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on Financial Literacy and Education |
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Issue of 2023‒12‒04
six papers chosen by |
| By: | Donato Masciandaro |
| Abstract: | Politicians can be more or less active in pursuing financial education policies in order to strength the financial literacy of the citizens, and consequently their trust. This paper explores the role of financial education policy in modifying the financial-trust endowment of a given population taking the political cost-benefit analysis into account. As, in any period, each incumbent government can design and implement its own financial education policy and as financial-literacy deficits are more likely in a period of financial innovation, we assume that constituencies more or l ess in favour of such policies are present in a given country. If this is the case, we can show that, in a democracy with political competition, the level of activism in implementing financial education policies is positively associated with financial-instability risks, literacy benefits, and illiteracy costs. Moreover, preferences and constraints motivate the politician in charge. More specifically, a more longer time horizons, lower psychological attitudes towards the status quo, and a higher probability of re-election can increase financial-literacy efforts. |
| Keywords: | financial literacy, financial education, financial trust, fintech, financial crisis, loss aversion, political competition |
| JEL: | D72 G28 G53 H10 K00 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp23208&r=fle |
| By: | Markonah Markonah (Perbanas Institute, Indonesia Author-2-Name: Hedwigis Esti Riwayati Author-2-Workplace-Name: Perbanas Institute, Indonesia Author-3-Name: Yohanes Ferry Cahaya Author-3-Workplace-Name: Perbanas Institute, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - This study examines how financial literacy affects Indonesia's millennial generation's financial behavior and investment decisions. This study will also look at the influence of financial literacy as mediated by financial behavior on the millennial generation's investment decisions. Methodology/Technique - This research utilizes quantitative methods. The demography for this study is the millennial generation in Jakarta, Indonesia, which comprises 15, 575 people. A non-probability and purposive sampling strategy were used to sample 100 people. The analytical tool makes use of path analysis and Smart-PLS. Result - According to the study's findings, basic financial literacy does not impact the millennial age's investment decisions or financial behavior. Advanced financial literacy cannot impact the investment decisions of the millennial generation in Jakarta, but it can influence their financial behavior. The millennial generation's financial behavior might impact investing decisions. Basic financial knowledge does not influence Millennial investing decisions as mediated through financial behavior. Advanced financial literacy can influence Millennial investing decisions as mediated through financial behavior. Novelty - This research is expected to be a reference for the millennial generation in making investment decisions. The millennial generation is expected to increase financial literacy and improve financial behavior in making investment decisions. Type of Paper - Empirical" |
| Keywords: | Basic Financial Literacy, Millennial Generation, Financial Behavior, Investment Decisions |
| JEL: | G2 G23 |
| Date: | 2023–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr225&r=fle |
| By: | Cita Puspita Sari (The Central Agency of Statistics for Bandar Lampung Municipality); Eny Sulistyaningrum (Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada) |
| Abstract: | This study examines the impact of digitalization on access to household credit during the National Economic Recovery Program. Data from the National Socioeconomic Survey (Survei Sosial Ekonomi Nasional/Susenas) and Village Potential Statistics (Potensi Desa/Podes) from 2019 (pre-pandemic) and 2021 (one year post-pandemic) are used in this research. Using the binomial logit model-fixed effect, this research found that digitalization has a significant impact on access to household credit, both before and during the COVID-19 pandemic. The majority of households with access to credit are headed by males living in rural areas, who are married, working, graduated from junior high school or above, and are 30-59 years old. In line with the national economic recovery program, the government can accelerate financial inclusion by increasing access to household credit to all levels of the society without gender discrimination through banking digitalization. |
| Keywords: | Digitalization, Credit Access, Financial Inclusion, Logit, Pandemic |
| JEL: | G5 G2 O1 E5 O3 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:gme:wpaper:202303002&r=fle |
| By: | Preziuso, Massimo; Koefer, Franziska; Ehrenhard, Michel |
| Abstract: | In the European Union (EU), the revised Payment Services Directive (PSD2) aims to provide more convenient and customized financial products through open banking (OB) platforms. However, little attention has been paid to the role of OB in improving the financial well-being of the growing number of the EU's underserved groups, which currently constitute approximately a quarter of its population. This study examines how the PSD2 and OB impact inclusive finance in the EU based on the perspectives of the Netherlands' ecosystem, one of the leaders in the EU's financial technology (FinTech) landscape. A fundamental distinction can be drawn between the OB users and the ecosystem's players. Regarding the impact of financial services on the users' inclusivity, while the PSD2 strengthens the infrastructure necessary for financial inclusion, many challenges remain, mainly because it was not designed for this purpose. This study identifies several areas of improvement that include adjustments to the know your customer (KYC) and anti-money laundering (AML) processes for underserved customers, innovative ways to communicate the PSD2's potential, and the regulation of technology providers' activities to build trust. Meanwhile, from the ecosystem's position, there is a need to strengthen and improve microfinance regulation according to the opportunities provided by the PSD2 to support microfinance institutions (MFIs) in scaling up and reaching underserved clients across borders with innovative services. OB improvements can also be achieved by organizations formed by MFIs and FinTechs in collaboration with banks. Such hybrid institutions will combine the best features of each of them: knowledge of the needs of local underserved clients from MFIs, technological innovations from FinTechs, and large and trusted customer bases, infrastructures, and access to institutional investments and governments from banks. Finally, an EU inclusive OB sector depends on the centrality of trusted regulators as coordination bodies. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eifwps:279536&r=fle |
| By: | Christophe André; Orsetta Causa; Emilia Soldani; Douglas Sutherland; Filiz Unsal |
| Abstract: | Women’s employment rates and wages are still lagging those of men across OECD countries, with average employment and wage gaps now around 15% and 12% respectively. Gaps narrowed at a relatively modest pace over the past decade, calling for further policy action. A lack of affordable high-quality childcare is often an obstacle to women’s participation in the labour market and notably to working full time. A very unequal sharing of parental leave between parents and challenges upon return to work further hampers women’s careers. Biases in the tax system may discourage women from working in some countries. Women face disadvantage in accessing management positions and entrepreneurship. A range of policies can help reduce gender gaps, including better childcare provision, incentivising parents to better share parental leave, re-skilling and upskilling on return from parental leave, encouraging gender equality within firms, integration programmes for foreign-born women, promoting women entrepreneurship and financial inclusion, and levelling taxation for second earners. Moreover, the multiple dimensions and root causes of gender inequality call for mainstreaming gender across policy domains. |
| Keywords: | Childcare, Economics of Gender, Education, Entrepreneurship, Financial inclusion, Gender equality, Immigration, Inequality, Labour discrimination, Parental leave, Taxation, Training |
| JEL: | D63 H24 I24 J13 J15 J16 J71 J78 L26 M53 |
| Date: | 2023–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1776-en&r=fle |
| By: | Brandon Goldstein; Julapa Jagtiani; Catharine Lemieux |
| Abstract: | A growing portion of consumer credit has recently been devoted to unsecured personal installment loans. Fintech firms have been active players in this market, with an increasing market share, while the market share of banks has declined. Studies of fintech lending have shown that their digital access and ability to leverage alternative data have increased accessibility in underserved areas, enabled consumers with thin credit files to obtain credit, and provided a lower cost alternative to long-term credit card financing. This paper exams three questions: (1) Do proprietary loan rating systems accurately predict the likelihood of default? (2) Can a proprietary loan rating system, leveraging alternative data, that was developed in a favorable economic period continue to perform well under adverse economic conditions (such as the COVID-19 pandemic)? (3) Have fintechs been “cream skimming, ” i.e., underpricing the cost of credit to top-tier customers? This study uses data from LendingClub, one of the largest fintech lenders in the personal loan market. We find that LendingClub’s loan rating system is superior to traditional measures of credit risk when predicting the likelihood of default and that the loan rating system continued to perform well during the pandemic period. Finally, we find no evidence of cream skimming. |
| Keywords: | Fintech; peer-to-peer (P2P); alternative data; financial inclusion; credit access; COVID-19; fintech loan default; cream skimming; fintech loan rate |
| JEL: | G21 G28 G18 L21 |
| Date: | 2023–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:97272&r=fle |