nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒02‒13
eleven papers chosen by

  1. Determinants of interest in eNaira and financial inclusion information in Nigeria: role of Fintech, cryptocurrency and central bank digital currency By Ozili, Peterson K
  2. By Marwa Kerdouci; Assia Saadane
  3. Digital finance research and developments around the World: a literature review By Ozili, Peterson K;
  4. The Anatomy of Banks’ IT Investments: Drivers and Implications By Mr. Maria Soledad Martinez Peria; Mr. Yannick Timmer; Mr. Nicola Pierri; Kosha Modi
  5. Supporting Sustainable Financing and Access to Finance in Armenia By Kiichi Tokuoka; Maria Atamanchuk
  6. Digital Money and Remittances Costs in Central America, Panama, and the Dominican Republic By Ms. Alina Carare; Mr. Yorbol Yakhshilikov; Metodij Hadzi-Vaskov; Dmitry Vasilyev; Lavinia Franco; Justin Lesniak
  7. Enhancing Digital G2P Transfer Capacities in the Asian LDCs By Nitin Madan; Alberto Isgut
  8. Economic impact of the digital revolution on the Asian economy By Oliver, Dr
  9. Curb Your Enthusiasm: The Fintech Hype Meets Reality in the Remittances Market By Tito Nícias Teixeira da Silva Filho
  10. Gen Z, Personality Traits and Sustainability Awareness: An Econometric Investigation By Canova, Luciano; Paladino, Giovanna
  11. Frames, Incentives, and Education: Effectiveness of Interventions to Delay Public Pension Claiming By Franca Glenzer; Pierre-Carl Michaud; Stefan Staubli

  1. By: Ozili, Peterson K
    Abstract: The eNaira is the central bank digital currency of Nigeria. People who are interested in the eNaira and financial inclusion will seek information about eNaira and financial inclusion. Their interest in information about eNaira and financial inclusion will make it easier for them to adopt the eNaira and embrace other financial inclusion innovations such as financial technology (Fintech) and cryptocurrency. This paper investigates the determinants of interest in eNaira and financial inclusion information. Interest over time data were analyzed using descriptive statistics, correlation analysis and ordinary least squares (OLS) regression. The study also used the GMM and 2SLS regression methods for robustness. The findings of this study reveal that interest in Fintech and eNaira information are significant positive determinants of interest in financial inclusion information. Also, interest in financial inclusion is a significant positive determinant of interest in eNaira information. Furthermore, interest in Fintech information has a positive and significant correlation with interest in financial inclusion information. There is also a significant positive correlation between interest in central bank digital currency information and interest in Fintech information. The implication of the findings is that interest in information about new financial innovations, such as Fintech and eNaira, can stimulate interest in information about financial inclusion.
    Keywords: eNaira, Fintech, financial inclusion, central bank digital currency, cryptocurrency, information, innovation, innovation diffusion theory.
    JEL: G21 G23 G24
    Date: 2023
  2. By: Marwa Kerdouci (Université 08 mai 45 Guelma [Algérie]); Assia Saadane (Université 08 mai 45 Guelma [Algérie])
    Abstract: This study aims to highlight the initiatives undertaken by fintech companies in Côte d'Ivoire to access and use financial services, including by promoting financial inclusion. The study focused primarily on mobile money accounts and how they have already improved financial inclusion in Côte d'Ivoire, drawing on the analytical descriptive approach. The study found a dynamic ecosystem of players from different sectors, but access to finance remains the most difficult. On the other hand, Côte d'Ivoire is an emerging fintech platform, driven by the rapid adoption of « mobile money », where it has witnessed strong investor enthusiasm for digital finance, driven by favourable factors such as young people in the population, increasing the spread of smartphones, high-speed Internet and expanding populations without bank accounts.
    Keywords: fintech financial inclusion mobile money digital finance. JEL Classification Codes: E4 E5 F36 G2 G3, fintech, financial inclusion, mobile money
    Date: 2022–12–04
  3. By: Ozili, Peterson K;
    Abstract: This paper presents a concise review of the existing digital finance research in the literature, and highlight some of the developments in digital finance around the world. The paper reached several conclusions. Firstly, it showed that digital finance has become an important part of modern finance and the major application of digital finance can be found in Fintech, embedded finance, open banking and decentralized finance, central bank digital currencies, among others. Secondly, it identified some international determinants of digital finance which includes the need for efficiency in financial services delivery, the need to achieve the United Nations sustainable development goals using existing digital technologies, the need to increase financial inclusion through digital financial inclusion and the need for efficient payments and payment settlement finality. The paper also finds that digital finance research is growing fast, and recent studies have investigated contemporary issues in digital finance that are relevant for policy and practice. Regarding the digital finance developments around the world, the paper shows that the Fintech and mobile money industries are the largest beneficiary of investments in digital finance with the total number of users of mobile money services surpassing 1 billion globally. Also, the paper predicts that the future of digital finance is to create a digital environment that permits the offering of all kinds of financial product and services that can be customized and personalized to meet the unique needs of all users on a single digital platform and without requiring any form of human assistance or intermediary. The paper then suggest some areas for future research which include the need for more research on how regulators can keep pace with emerging digital finance transformation, the need for more research on user information security and compliance, the need for more research on how to deal with bias caused by bad data, the need for more research on how to deal with algorithmic bias, and the need for more research on how to combine a risk-conscious culture with a higher risk appetite for digital finance transformation.
    Keywords: digital finance, artificial intelligence, machine learning, financial inclusion, fintech, access to finance, financial stability, economic growth, blockchain, central bank digital currency, robotics, cryptocurrency.
    JEL: G21 O32 O33
    Date: 2023
  4. By: Mr. Maria Soledad Martinez Peria; Mr. Yannick Timmer; Mr. Nicola Pierri; Kosha Modi
    Abstract: This paper relies on administrative data to study determinants and implications of US banks’ Information Technology (IT) investments, which have increased six-fold over two decades. Large and small banks had similar IT expenses a decade ago. Since then, large banks sharply increased their spending, especially those which were more exposed to competition from fintech lenders. Other local-level and bank-level factors, such as county income and bank income sources, also contribute to explain the heterogeneity in IT investments. Analysis of the mortgage market reveals that fintechs’ lending behavior is more similar to that of non-bank financial intermediaries rather than IT-savvy banks, suggesting that factors other than technology are responsible for the differences between banks and other lenders. However, both IT-savvy banks and fintech lend to lower income borrowers, pointing towards benefits for financial inclusion from higher IT adoption. Banks’ IT investments are also shown to matter for the responsiveness of bank lending to monetary policy.
    Keywords: IT Adoption; Fintech Competition; Financial Inclusion; Monetary Policy; banks' IT investment; IT-savvy bank; tech spend; IT bank; Fintech; Mortgages; Loans; Income; Bank credit; Global
    Date: 2022–12–09
  5. By: Kiichi Tokuoka; Maria Atamanchuk
    Abstract: In Armenia, both external and domestic financing face challenges. Armenia’s share of inward foreign direct investment (FDI) in private external financing has declined significantly over the past decade. Access to domestic finance in Armenia is also moderate and masks important disparities. Against this background, this paper analyses the determinants of inward FDI and examines the impediments to increasing access to domestic finance. The paper confirms empirically that governance-related structural factors have a significant impact on inward FDI. Similar structural factors, informality and poor accounting practices are reported among major challenges for increasing access to finance for firms in Armenia. This paper finds that to improve financing in Armenia include: implementing structural reforms to improve the business environment, maintaining prudent macroeconomic policies, strengthening financial reporting, and improving financial inclusion through reduced informality in the economy.
    Keywords: Inward FDI; access to finance; financial inclusion
    Date: 2023–01–13
  6. By: Ms. Alina Carare; Mr. Yorbol Yakhshilikov; Metodij Hadzi-Vaskov; Dmitry Vasilyev; Lavinia Franco; Justin Lesniak
    Abstract: This paper investigates factors that predict variation in digital and non-digital remittance fees over time and across countries, exploring differences between CAPDR and other regions. The paper fills a void in the literature on how country- and corridor-specific factors relate to remittance fees at different levels of digitalization of the transaction mode. It also complements stylized facts and regression analysis with a survey analysis of the CAPDR authorities’ views on the latest developments, possibilities, and risks related to digital remittances with a view to gauging the authorities’ potential role in further reducing the cost of cross-border payments more generally and remittances fees in particular. The paper finds a clear trend of declining remittance fees across countries and at any level of digitalization, albeit they remain higher for CAPDR countries relative to non-CAPDR countries. More competition, financial and digital development in receiving countries—such as debit/credit card ownership or bank branch penetration—are associated with lower remittance fees, especially in CAPDR. The surveyed authorities actively explore the use of digital money to advance domestic payment systems, expedite financial inclusion, and lower remittances fees, yet see considerable risks, especially for preserving monetary sovereignty in CAPDR.
    Keywords: Digital money; cryptocurrency; stablecoin; remittances
    Date: 2022–12–02
  7. By: Nitin Madan (Consultant, Macroeconomic Policy and Financing for Development Division of ESCAP); Alberto Isgut (Economic Affairs Officer, Macroeconomic Policy and Financing for Development Division of ESCAP)
    Abstract: In response to the COVID-19 pandemic, globally, there has been a rapid scale up of Government-to-Person (G2P) payments, especially digital cash transfers via mobile money agents and e-wallets. Many least developed countries (LDCs) have relied on robust mobile money agent networks, and high levels of mobile connectivity and ownership which enable G2P transactions. Such transfers are particularly advantageous in emergency situations like the COVID-19 pandemic as they allow for digital payments to take place in situations of social distancing and lockdowns. Digital payments can offer multiple benefits to various stakeholders, including governments, recipients, and service providers. Digital payments are a driver of financial inclusion, with payments often serving as a gateway to account ownerships and access to savings and loan products. Furthermore, evidence suggests that shifting government payments to digital platforms results in substantial government savings for cash transfer programmes. For example, in 2018, the Government of India estimated that using digital payments for social cash transfers resulted in savings of over $12.7 billion (Pazarbasioglu and others, 2020). Many countries, including LDCs in Asia, have started to strengthen and improve their G2P cash transfer systems. In response to the COVID-19 pandemic, 1, 414 social protection measures have been either planned or implemented across 222 countries or territories as of December 2021. These included various social assistance, social insurance, and labor market measures. Social assistance measures constituted 55 per cent of such measures on average (in East Asia and Pacific, it is higher at 61 per cent and South Asia, it is at 70 per cent) and within that, 42 per cent were cash transfers (Gentilini and others, 2020). The capacity of countries to manage G2P transfers effectively as well as to ensure inclusion, especially of informal workers, has become more important in light of the use of cash transfers as a policy response to the pandemic. Lessons from the rapid scale-up of G2P systems in various countries suggest three building blocks for a system: a unique ID (preferably digital with biometrics), socio-economic databases that are linked to the unique ID, and a channel for digital delivery. This paper reviews the three building blocks in eight Asian LDCs – Afghanistan, Bangladesh, Bhutan, Cambodia, the Lao People’s Democratic Republic, Myanmar, Nepal, and Timor-Leste – and discusses measures that can enhance the capacity of these countries. It also looks at whether the reviewed LDCs offer any lessons for others in the region. The paper also reviews the regulatory frameworks for digital payments and digital delivery channels in the reviewed LDCs.
    Keywords: government-to-person (G2P) payments, Asian least developed countries, COVID-19 pandemic, social cash transfers, mobile money
    JEL: O38
    Date: 2022–12
  8. By: Oliver, Dr
    Abstract: As a result of digital technologies, many Asian countries are in a position to enhance their competitiveness and promote economic growth by increasing their use of these technologies. As a research paper, the paper focuses on the development of digitalization in the modern economy of Asia, as well as its impact on the economic processes that determine the economic growth of the country. As long as people are capable of interpreting and adapting the impact of digitalization, we will be able to observe the impact of digitalization. A person has to be able to make judicious decisions when it comes to their finances, so he or she needs to be financially literate. As more and more people transact their financial transactions over the Internet, digital financial literacy has become an increasingly important skill. By leveraging the potential of digitalization, we have the possibility of changing a business model and creating new revenue-generating and value-creating opportunities. There will be an emphasis on the effects of digitalization on the MSME and service sectors in this paper, as well as how industry 4.0 has not been implemented to a greater extent as a result of digitalization having an impact on the MSME and service sectors. In order to understand why digitization is so important and which sectors have been affected and how we can as a nation emerge as the third largest economy in the near future, we must understand why digitisation is so important and what sectors have been impacted. In addition, digitalisation has assisted in the increasing use of e-wallets as well as bringing transparency to financial transactions. There is significant potential for Asian public finance to improve in the years to come with the advent of digitalisation, which is highly correlated with good institutions and performance. The fact that there is a risk of erosion of the tax base does not mean that policies that increase data sharing and withholding mechanisms cannot be introduced as a way of mitigating these risks.
    Keywords: Digital revolution and economic development, digitisation and economic impact in Asia, digitisation for competitiveness, Asian economy and digital journey
    JEL: F6 F62 F68 O1 O10 O14 O2 O20 O4 O42
    Date: 2023–01–05
  9. By: Tito Nícias Teixeira da Silva Filho
    Abstract: Fintech has become one of the most popular topics among policymakers and experts. It usually comes with the qualifier “disruptive”. Thus, the hype is easy to understand: fintech would upend the financial system due to its disruptive nature, as it would allow financial services to be completed faster, cheaper, and more efficiently. Indeed, many have predicted that the remittances market was on the verge of being disrupted as remittances are considered too costly while remittance service providers inefficient, opaque, and outdated. Therefore, there seems to be no better setting for assessing the allegedly disruptive effects of fintech. Against that background, this paper investigates how those predictions have fared so far. Contrary to expectations, it found that instead of disrupting incumbents fintechs have increasingly been entangled with them. Therefore, not only there is no evidence of disruption, but it is unlikely to occur in the foreseeable future. Even so, the paper argues that fintechs play an important role in the remittances market.
    Keywords: fintech; disruptive; bitcoin; blockchain; mobile money; remtech; remittances costs; financial inclusion; innovation.
    Date: 2022–12–02
  10. By: Canova, Luciano; Paladino, Giovanna
    Abstract: Since 2018 the awareness of sustainability issues and climate change has increased significantly, especially among the younger generation. The COVID-19 pandemic and the related shutdown of many economic activities contributed to raising concerns about the conservation of biodiversity, the environment, and personal economic well-being. In this study, we examine how members of Generation Z deal with issues related to environmental sustainability and personal money management. By using the technique of the principal component analysis, two synthetic indexes were computed from a set of variables associated with the answers to a questionnaire that investigates the approach to environmental and economic sustainability by a representative sample of 400 Italian youngsters aged between 13 and 18 years. The GREEN INDEX is the result of the aggregation of environmental practices while the MONEY INDEX represents habits in personal money management. They are used as dependent variables of linear, ordered probit, and bivariate probit regressions to detect how socio-demographic factors and personality characteristics are associated with sustainability awareness. Our results show the overall importance of character traits - such as curiosity and scrupulousness - in improving the level of awareness and the strong statistical association between attention to money management and a sense of responsibility toward the environment. This finding hints that working on one dimension may produce a positive spillover effect on the other, setting in motion a virtuous circle for policy implementation.
    Keywords: Sustainability, Environment, Financial Education, Gen Z
    JEL: D14 Q54
    Date: 2023–01–11
  11. By: Franca Glenzer; Pierre-Carl Michaud; Stefan Staubli
    Abstract: Many near-retirees forgo a higher stream of public pension income by claiming early. We provide both quasi-experimental and survey-experimental evidence that the timing of public pension claiming is relatively inelastic to changes in financial incentives in Canada. Using the survey experiment, we evaluate the effect of two different educational interventions and different ways of framing the incentive to delay claiming. While all three types of interventions induce delays, these interventions have heterogeneous financial consequences for participants who react.
    Keywords: pension claiming; annuities; retirement; financial education; framing
    JEL: D91 H55 J14 J26
    Date: 2023

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