nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒05‒01
five papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Women in Fintech: As Leaders and Users By Purva Khera; Ratna Sahay; Sumiko Ogawa; Mahima Vasishth; Ratna Sahay
  2. Reverse Mortgages and Financial Literacy By Ismael Choinière-Crèvecoeur; Pierre-Carl Michaud
  3. The Digital Banking and Fintech Sandbox - Nepal By Tan, Albert
  4. Frames, Incentives, and Education: Effectiveness of Interventions to Delay Public Pension Claiming By Franca Glenzer; Pierre-Carl Michaud; Stefan Staubli
  5. Insurance and Portfolio Decisions: Two Sides of the Same Coin? By Armantier, Olivier; Foncel, Jérôme; Treich, Nicolas

  1. By: Purva Khera (International Monetary Fund); Ratna Sahay (International Monetary Fund); Sumiko Ogawa (International Monetary Fund); Mahima Vasishth (University of California); Ratna Sahay (International Monetary Fund)
    Abstract: While digital financial services have made access to finance easier, faster, and less costly, helping to broaden digital financial inclusion, its impact on gender gaps varies across countries. Moreover, women leaders in the fintech industry, although growing, remain scarce. This paper explores the interaction between ‘women’ and ‘fintech’ by examining: (i) the role of women leaders on firm-level performance in the fintech industry; and (ii) the determinants of gender gaps in the usage of digital services to better understand the crosscountry differences. Results indicate that greater gender diversity in the executive board is associated with better performance of fintech firms. With regard to determinants of the gender gaps in the usage of digital financial services, we find that higher financial and digital literacy of women is associated with lower gender gaps in digital financial inclusion, and that socio-cultural factors also play a key role.
    Keywords: Firm performance, Women leaders, Digital financial inclusion, Financial literacy, Digital literacy
    JEL: J16 L25 G53
    Date: 2023–03–02
  2. By: Ismael Choinière-Crèvecoeur; Pierre-Carl Michaud
    Abstract: Few retirees use reverse mortgages. In this paper, we investigate how financial literacy and prior knowledge of the product influence take-up by conducting a stated-preference experiment. We exogenously manipulate characteristics of reverse mortgages to tease out how consumers value them and investigate differences by financial literacy and prior knowledge of reverse mortgages. We find that those with higher financial knowledge are more likely to know about reverse mortgages, not more likely to purchase them at any cost but are more sensitive to the interest rate and the insurance value of these products in terms of the non-negative equity guarantee. Peu de retraités ont recours aux prêts hypothécaires inversés. Dans cet article, nous étudions l'influence de la littératie financière et de la connaissance préalable du produit sur son utilisation en menant une expérience de préférences déclarées. Nous manipulons de manière exogène les caractéristiques des prêts hypothécaires inversés afin de déterminer la valeur que leur accordent les consommateurs et d'étudier les différences en fonction de la littératie financière et de la connaissance préalable des prêts hypothécaires inversés. Nous constatons que les personnes ayant de meilleures connaissances financières sont plus susceptibles de connaître les prêts hypothécaires inversés; qu'elles ne sont pas plus susceptibles de les acheter à tout prix; mais qu'elles sont plus sensibles au taux d'intérêt et à la valeur d'assurance de ces produits en termes de garantie de valeur nette réelle non négative.
    Keywords: reverse mortgages, savings, retirement planning, insurance, hypothèques inversées, épargne, planification de la retraite, assurance
    JEL: G53 G21 R21
    Date: 2023–02–01
  3. By: Tan, Albert
    Abstract: Over the past few years, the concept of a Digital Banking and Fintech Sandbox has emerged as a powerful force for driving innovation and fostering financial inclusion, especially in emerging economies that grapple with various challenges in providing access to essential financial services. A regulatory sandbox serves as a structured, secure, and controlled environment that enables startups, financial institutions, and other relevant stakeholders to experiment with and test innovative financial products and services while enjoying temporary relief from specific regulations. This forward-thinking, progressive initiative strives to promote collaboration, deepen regulatory comprehension, and accelerate the adoption of innovative technologies, all the while maintaining a strong commitment to consumer protection and financial stability. Nepal, a nation characterized by a sizable unbanked population, is well-positioned to reap substantial benefits by embracing this innovative concept. According to the World Bank's Global Findex Database, a mere 45% of Nepalese adults held an account at a financial institution in 2017. This statistic reveals a concerning reality: a significant segment of the population remains without access to essential financial services such as savings accounts, credit, and insurance. By implementing a Digital Banking and Fintech Sandbox, Nepal has the opportunity to leverage state-of-the-art technological advancements and inventive business models to bridge this financial inclusion gap and ultimately elevate the economic prospects of its citizens. The legal community in particular occupies a critical position in advancing the Digital Banking and Fintech Sandbox in Nepal, as they boast the requisite expertise and authority to shape the regulatory landscape that will govern the sandbox. Legal professionals, including lawyers, judges, and policymakers, must collaborate to develop a tailored regulatory framework for the sandbox that strikes a delicate balance between fostering innovation and safeguarding consumer protection, data privacy, and cybersecurity. By facilitating constructive dialogue among stakeholders and fostering a spirit of cooperation, the legal fraternity can help cultivate an enabling environment for the growth and adoption of digital banking and fintech solutions that cater to the needs of the unbanked population.
    Date: 2022–06–14
  4. 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. De nombreux individus approchant de la retraite renoncent à un un flux plus élevé de revenu de pensions publiques en demandant ces dernières de manière anticipée. Nos analyses de type quasi-expérimentale et de type enquête-expérimentale montrent que, au Canada, le moment auquel les individus demandent leur pension du RPC / RRQ est relativement inélastique aux changements dans les incitations financières. Dans la portion utilisant une expérience par enquête, nous évaluons l'effet de deux interventions éducationnelles et de manières variables de présenter l’information concernant l’incitation au report de la demande de pension. Bien que les trois types d'interventions induisent des reports, elles ont des conséquences financières hétérogènes parmi les participants qui y réagissent.
    Keywords: Pension Claiming, Annuities, Retirement, Financial Education, Framing, Demande de pension, rentes, retraite, éducation financière, encadrement
    JEL: D91 H55 J14 J26
    Date: 2023–01–13
  5. By: Armantier, Olivier; Foncel, Jérôme; Treich, Nicolas
    Abstract: We study insurance and portfolio decisions, two opposite risk retention tradeoffs. Using household level data, we identify the first joint determinants (e.g. subjective expecta-tions, risk attitude) and frictions (e.g. liquidity constraints, financial literacy) in the literature. We also find key differences between the two decisions. Notably, contrary to economic intuition, risky asset holding and insurance coverage both increase with wealth. We show that this apparent puzzle is driven in part by a specific behavioral pattern (the poor invest too conservatively, while the rich over-insure), and can be explained by two factors: regret avoidance and nonperformance risk.
    JEL: D14 D81 C3
    Date: 2023–04

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