nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒05‒08
eight papers chosen by

  1. Financial literacy for financial resilience: evidence from Cyprus during the pandemic period By Panayiotis C. Andreou; Sofia Anyfantaki; Adele Atkinson
  2. Telecommunications regulation, mobile money innovations and financial inclusion By Simplice A. Asongu
  3. Bank accounts, bank concentration and mobile money innovations By Simplice A. Asongu; Nicholas M. Odhiambo
  4. The Importance of Financial Literacy: Opening a New Field By Annamaria Lusardi; Olivia S. Mitchell
  5. Can social inclusion policies promote financial inclusion? By Ozili, Peterson K
  6. Central bank digital currency, poverty reduction and the United Nations sustainable development goals By Ozili, Peterson K
  7. Stacking up the Benefits: Lessons from India’s Digital Journey By Emine Hanedar; Cristian Alonso; Gerardo Uña; Dinar Prihardini; Tanuj Bhojwani; Kateryna Zhabska
  8. The role of mobile money innovations in transforming unemployed women to self-employed women in sub-Saharan Africa By Simplice A. Asongu; Sara le Roux

  1. By: Panayiotis C. Andreou (Cyprus University of Technology); Sofia Anyfantaki (Bank of Greece); Adele Atkinson (Durham University)
    Abstract: This study takes Cyprus as a case country to examine the role of financial literacy for financial resilience in the pandemic period. Responses to the survey questions to assess the level of financial literacy show that in 2021 less than 4 out of 10 respondents had a good financial knowledge proficiency level. The results also show that more than 1 out of 3 Cypriots are financial fragile, i.e., would not have been able to cover an unexpected financial need within a month without borrowing or asking for financial help. Moreover, about 6 out of 10 did not have a rainy-day fund to cover three months living expenses in case of losing their main source of income. The proportions are higher for young, not employed, low-income and larger households, indicating that these subgroups were the least resilient. These findings suggest that many Cypriot households were ill-prepared to face the economic consequences of the COVID-19 pandemic. Most importantly, the findings indicate that financial knowledge proficiency appears as a strong antecedent of one’s proclivity of being financially resilient. An important policy implication of the study’s conclusions is that financial education could help households to improve their financial resilience and prepare for future shocks.
    Keywords: financial literacy;financial resilience;financial fragility;rainy-day funds;COVID-19;personal finance;financial education
    JEL: G53 G51 D14 D91 G21
    Date: 2023–02
  2. By: Simplice A. Asongu (Yaounde, Cameroon)
    Abstract: This study assesses how corporate telecommunication (telecom) policies follow telecom sector regulation in mobile money innovation for financial inclusion in developing countries. Telecom policies are understood in terms of mobile subscriptions, mobile connectivity coverage and mobile connectivity performance while mobile money innovations represent mobile money accounts, the mobile used to send money and the mobile used to receive money. The empirical evidence is based on Tobit regressions. Telecom sector regulation positively influences mobile money innovations. From net influences, mobile subscriptions and connectivity policies moderate telecom sector regulation to positively influence mobile money innovations; exclusively within the remit of mobile money accounts because the corresponding net influences on the mobile used to send money and the mobile used to receive money are negative. The interactive influences are consistently negative and hence, thresholds for complementary policies are provided in order to maintain the positive influence of telecom sector regulation on mobile money innovations. This study has complemented the extant literature by assessing how corporate telecommunication policies follow telecommunication sector regulation in mobile money innovations for financial inclusion.
    Keywords: Mobile money; technology diffusion; financial inclusion; inclusive innovation
    JEL: D10 D14 D31 D60 O30
    Date: 2023–01
  3. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The present study investigates how increasing bank accounts and bank concentration affect mobile money innovations in 148 countries. It builds on scholarly and policy concerns in the literature that increasing bank accounts may not be having the desired effects on financial inclusion on the one hand and on the other, that bank concentration which is a proxy for market power is a relevant mobile money innovation demand factor. The empirical evidence is based on Tobit regressions. From the findings, it is apparent that boosting bank accounts is positively related to the three mobile money innovations (i.e. mobile bank accounts and the mobile phone used to send money). Moreover, some critical levels of bank account penetration require complementary policies in order to maintain the positive relationship between boosting bank accountsand positive outcomes in terms of money mobile innovations.Conversely, financial inclusion in terms of the three mobile money innovations is not significantly apparent upon enhancing bank concentration. Policy implications are discussed in the light of the provided thresholds for complementary policies.
    Keywords: Mobile money; technology; diffusion; financial inclusion; inclusive innovation, information asymmetry
    JEL: D10 D14 D31 D60 O30
    Date: 2023–01
  4. By: Annamaria Lusardi; Olivia S. Mitchell
    Abstract: We undertake an assessment of our two decades of research on financial literacy, building on our empirical research and theoretical work casting financial knowledge as a form of investment in human capital. We also draw on recent data to determine who is the most – and least – financially savvy in the United States, and we highlight the similarity of our results in other countries. A number of convincing studies is now available, from which we draw conclusions about the effects and consequences of financial illiteracy, and what can be done to fill these gaps. We conclude by offering our thoughts on implications for teaching, financial literacy programs, and future research.
    JEL: G53
    Date: 2023–04
  5. By: Ozili, Peterson K
    Abstract: This study investigates whether social inclusion policies promote financial inclusion. Three social inclusion policies were analyzed: gender equality policies, environmental sustainability policies and social protection policies. The study used the panel fixed effect regression methodology to analyse data from 48 low- and medium-income countries. It was found that social inclusion policies did not have a significant effect on financial inclusion, implying that social inclusion policies do not promote financial inclusion. The older population are less likely to own an account at a formal financial institution in low and medium-income countries that have strong environmental sustainability policies and institutions. The implication of the finding is that the social policies and institutions established to promote environmental sustainability can discourage the older population from keeping their wealth in formal financial institutions.
    Keywords: financial inclusion, social inclusion, financial development, social policies, institutions.
    JEL: D60 G21 Z0 Z13
    Date: 2023
  6. By: Ozili, Peterson K
    Abstract: This paper examines the role of central bank digital currency (CBDC) for poverty reduction and sustainable development. In the paper, I argue that a CBDC can eliminate poverty by increasing financial inclusion which gives poor people access to affordable credit and other basic financial services which they can use to improve their welfare, thereby enabling them to rise above poverty, and achieve the United Nations sustainable development goal of eradicating poverty. This argument is valid only if a central bank digital currency is designed to incorporate features that increase financial inclusion. The argument may not be valid in cases where a CBDC is not designed to increase financial inclusion as is the case in some developed countries. The implication is that a CBDC can lead to poverty reduction only when the CBDC design incorporate features that increase financial inclusion. Policy makers can ensure that the CBDC used in their countries is designed to incorporate features that increase financial inclusion which is vital for poverty reduction and for achieving the United Nations sustainable development goal of eradicating poverty in all its forms.
    Keywords: CBDC, central bank digital currency, financial inclusion, poverty reduction, sustainable development goals, United Nations.
    JEL: E40 E42 Q01 Q50 Q56
    Date: 2023
  7. By: Emine Hanedar; Cristian Alonso; Gerardo Uña; Dinar Prihardini; Tanuj Bhojwani; Kateryna Zhabska
    Abstract: Foundational digital public infrastructure (DPI), consisting of unique digital identification, payments system and data exchange layer has the potential to support the transformation of the economy and support inclusive growth. India’s foundational DPI, called India Stack, has been harnessed to foster innovation and competition, expand markets, close gaps in financial inclusion, boost government revenue collection and improve public expenditure efficiency. India’s journey in developing a world-class DPI highlights powerful lessons for other countries embarking on their own digital transformation, in particular a design approach that focuses on shared building blocks and supporting innovation across the ecosystem.
    Keywords: Digitalization; digital payments; digital ID; govtech
    Date: 2023–03–31
  8. By: Simplice A. Asongu (Yaounde, Cameroon); Sara le Roux (Oxford Brookes University, Oxford, UK)
    Abstract: The study examines how mobile money innovations transform unemployed women to self-employed women. The empirical evidence is based on interactive quantile regressions focusing on data in 44 countries from sub-Saharan Africa for the period 2004 to 2018. The hypothesis that mobile money innovations transform female unemployment to female self-employment is tested. Eight mobile money innovation dynamics presented in four categories are employed. Three main common findings are apparent from interactions between female unemployment, eight mobile money innovation dynamics and female self-employment: (i) the investigated hypothesis is valid exclusively at the top quantiles of female self-employment; (ii) the net effects are consistently negative and (iii) the corresponding conditional or interactive effects upon which the net effects are based are consistently positive. This is an indication that critical masses at which money innovation innovations have an overall positive net effect on female self-employment are apparent. The corresponding mobile money innovation policy thresholds at which the net effects on female self-employment change from negative to positive are provided. Policy implications are discussed.
    Keywords: Mobile phones; financial inclusion; women; inequality; sub-Saharan Africa
    JEL: G20 O40 I10 I20 I32
    Date: 2023–01

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