDI) for internet users and World Governance Indicators (WGI) for governance indicators over the period 2004 to 2020. Analysing the data using the System Generalized Method of Moments (SGMM), the results show that the internet can be effectively complemented with the quality of governance to improve financial inclusion.Thresholds of governance that are needed for the internet to promote financial inclusion are provided. The established thresholds are as follows: (i) 0.300 “voice and accountability†and “government effectiveness†, respectively; (ii) 0.250 “rule and law†; (iii) 2.500 “economic governance†and (iv) 1.000 “institutional governace†and “general governance†, respectively. Policies aimed at reinforcing the quality of governance in SSA countries could help consolidate internet infrastructure to promote internet usage and in turn improve financial inclusion.
    Keywords: Internet, financial inclusion, governance quality
    JEL: O30 G20 H11
    Date: 2023–01
  8. By: Najat El Mekkaoui (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Bérangère Legendre (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: Many pension reforms in OECD countries included pension statements with the objective of improving individuals' financial security in retirement. Our objective is to assess the effectiveness of the pension information policy implemented in France and to investigate whether the pension statement results in better informed workers, who then increase their retirement savings. Using regression discontinuity designs combined with quantile regressions, we assess whether the changes in retirement savings and holding of assets are due to the pension information system and then quantify the impact. We conclude that a pension estimate sent to workers encourages the wealthiest to increase their retirement savings while it does not influence the savings of individuals with a low level of wealth.
    Keywords: pension statements,savings for retirement,financial literacy,quantile regressions
    Date: 2022–03–03

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