nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2024‒05‒13
four papers chosen by

  1. Financial inclusion and banking sector competition in South Africa By Tendai Gwatidzo; Witness Simbanegavi
  2. Financial Inclusion Challenges Faced by Rural Micro Businesses in Cuddalore District of India By Pazhanisamy, R.
  3. Diffusion of Digital Payments in India – Insights based on data from PhonePe Pulse By Mansi Kedia; Aarti Reddy; Sanjana Shukla
  4. Anchoring Households’ Inflation Expectations When Inflation Is High By Giang Nghiem; Lena Dräger; Ami Dalloul

  1. By: Tendai Gwatidzo; Witness Simbanegavi
    Abstract: Using survey data from the World Banks Global Findex Database and a pseudo panel we investigate two pertinent issues pertaining to financial inclusion in South Africa. First, we consider the factors driving the likelihood of accessing financial services in South Africa. Second, we investigate the impact of banking sector competition on financial inclusion in South Africa essentially testing the information and market power hypotheses. Household head characteristics such as age, education and income are found to positively influence the likelihood of being financially included. Considering the relationship between financial inclusion and banking sector competition, evidence supports the information hypothesis rather than the market power hypothesis. That is, lower bank competition facilitates the formation of longer-lasting relationships between banks and their clients, which incentivises banks to invest in information generation and monitoring in previously unserved markets, thereby expanding financial inclusion.
    Date: 2024–04–16
  2. By: Pazhanisamy, R.
    Abstract: Small and Micro Enterprises (SMEs) in India are facing many problems such as unable to access to low cost credit from the formal financial institutions, specifically banking and extend their product to the remote markets. Some factors restrict the access to the finance on the input side while others restrict the products and its market outreach on the others side blocks the micro enterprises growth and lead to the rural population to be interlocked in chronic underemployment underdevelopment. With regard to this there are a very few research attempts are only available to test and verify the implication and operations of the Economic theories that highlights these two side issues rationalize how they contribute for the long run credit gap in the rural economy. Particularly the literature on the credit rationing theory on the input side of the financial inclusion policies and the pecking order theory on the demand side of the finance and their inter relationship with other theories like theory of moral hazard, agency theory, and the theory of adverse selection etc. are not documented and tested at the gross root level for which this paper attempted fill this gap.
    Keywords: Challenges of Micro Businesses, Issues of Rural Micro Enterprises, Test of theoretical impact on micro businesses, challenges of rural business Management, Financial inclusion challenges in rural areas
    JEL: D21 E32 G53 L22 L98 M30
    Date: 2024
  3. By: Mansi Kedia (Indian Council for Research on International Economic Relations (ICRIER)); Aarti Reddy; Sanjana Shukla
    Abstract: Digitalisation of payments is a global trend, with the COVID-19 pandemic having triggered accelerated adoption. While India has been at the forefront of this transition, there is little understanding of how the Unified Payments Interface (UPI), India's real-time digital payment system, has diffused and the extent of its inclusive scaling within the country. The paper relies on state and district level data from PhonePe, the largest digital payments platform in India, to better understand the heterogeneity in patterns of diffusion across states and districts of India. Data from various other sources are used to examine how socio-economic factors correlate with diffusion.
    Keywords: Digital Payments, Financial Inclusion, Financial Institutions and Services
    Date: 2024–03
  4. By: Giang Nghiem; Lena Dräger; Ami Dalloul
    Abstract: This paper explores communication strategies for anchoring households’ medium-term inflation expectations in a high inflation environment. We conducted a survey experiment with a representative sample of 4, 000 German households at the height of the recent inflation surge in early 2023, with information treatments including a qualitative statement by the ECB president and quantitative information about the ECB’s inflation target or projected inflation. Inflation projections are most effective, but combining information about the target with a qualitative statement also significantly improves anchoring. The treatment effects are particularly pronounced among respondents with high financial literacy and high trust in the central bank.
    Keywords: anchoring of inflation expectations, central bank communication, survey experiment, randomized controlled trial (RCT)
    JEL: E52 E31 D84
    Date: 2024

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