nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒10‒02
three papers chosen by
Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca

  1. Between money and speculative asset: the role of financial literacy on the perception towards Bitcoin in Italy By Cascavilla, Alessandro
  2. Selection into Financial Education and Effects on Portfolio Choice By Irina Gemmo; Pierre-Carl Michaud; Olivia S. Mitchell
  3. Persistent Gender Gaps in Business Profits in Indonesia: Implications for COVID-19 Recovery Policies By Mayra Buvinic; James C. Knowles; Firman Witoelar

  1. By: Cascavilla, Alessandro
    Abstract: With Bitcoin at the forefront, cryptocurrencies are gaining traction as an alternative asset investment, particularly among young investors. Although most of the empirical evidence has shown that it could not be defined as a currency, some Bitcoin users argue the opposite. This paper analyzes the factors influencing the perception of Bitcoin, i.e., whether it is a currency or an asset, with a focus on financial literacy among a subject pool of university students in Italy. The results show that, after controlling for several individual characteristics such as behavioral biases, personal attitudes, psychological traits, and socio-demographic information, this cryptocurrency is considered more than just an asset, and thus it could replace currency, among subjects with lower financial literacy, higher knowledge of Bitcoin, and those who do not trust the banking system. In contrast, Bitcoin is considered a speculative asset among those individuals with higher financial literacy. In line with the recent evidence that cryptocurrencies are mostly owned by young investors, results indicate the importance of increasing the level of financial education among them.
    Keywords: Bitcoin, Financial education, Financial literacy, Behavioral bias
    JEL: D14 D91 E41 O33
    Date: 2023
  2. By: Irina Gemmo; Pierre-Carl Michaud; Olivia S. Mitchell
    Abstract: To examine how financial education affects financial outcomes, one must evaluate whether and how sample selection may bias inferences regarding program impacts. Our incentivized experiment reveals how such selection influences estimated financial education effects. The more financially literate and those expecting higher gains pay more to purchase education, while those who consider themselves very financially literate pay less. Using portfolio allocation tasks, we show that the financial education increases portfolio efficiency and welfare by almost 20 and 3 percentage points, respectively. In our setting, selection does not greatly influence estimated program effects, comparing those participating and those who do not.
    Keywords: Financial Education, Financial Literacy, Portfolio Choice, Selection
    JEL: G11 G41 G53
    Date: 2023
  3. By: Mayra Buvinic (Center for Global Development); James C. Knowles; Firman Witoelar (Crawford School of Public Policy, Australian National University)
    Abstract: This paper analyzes a rich pre-pandemic data set on both men and women business owners from 401 mainly rural villages in five regencies (kabupaten) of East Java province, Indonesia. There are some similarities but mostly large gender differences in characteristics and resources in this random sample of Indonesian businesswomen and businessmen. Similarities include years worked in the business and cognitive ability of businesspeople. Large differences include proportionately more women business owners operating ‘consumer facing’ restaurants and retail shops hard hit by the COVID-19 pandemic and sharp gender gaps favoring men in the total value of business capital and savings and in all sources of monthly earned income. Multivariate analysis (propensity score matching) finds that much of the observed gender gaps in earned income and savings remain after business owners are effectively matched on the basis of their pre-existing characteristics and resources (endowments) suggesting that underlying discrimination may be an important driver. The findings further suggest that discrimination by customers and gender rigidities in women’s work time allocation likely contribute to gender inequalities in business outcomes. In the absence of effective interventions, there is a risk of a vicious cycle in which women’s low earnings lead to low savings (unexplained by gender differences in saving behavior), limited capital formation and risk-taking, and to even lower earnings. The paper uses these and other findings to discuss ways for gender-informed economic recovery programs to strengthen micro and small businesses, especially by addressing household and community factors that tilt business environments in favor of men.
    Keywords: gender, women’s entrepreneurship, women’s business outcomes, financial inclusion
    JEL: J16 L26 B54 D91
    Date: 2021–12–17

This nep-fle issue is ©2023 by Viviana Di Giovinazzo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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