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on Financial Literacy and Education |
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Issue of 2024‒05‒06
six papers chosen by |
| By: | Bucher-Koenen, Tabea; Janssen, Bennet; Knebel, Caroline; Tzamourani, Panagiota |
| Abstract: | We examine financial literacy in Germany and its relevance for financial well-being. Using data from the Panel on Household Finances collected in 2021, we show that about 62% of German households answer the Big Three financial literacy questions correctly. Those with lower education, who are out of the labor force, women, and those living in East Germany have lower levels of financial literacy. Identifying groups with lower financial literacy and developing strategies to reach them and enhance their abilities should therefore be an integral part of the German national financial literacy strategy. Financial literacy is linked to financial well-being: we document that those with higher financial literacy have a higher stock market participation rate and are less likely to report financial difficulties. |
| Keywords: | Financial knowledge, financial well-being, inflation, investment behavior |
| JEL: | G53 D14 G51 I3 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:289445&r=fle |
| By: | António Afonso; M. Carmen Blanco-Arana |
| Abstract: | Financial inclusion is a key factor for economic growth in most developing countries. This paper examines the relationship between financial inclusion and Gross Domestic Product (GDP) per capita in the Least Developed Countries (LDCs) using panel data for the period 1990-2021. The empirical evidence suggests that financial inclusion is indeed related to economic growth in the LDCs. We consider different dimensions of financial inclusion: usability (% of bank credit to bank deposits), accessibility (commercial bank branches), concentration (% of concentration of banks) and availability (depositors with commercial banks) to determine which has a greater effect on economic growth in the countries analyzed. Therefore, we assess which dimensions of financial inclusion are a better tool to improve the economic situation in the poorest countries in the world. While we conclude that all dimensions of financial inclusion have a positive effect on economic growth, in the expected direction, we find that not all dimensions affect economic growth similarly. The dimensions ‘accessibility’ and ‘concentration’ are robustly associated with economic growth, while ‘usability’ and ‘availability’ produce a significant but relatively lesser effect in the LDCs. |
| Keywords: | Financial inclusion; GDP per capita; Panel data; LDCs |
| JEL: | O47 C33 F30 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp03162024&r=fle |
| By: | Fumiko Hayashi; Aditi Routh |
| Abstract: | Cryptocurrency owners without sufficient financial literacy and risk tolerance may be financially vulnerable, as the cryptocurrency market is highly volatile and lacks consumer protections. Our study divides cryptocurrency owners into three groups based on their purpose for holding cryptocurrencies—for investment only (investors), for transactions only (transactors), and for a mix of investment and transactions (mix users)—and examines how each group correlates with financial literacy and risk tolerance compared to consumers who do not own cryptocurrencies (nonowners). Using the 2022 Survey of Household Economics and Decisionmaking, we find that investors and mix users are significantly or moderately more financially literate and risk tolerant than nonowners, but transactors are less financially literate and slightly more risk tolerant than nonowners. We also find that the three groups of cryptocurrency owners vary by demographic and financial characteristics. Our findings highlight that transactors could be particularly financially vulnerable in the absence of consumer protections in the cryptocurrency market. |
| Keywords: | cryptocurrency; financial literacy; risk |
| JEL: | D14 D91 E42 |
| Date: | 2024–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:98055&r=fle |
| By: | Dao, Chi Danh; Fenig, Guidon; Sator, Georg; Yoon, Jin Young |
| Abstract: | Ambuehl et al. (2022) explore ways to evaluate interventions designed to enhance decision-making quality when individuals misjudge the outcomes of their choices. The authors propose a novel outcome metric that can distinguish between interventions better than conventional metrics such as financial literacy and directional behavioral responses. The proposed metric, which transforms price-metric bias into interpretable welfare loss measures, can be applied to evaluate various training programs on financial products. Table 4 of the paper reports the authors' significant main point estimates at the 1% level. In this replication exercise, we first replicate the main findings of the original paper. Then, we modify the clustering method by using k-means with demographic variables as inputs, then we re-calculate standard errors with jackknife estimators. Finally, we include subjects who were excluded by the authors due to multiple switching in the multiple price lists. We find that all of these replications result in robust findings. Additionally, we successfully replicate Figure 4 from the paper. Notably, this replication demonstrates the insensitivity of the results to the choice of distance metric. |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:i4rdps:110&r=fle |
| By: | Auzepy, Alix; Bannier, Christina E.; Gärtner, Florian |
| Abstract: | We assess how sustainable finance literacy affects people's sustainable investment behavior, using a pre-registered experiment. We find that an increase in sustainable finance literacy leads to a 4 to 5% increase in the probability of investing sustainably. This effect is moderated by sustainability preferences. In the absence of moderate sustainability preferences, any additional increase in sustainable finance literacy is at minimum irrelevant, and we find some evidence that it might even reduce sustainable investments. Our findings underscore the role of knowledge in shaping sustainable investment decisions, highlighting the importance of factors beyond sustainability preferences. |
| Keywords: | Sustainable finance literacy, sustainable investments, behavioral finance, SFDR, MIFID |
| JEL: | G11 G18 G53 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:289626&r=fle |
| By: | Ubeda, Fernando; Mendez, Alvaro; Forcadell, Francisco Javier |
| Abstract: | Trust in banking plays a significant role in promoting financial inclusion. Multinational banks (MNBs) have the potential to enhance trust by adopting sustainable banking practices. We investigate the impact of MNBs' adoption of ESG (Environmental, Social and Governance) practices on trust in banking in 38 developing countries. Using an instrumental variable approach and control function estimation, our findings indicate that sustainable practices by commercial MNBs are positively and significantly associated with increased trust in banking. The results remain consistent across different samples, lending robustness to our findings. By demonstrating the importance of sustainable banking in fostering trust, this study contributes to the limited literature on trust in banking in the global South. |
| JEL: | F3 G3 |
| Date: | 2024–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122554&r=fle |