nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒09‒25
four papers chosen by

  1. Financial Inclusion and Monetary Policy: A Study on the Relationship between Financial Inclusion and Effectiveness of Monetary Policy in Developing Countries By Gautam Kumar Biswas; Faruque Ahamed
  2. Constraints to Digital Financial Inclusion of Beneficiaries of PSARA Cash Transfer Program inHaiti - A Demand-side Analysis and Recommendations By Martinez Cuellar, Cristina; Tesliuc, Cornelia M.; Jaupart, Pascal Jean Edouard; Manigat, Ailo Klara
  3. The role of local promoters in helping microentrepreneurs engage in digital business training. The case of Expertienda By Rodríguez-Lesmes, Paul; Gutierrez, Luis H.; Urueña-Mejia, Juan Carlos; Ortiz, Andres; Medina Rojas, Ivan; Romero, Mauricio
  4. Differences between NZ and U.S. individual investor sentiment: More noise or more information? By Jędrzej Białkowski; Moritz Wagner; Xiaopeng Wei

  1. By: Gautam Kumar Biswas; Faruque Ahamed
    Abstract: The study analyzed the impact of financial inclusion on the effectiveness of monetary policy in developing countries. By using a panel data set of 10 developing countries during 2004-2020, the study revealed that the financial inclusion measured by the number of ATM per 100, 000 adults had a significant negative effect on monetary policy, whereas the other measure of financial inclusion i.e. the number of bank accounts per 100, 000 adults had a positive impact on monetary policy, which is not statistically significant. The study also revealed that foreign direct investment (FDI), lending rate and exchange rate had a positive impact on inflation, but only the effect of lending rate is statistically significant. Therefore, the governments of these countries should make necessary drives to increase the level of financial inclusion as it stabilizes the price level by reducing the inflation in the economy.
    Date: 2023–08
  2. By: Martinez Cuellar, Cristina; Tesliuc, Cornelia M.; Jaupart, Pascal Jean Edouard; Manigat, Ailo Klara
    Abstract: The Adaptive Social Protection for Increased Resilience project (ASPIRE or PSARA for itsacronym in French), financed by The World Bank and implemented by the government of Haiti, aims to design andimplement a cash transfer program for vulnerable households in Haiti, with a focus on increasing financial inclusion anddigitizing payments. This report analyzes the financial inclusion landscape of beneficiaries; identifies demand-sidebarriers to the uptake of Digital Financial Services (DFS); and provides recommendations for promoting the use of DFSamong beneficiaries and their communities. The findings of this report show that while access to formal financialservices is limited, there is more access and usage of mobile money and informal services through the VillageSavings and Loan Associations (VSLAs). The report recommends actions to remove barriers to DFS usage, such as creatingand promoting DFS use cases among beneficiaries, increasing trust and confidence in using e-wallets, working withpolicymakers to provide IDs for beneficiaries and with regulators to reduce Know Your Customer (KYC) on low-tieraccounts, and increasing mobile phone ownership. Additionally, the report suggests strategies to support arobust DFS ecosystem, including designing attractive products for low-income customers and building a sustainableCash-in and Cash-out agent network.
    Date: 2023–07–01
  3. By: Rodríguez-Lesmes, Paul (Facultad de Economía Universidad del Rosario); Gutierrez, Luis H. (Facultad de Economía Universidad del Rosario); Urueña-Mejia, Juan Carlos (Facultad de Economía Universidad del Rosario; Corporacion Universitaria Minuto de Dios); Ortiz, Andres (Corporacion Universitaria Minuto de Dios, and Universidad de La Salle); Medina Rojas, Ivan (Corporacion Universitaria Minuto de Dios); Romero, Mauricio (Fundacion Capital)
    Abstract: The challenge for policymakers is providing good quality business training services that can reach vast numbers of firms while not expensive. This paper examines the marginal impact of implementing a free smartphone-based business training called Expertienda for Colombian microentrepreneurs. Using teams of local university students and a randomised control trial design, we invited microentrepreneurs to install the application in 2021 and follow up with them at least three times. The sample consisted of 1, 013 microentrepreneurs in 10 Colombian cities, for whom we collected administrative records on the application usage and observational and survey data one year after the implementation. We show that for every 100 incentivized businesses, 4 installed and used the app. Moreover, there is no evidence of spillovers at the local level regarding take-up. Regarding business performance, results show no evidence that the course affected financial inclusion, formalisation, or business practices indexes.
    Keywords: Financial inclusion; business practices; Formality; Digital training; Microbusiness
    JEL: C93 D22 O10 O17
    Date: 2023–09–11
  4. By: Jędrzej Białkowski (University of Canterbury); Moritz Wagner (University of Canterbury); Xiaopeng Wei
    Abstract: In this study, we introduce a newly created sentiment index of individual investors in NZ constructed similar to the well-known sentiment index provided by the American Association of Individual Investors (AAII) in the U.S. This unique setup allows us to compare different aspects of investors’ behaviour in both countries. We show that NZ market participants are less confident about the directional movement of the stock market, their expectations are more volatile and their distributions have fatter tails. By contrast, both bullish and bearish sentiment is more persistent among U.S. investors. Furthermore, our analysis of return predictability reveals that both groups of investors behave as noise traders. However, the results for NZ investors are stronger. Overall, our findings call for better financial education, particularly in the area of equity investing.
    Keywords: AAII sentiment index, Information traders, Noise traders, NZ sentiment index, Return predictability
    JEL: G11 G14 G18
    Date: 2023–08–01

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