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on Financial Literacy and Education |
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Issue of 2021‒11‒29
six papers chosen by |
| By: | Julia Bersch; Mrs. Esther Perez Ruiz; Mr. Yorbol Yakhshilikov; Jean François Clevy; Naseem Muhammad |
| Abstract: | This paper analyzes the potential for fintech to facilitate cheaper and more efficient remittances, and to enhance financial inclusion in Central America. Digital remittances remain nascent in the region, primarily reflecting behavioral inertia, small cost advantages of digital over traditional channels, and inadequate financial literacy. Through expanded alliances between traditional and fintech operators, digital remittances can further reduce transaction costs and reach those remote, low-income households in a timely and secure manner. A meaningful expansion of fintech remittances necessitates an enabling regulatory environment for digital financial services, and KYC and AML/CFT requirements proportionate to the value of transfers. |
| Keywords: | remittances digitalization; Fintech remittance; remittances corridor; C. remittances cost; remittances' fee; Remittances; Mobile banking; Financial inclusion; Fintech; Global; Central America; Caribbean; South Asia; East Asia |
| Date: | 2021–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/175&r= |
| By: | Batista, Catia (Nova School of Business and Economics); Sequeira, Sandra (London School of Economics); Vicente, Pedro C. (Universidade Nova de Lisboa) |
| Abstract: | We examine the impact of providing access to mobile savings accounts and improving financial management skills on the performance of female-led microenterprises in Mozambique. We find evidence that both interventions can improve business performance but the effects are highly heterogeneous. Combining both types of support is associated with a large increase in both short and long-term firm profits and in financial security for the microentrepreneur. This allowed female-headed microenterprises, particularly those with a higher baseline level of profits, to close the gender profit gap in performance and skills relative to their male counterparts. The main drivers of improved business performance are improved financial management practices (bookkeeping), an increase in accessible savings, and reduced transfers to friends and relatives. For female entrepreneurs with intermediate levels of profits at baseline, even just providing access to mobile money accounts can increase long-term profits and for the most disadvantaged microentrepreneurs it can at least in-crease levels of financial security. Uncovering this heterogeneity in impact within different types of female-led microenterprises can help improve the targeting of these interventions in the future. |
| Keywords: | microenterprise development, management, gender, mobile money, financial literacy, economic development |
| JEL: | O15 O16 G53 J16 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14781&r= |
| By: | Radoslaw Kotkowski (Narodowy Bank Polski); Michal Polasik (Nicolaus Copernicus University) |
| Abstract: | This paper investigates the way in which the COVID-19 pandemic has changed an important aspect of everyday life, viz. how people make payments. The empirical study is based on a survey of over 5,000 respondents from 22 European countries. It shows that consumers who had been making cashless payments prior to the outbreak of the pandemic have been even more likely to do so since it broke out. On the other hand, the consumers who had mostly been paying in cash have often continued to do so. Results indicate that the usage of banking and payment innovations proved to be the catalyst leading to the growth of cashless payment usage. The divide between those who pay in cash and those who do not, therefore, seems to have widened during the pandemic. We found that the probability of more frequent cashless payments as a result of the pandemic differs considerably between countries and therefore depends on local conditions. The results indicate that the pandemic has exacerbated major financial inclusion issues and that this needs to be addressed by policymakers, but also that further analysis of factors differentiating usage of cash and the cashless instrument is needed. |
| Keywords: | COVID-19 pandemic; Cash; Cashless payments; Change in payment behaviour |
| JEL: | E41 E42 I12 I18 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:339&r= |
| By: | Patrick T. Harker |
| Abstract: | Speaking to a virtual audience at the Fifth Annual Fintech Conference, Philadelphia Fed President Patrick T. Harker said he sees great opportunities in using fintech as a tool to promote financial inclusion. But he cautioned that human judgment is still responsible for training algorithms and determining how financial technologies operate. |
| Date: | 2021–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpsp:93369&r= |
| By: | Tobias Berg; Andreas Fuster; Manju Puri |
| Abstract: | In this paper, we review the growing literature on FinTech lending – the provision of credit facilitated by technology that improves the customer-lender interaction or lenders’ screening and monitoring of borrowers. FinTech lending has grown rapidly, though in developed economies like the U.S. it still only accounts for a small share of total credit. An increase in convenience and speed appears to have been more central to FinTech lending’s growth than improved screening or monitoring, though there is certainly potential for the latter, as is the case for increased financial inclusion. The COVID-19 pandemic has shown potential vulnerabilities of FinTech lenders, although in certain segments they have displayed rapid growth. |
| JEL: | G2 G20 G21 G23 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29421&r= |
| By: | Isaac K. Ofori (University of Insubria, Varese, Italy); Christopher Quaidoo (University of Insubria, Varese, Italy); Pamela E. Ofori (University of Insubria, Varese, Italy) |
| Abstract: | This study uses machine learning techniques to identify the key drivers of financial development in Africa. To this end, four regularization techniques— the Standard lasso, Adaptive lasso, the minimum Schwarz Bayesian information criterion lasso, and the Elasticnet are trained based on a dataset containing 86 covariates of financial development for the period 1990 – 2019. The results show that variables such as cell phones, economic globalisation, institutional effectiveness, and literacy are crucial for financial sector development in Africa. Evidence from the Partialing-out lasso instrumental variable regression reveals that while inflation and agricultural sector employment suppress financial sector development, cell phones and institutional effectiveness are remarkable in spurring financial sector development in Africa. Policy recommendations are provided in line with the rise in globalisation, and technological progress in Africa. |
| Keywords: | Africa, Elasticnet, Financial Development, Financial Inclusion, Lasso, Regularization, Variable Selection |
| JEL: | C01 C14 C52 C53 C55 E5 O55 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:21/074&r= |