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on Financial Literacy and Education |
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Issue of 2025–01–20
eight papers chosen by Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca |
| By: | Paul S. Calem; Chris Henderson; Jenna Wang |
| Abstract: | This paper conducts a detailed exploration of the factors associated with unbanked status among U.S. households and how these relationships evolved between 2015 and 2019. Biennial FDIC household survey data on bank account ownership and household characteristics, combined with state-level variables, are examined with application of both fixed effects and multilevel modeling. The analysis finds that even as rising incomes drove a decline in the unbanked percentage of the population over this period, income remained the most significant differentiator, with strong associations with race and ethnicity also persisting. Unbanked status became more concentrated among single individuals and disabled individuals and less concentrated among younger households over this period, and less strongly related to unemployment spells. New factors identified by the analysis include lack of digital access and non-citizen immigrant status, both associated with significantly higher likelihood of being unbanked. Identified state-level relationships include an association between financial literacy measures and percent unbanked. Overall, the findings suggest that continuation of recent efforts by policymakers to bridge the digital divide in rural and urban areas and to enhance financial literacy could help expand financial inclusion. Another key takeaway is that unknown structural factors still pose a challenge to explaining who is unbanked, especially regarding gaps by race and ethnicity, underscoring a need to capture more granular data on the unbanked. |
| Keywords: | unbanked; consumer banking; financial inclusion; financial literacy; multilevel modeling |
| JEL: | D14 D31 G21 G53 C81 C83 |
| Date: | 2025–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:99465 |
| By: | Nidhaleddine Ben Cheikh (ESSCA School of Management); Christophe Rault (University of Orléans) |
| Abstract: | Although financial inclusion would induce greater pollutant emissions through economic activity, improved access to financial services may facilitate investment in clean technologies. This study investigates whether financial inclusion has influenced the dynamics of carbon dioxide (CO2) emissions over the last decade using a sample of 70 countries. We implement panel threshold techniques to explore possible regime shifts in environmental quality. Our results reveal that the influence of increased financial access on air pollution depends on the economic development stage. While financial inclusion can increase CO2 emissions in lower-income regimes, environmental quality appears to be enhanced, with more inclusiveness at later developmental stages. Less-developed countries require more robust environmental policies to align their financial inclusion initiatives with sustainable economic development. |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1713 |
| By: | Sanroman Graciela; Bertoletti Lucía; Borraz Fernando |
| Abstract: | This paper examines the disparity in default risk between vulnerable and non-vulnerable populations in consumer lending. We merge an exhaustive registry of loans granted in the financial system with microdata on vulnerable individuals applying for social programs. We estimate the sources of this disparity and how loan and individual characteristics influence the probability of default. We find that vulnerable individuals have a higher risk than non-vulnerable individuals. However, this difference is reduced when individual debt characteristics, particularly the interest rate, are considered. Specifically, interest rates explain at least 30 percent of the risk gap. We also find that the default probabilities faced by lending firms are higher than those faced by banks, but we show that this effect is partly due to interest rate divergences. Our study underscores the importance of considering individual characteristics, loan characteristics, and interest rates when assessing default risk. While recognizing their limitations, these results suggest the need for policy interventions to promote financial inclusion, fair interest rate practices, and financial education, especially for vulnerable populations. |
| JEL: | G21 G51 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4765 |
| By: | Clarke, Jeanelle |
| Abstract: | Access to credit is a key component for business development. Yet, for women in Latin America and the Caribbean, there are barriers which hinder this access, hamper women’s entrepreneurship and slow economic empowerment efforts in the region. One of these barriers is risk aversion, both as supply and demand constraint. On the supply side, financial institutions may exhibit inherent gender bias by providing lower levels of financing and higher interest rates to women entrepreneurs. On the demand side, women entrepreneurs may refrain from approaching financial institutions for fear of rejection or unfavourable terms of credit. The number of women entrepreneurs has grown within the region and represents an important area of opportunity for inclusive economic development. Financial institutions have a role to play in widening access to credit to support women’s entrepreneurship. It has been found that targeted gender responsive financing programmes can be highly effective at widening access and combatting negative gender bias. In Latin America and the Caribbean, successful examples have focused on creating innovative financial products that cater to the unique characteristics of women entrepreneurs, providing financial education and training, using appropriate indicators to determine financial needs. |
| Date: | 2024–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col035:81174 |
| By: | Jürgen Huber; Michael Kirchler; Teresa Steinbacher |
| Abstract: | In this study we explore the knowledge and beliefs regarding behavioral biases among behavioral scientists, financial professionals, and the general population. We investigate knowledge about ten prominent biases and collect beliefs about the knowledge levels of each of these subject pools by conducting an online survey with 547 participants. We find that knowledge about the selected biases is highest among behavioral scientists and lowest in the general population. Potential explanatory variables, such as age, gender, income, and financial literacy, show almost no impact on knowledge levels. Regarding accuracy of beliefs about knowledge of the own and the other groups, each subject pool has the highest accuracy rates for their own group, and behavioral scientists assessing other behavioral scientists have by far the highest accuracy rate. |
| Keywords: | Behavioral biases, expert beliefs, behavioral scientists, financial professionals. |
| JEL: | C91 G40 G53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:inn:wpaper:2024-13 |
| By: | Marcel Fafchamps; Asadul Islam; Debayan Pakrashi; Denni Tommasi |
| Abstract: | We conduct a clustered randomized controlled trial across 180 villages in Uttar Pradesh, India, to promote the take-up of a savings commitment product newly introduced to our study population. A random subset of participants was targeted through our promotional campaign to test whether the product's diffusion among untargeted participants operates primarily through information sharing or through persuasion by incentivized target participants. If social learning is the main channel of diffusion, we would expect higher sign-up and take-up rates in information villages compared to persuasion villages. Conversely, if persuasion is the primary channel, sign-up and take-up rates should be higher in persuasion villages. Our findings consistently favor the persuasion channel, as sign-up and take-up rates were higher in the persuasion treatment, even without increased financial literacy or knowledge about the product. Information alone had a negligible impact on take-up, while the combined treatment achieved the highest sign-up and conversion rates, suggesting that information complements persuasion by enhancing its effectiveness. These results highlight the importance of incentivized persuasion in promoting product take-up and suggest that, in certain contexts, direct information-sharing may be less effective than previously assumed. |
| JEL: | D14 G21 O16 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33285 |
| By: | Chowdhury, Emon Kalyan |
| Abstract: | This study investigates the impact of stock market development on economic growth in South Asia, focusing on India, Bangladesh, Pakistan, and Sri Lanka. Using panel data analysis and considering key macroeconomic variables, the study finds a strong positive correlation between stock market capitalization and turnover, and GDP growth. However, significant heterogeneity exists across countries. India demonstrates substantial growth driven by mature markets, while others face challenges related to liquidity and regulatory oversight. The study emphasizes the crucial role of strong governance, financial literacy, regional cooperation, and policies that encourage long-term investment in unlocking the full potential of stock markets to drive sustainable economic progress in South Asia. |
| Keywords: | Stock market development; economic growth; South Asia; financial markets; regional integration |
| JEL: | E5 F3 G24 |
| Date: | 2024–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123002 |
| By: | Williams, Mariama; Constable, Ayesha |
| Abstract: | Addressing gender inequality in climate finance is crucial for reducing women’s vulnerability to climate hazards, especially in the Caribbean where the impacts of climate change are threatening economies and livelihoods. Financial inclusion for women is necessary for sustainable development and climate resilience. This report analyzes gender-based climate financing in the region, examining the global and regional climate finance landscape, and highlighting key issues related to gender equality and women’s autonomy. The report includes: an analysis of challenges and opportunities for gender equality in climate financing; trend analysis of climate finance distribution and its reach to women and women’s organizations, an evaluation of gender action plans by main climate financing mechanisms; and an examination of innovative financing initiatives from a gender perspective. This comprehensive analysis aims to enhance understanding of gender-responsive climate finance and its impact on women’s lives and livelihoods in Latin America and the Caribbean. |
| Date: | 2024–12–02 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col040:81051 |