nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2023‒10‒23
five papers chosen by
Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca

  1. Mobile Money, Interoperability, and Financial Inclusion By Markus K. Brunnermeier; Nicola Limodio; Lorenzo Spadavecchia
  2. Alternative Personal Credit Scoring Tests without Financial History, A Novel Method, Credit Needs and Democracy By syrup, soul
  3. Conditional Cash Transfers, Debit Cards and Financial Inclusion: Experimental Evidence from Argentina By Cruces, Guillermo
  4. Child Labor, Rainfall Shocks, and Financial Inclusion: Evidence from Rural Households By Bernal, Carolina; Vlaicu, Razvan
  5. "Community Voices in Control: A Systematic Review of Local Representation's Influence on RCB Governance Structure’’ By Amoako, Frimpong; Asuamah Yeboah, Samuel

  1. By: Markus K. Brunnermeier; Nicola Limodio; Lorenzo Spadavecchia
    Abstract: This paper investigates the tradeoff between competition and financial inclusion resulting from the vertical integration between mobile network and money operators. Joining newly assembled data on mobile money fees through the WayBack machine, with sources on network coverage and financials, we examine the staggering across African operators and countries of platform interoperability – a policy that promotes transactions and competition across mobile money operators. Our results show that interoperability benefits users by lowering mobile money fees and their dispersion across operators. However, these positive effects are offset by a decrease in mobile towers and network coverage, especially in rural and poor districts, which, in turn, leads to a lower financial inclusion. We note that combining interoperability with subsidies for rural telecommunications delivers lower fees without hurting coverage.
    JEL: E4 O16 O30
    Date: 2023–09
  2. By: syrup, soul
    Abstract: Credit scores allow individuals and businesses to be able to take loans, many of which stimulate the economy, allowing ideas to be formed into products and services, and giving the opportunity for people to own their own place of residence. The hypothesis of this study was that IQ scores and financial literacy scores are positively correlated with credit scores, and that higher financial literacy confidence scores coupled with low financial literacy scores are negatively correlated to credit scores, thus allowing the possibility to create an algorithm to predict credit scores of people who do not have credit scores. A survey was used to collect the data in this study, specifically IQ scores, financial literacy scores, financial literacy confidence scores, and credit scores. 96 participants, aged 18 and over, were recruited through opportunistic sampling and consented to take part in the survey. Analysis consisted of correlation charts, heatmaps, scatter plots, multivariable regression, to find patterns in the data. The results show that the combination of IQ scores, financial literacy scores, and financial literacy self-confidence scores, is strongly positively correlated to credit scores. A multivariable regression model was created, with an accuracy of 74.19%. An Artificial Neural Network was created, with an accuracy of 65.51%.
    Date: 2023–09–29
  3. By: Cruces, Guillermo
    Abstract: Cash transfer and other social protection programs in developing countries have often been accompanied by measures to foster financial inclusion, such as the adoption and use of bank accounts and electronic means of payments. Argentina's social benefits are paid in bank accounts and accessed through debit cards. With the simultaneous objective of fostering formality among beneficiaries and stores, the use of debit cards for purchases has been incentivized by means of additional subsidies. We studied the low take-up of these extra benefits by means of a field experiment involving 400, 000 beneficiaries of Argentinas largest conditional cash-transfer program (with 2.2 million beneficiaries who are the parents of four million children, 40% of the countrys 0-17-year olds). By using their debit card to spend the allowance, rather than withdrawing cash from ATMs, they can receive a rebate of 15% of their expenditures. However, they systematically fail to claim this benefit: only about 25% of beneficiaries receive this transfer. Our experiment provided information about the effectiveness of an information campaign conducted via text messages or through on-screen messages at ATM machines. The campaign increased purchases with debit cards and subsequent rebates significantly but not substantially in the short run. However, beneficiaries who increased their use of debit cards do not exhibit a higher probability of having access to credit through the financial system, nor higher levels of formal employment. The results indicate that cultural factors (a preference for cash), administrative hassle and citizen security issues are relevant issues that limit the potential of financial inclusion through increased use of digital means of payment.
    Keywords: Take-up of social benefits;financial inclusion
    JEL: C93 H26 K34 K42 Z13
    Date: 2023–08
  4. By: Bernal, Carolina; Vlaicu, Razvan
    Abstract: This paper examines how rural households cope with climate change related rainfall shocks by re-allocating childrens time between domestic activities and school attendance. Households affected by an unanticipated rainfall shock face an inter-temporal trade-off between current household income and future potential earnings. Financial inclusion may mitigate or exacerbate the human capital impacts of rainfall shocks depending on whether it relaxes or constrains household budgets. The data come from a three-round panel household survey in rural Colombia collected between 2010-2016. The main findings are that rainfall shocks induce households to choose immediate benefits over long-run investments in education by increasing the incidence of child labor and household chores at the expense of school attendance. Over-indebtedness through pre-existing formal loans reinforces the likelihood that a child works due to rainfall shocks, whereas asset insurance, foreign remittances, and natural disaster aid mitigate or eliminate the shock-induced shift toward domestic activities and away from schooling.
    Keywords: Child Labor;human capital;Rainfall shocks;climate change;financial inclusion;Rural households;Schooling
    JEL: D14 J13 J22 O15 Q54
    Date: 2023–08
  5. By: Amoako, Frimpong; Asuamah Yeboah, Samuel
    Abstract: Local community representation plays a pivotal role in shaping the governance structures and decision-making processes of rural and community banks (RCBs) in developing countries. This systematic review aims to comprehensively assess the impact of community representation on RCBs within the context of developing nations, shedding light on the dynamics that influence the effectiveness of local voices in governing these essential financial institutions. Employing a rigorous methodology encompassing database searches, inclusion criteria, and quality assessment, this review synthesizes a diverse range of empirical studies, theoretical frameworks, and case examples. The conceptual framework explores the diverse forms of community representation within RCBs and examines the theoretical foundations underpinning their influence in developing country settings. Drawing on an extensive body of literature, this review investigates how community representation affects governance structures, focusing on the roles, powers, and structural changes that emerge within RCBs in the context of resource-constrained economies. Through an exploration of future research directions and identified gaps, the review offers insights into emerging trends and the pressing need for further investigations in this critical area, aiming to contribute to the sustainable development goals of these nations. The findings of this systematic review provide valuable insights into the interplay between local community representation and RCB governance in developing countries, offering practical recommendations for policymakers, practitioners, and scholars working to enhance the role of community voices in the decision-making processes of essential financial institutions that serve as lifelines in these economies. By synthesizing existing knowledge and highlighting areas for improvement, this review informs discussions on promoting financial inclusion and economic development in the developing world.
    Keywords: Community representation, Rural and community banks, Governance structures, Decision-making processes, Financial inclusion, Economic development, Resource-constrained economies.
    JEL: G21 O16 O43 O57
    Date: 2023–04–10

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.