nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒10‒16
four papers chosen by
Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca


  1. GPT has become financially literate: Insights from financial literacy tests of GPT and a preliminary test of how people use it as a source of advice By Pawe{\l} Niszczota; Sami Abbas
  2. Can Digital G2P Transfers Drive Financial Inclusion and Digital Payments? Evidence from India By Alan Gelb; Anit Mukherjee; Brian Webster
  3. Does Social Identity Constrain Rural Entrepreneurship? The Role of Financial Inclusion By Sandhya Garg; Samarth Gupta; Sushanta Mallick
  4. Financial Exclusion and Inflation Costs By Diogo Baerlocher

  1. By: Pawe{\l} Niszczota; Sami Abbas
    Abstract: We assess the ability of GPT -- a large language model -- to serve as a financial robo-advisor for the masses, by using a financial literacy test. Davinci and ChatGPT based on GPT-3.5 score 66% and 65% on the financial literacy test, respectively, compared to a baseline of 33%. However, ChatGPT based on GPT-4 achieves a near-perfect 99% score, pointing to financial literacy becoming an emergent ability of state-of-the-art models. We use the Judge-Advisor System and a savings dilemma to illustrate how researchers might assess advice-utilization from large language models. We also present a number of directions for future research.
    Date: 2023–08
    URL: http://d.repec.org/n?u=RePEc:arx:papers:2309.00649&r=fle
  2. By: Alan Gelb (Center for Global Development); Anit Mukherjee (Center for Global Development); Brian Webster (Center for Global Development)
    Abstract: Does channeling government-to-person (G2P) payments through bank accounts encourage financial inclusion and use? This paper explores the factors that have driven the adoption of digital payments in India by beneficiaries of PMGKY, the large-scale COVID-19 relief program launched in May 2020. India’s 2013 move to pay social benefits through direct transfers into bank accounts significantly increased account ownership, but uptake of digital payments has been slower, although it has accelerated more recently through smartphone-based apps. Recipient survey data shows that personal and household attributes influence the likelihood of adopting digital payments. Smartphone ownership and digital literacy improve the odds while being a woman reduces them. The strength of the local digital payments ecosystem also exerts significant influence on household adoption; favorable personal and ecosystem factors are needed for widespread use. The historical progression shows that G2P transfers create an entry point but that widespread access to low-cost mobile telecommunications, interoperability, and the entry of new players offering convenient payments interfaces have been vital to the growth of digital payments.
    Keywords: digital, payments, India
    JEL: G20 G53 O10 O16 O33 O35
    Date: 2022–06–09
    URL: http://d.repec.org/n?u=RePEc:cgd:wpaper:618&r=fle
  3. By: Sandhya Garg; Samarth Gupta; Sushanta Mallick (Institute of Economic Growth, Delhi)
    Abstract: This paper examines whether better financial access can mitigate the impact of social identity on entrepreneurship. Using a novel dataset of Indian villages and distance to bank branches, we find that proximity to a bank branch improves non-agricultural entrepreneurship of underprivileged caste groups in India, with a significant entry occurring in sectors which were dominated by the privileged caste groups. We find that this effect is mediated by the uptake of institutional credit by under-privileged groups. Our results show that the financial inclusion can break rigid social norms around caste and occupation in India.
    Date: 2023
    URL: http://d.repec.org/n?u=RePEc:awe:wpaper:460&r=fle
  4. By: Diogo Baerlocher (Department of Economics, University of South Florida)
    Abstract: This paper constructs two models of financial exclusion to assess the welfare costs of inflation. In the first, inflation costs are measured within a classical endowment economy. The second includes a production sector and costly credit. Both models are calibrated to account for inflation costs in a high-inflation economy (developing country) and in a low-inflation economy (developed economy). In an endowment economy, when inflation is reduced from 1.5% to zero in a developed economy, the welfare costs for agents with (without) financial access are 0.36% (1.1%) consumption equivalent variation (CEV). In a model with costly credit, the welfare costs for agents with (without) financial access are 0.7% (1.36%) CEV. For developing countries, when inflation is reduced from 6.2% to zero, the welfare costs for agents with (without) financial access are 1.3% (5%) in an endowment economy. In the costly-credit model, the welfare costs for agents with (without) financial access are 0.44% (6%) CEV. The main finding is that there is a substantial asymmetry in welfare costs between individuals with and without access to financial services, especially in developing countries.
    Keywords: Financial Exclusion, Inflation Costs, Costly Credit
    JEL: D53 E31 E51 G23
    Date: 2023–09
    URL: http://d.repec.org/n?u=RePEc:usf:wpaper:2023-01&r=fle

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