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on Financial Literacy and Education |
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Issue of 2024–12–16
four papers chosen by Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca |
| By: | Jana S. Hamdan; Tim Kaiser; Lukas Menkhoff; Yuanwei Xu |
| Abstract: | We study the effects of scaling up a financial- and business education program in a randomized saturation experiment in Uganda. We randomly assign the program at the cluster-level, and then randomize the share of treated individuals within treated clusters. 15 months later, we find that treated entrepreneurs are more likely to use mobile money savings accounts and payments, increase their mobile money and bank savings at the intensive and extensive margins, and invest more. We find little evidence of spillovers on untreated peers, but as the share of treated entrepreneurs increases, beneficial effects on the treated decline. |
| Keywords: | scaling, business training, financial literacy, micro-entrepreneurs, mobile money, spillover effects, saturation effects |
| JEL: | C93 D14 G53 O12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11431 |
| By: | Donghoon Lee; Daniel Mangrum; Wilbert Van der Klaauw; Crystal Wang |
| Abstract: | We examine the impact of financial education on credit decisions during COVID-19. The pandemic presented economic challenges, but policy responses provided opportunities for savvy borrowers. Using variation in state-mandated financial education during high school, we find that mandated borrowers reduced their credit card balances by larger amounts after stimulus checks were distributed and were more likely to buy homes and to refinance mortgages at low rates during the pandemic. The larger credit card balance reduction was driven by middle-income areas and subprime borrowers, while prime borrowers drove mortgage refinancing. Our findings underscore the importance of financial education for economic resilience. |
| Keywords: | financial education; high school curriculum; financial decision-making; household debt; COVID-19 pandemic |
| JEL: | D14 G51 G53 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:99058 |
| By: | Sugata Marjit; Pranab Kumar Das |
| Abstract: | The paper provides an analysis of the simultaneous existence of the formal and the informal sources of finance and their implications for the rate of growth in an economy. Our main result is that in the presence of two sources of borrowing, viz. formal banking sector with lower interest rate with finance constraint and an informal credit market with a higher interest rate but unlimited amount of availability of loans, the informal source may boost the rate of growth. Hence, without the informal source of finance easily the growth rate could have been lower. The premium associated with the differential interest rate in favour of the informal source unequivocally increases propensity towards investment. Thus higher interest rate in the informal source provides the incentive to save resources from from own production as banks do not lend beyond the quota. Thus, if diminishing returns do not impede marginal productivity too much, availability of informal credit must act as a growth stimulant. Thus the presence of informal credit market can be an effective catalyst for growth and development, contrary to what is generally perceived in the literature on financial inclusion. |
| Keywords: | finance, informal, growth |
| JEL: | G20 O40 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11446 |
| By: | Orkun Saka; Yuemei Ji; Clement Minaudier |
| Abstract: | We show that politicians facing a binding term limit are more likely to engage in financial de-liberalisation than those facing re-election, but only in the wake of a financial crisis. In particular, they implement policies that tend to favour incumbent financial institutions over the general population, such as increasing barriers to entry in the banking sector. We rationalise this behaviour with a theory of political accountability in which crises generate two opposite effects: they increase the salience of financial policies to voters but also create a window of opportunity for politicians captured by the financial industry to push potentially harmful reforms. In line with the implications of our model, we show that revolving doors between the government and the financial sector play a key role in encouraging bank-friendly policies after crises. |
| Keywords: | financial crises, political accountability, democracies, term-limits, special-interest groups |
| JEL: | D72 D78 G01 P11 P16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11461 |