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on Financial Literacy and Education |
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Issue of 2022‒01‒17
six papers chosen by |
| By: | Elisa Darriet (LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM], LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - UP2 - Université Panthéon-Assas - SU - Sorbonne Université); Marianne Guille (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - UP2 - Université Panthéon-Assas - SU - Sorbonne Université); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | The aim of this chapter is to investigate the relationship between financial literacy and numeracy. It turns out that numeracy and financial literacy are strongly correlated. In order to clarify this relationship, we review, in a first section, the general definition of numeracy and its most commonly used measures. We then try to enlighten the distinction that can be made between numeracy and financial literacy. In a second section, we focus on the relationship between numeracy and financial literacy using the main empirical studies performed. Since the analyses of their results show that numeracy is a key determinant of financial literacy, we highlight, in a third and final section, the key role that numeracy could have in education programs and consumer protection policies to improve financial decisions. |
| Keywords: | Financial literacy,Numeracy |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-03461252&r= |
| By: | Neil Bhutta; Jacqueline Blair; Lisa J. Dettling |
| Abstract: | Most financial advisors recommend storing three to six months of expenses in liquid assets in case of an emergency. Yet we estimate that more than half of U.S. families do not have at least three months of their non-discretionary expenses in liquid savings. We find that financial literacy is strongly predictive of having three months of liquid savings, controlling for income, income variability, and even parental resources. We also find that financial literacy predicts liquid savings across the income distribution. These results indicate that accumulation of an emergency fund is not simply a function of income. Finally, financial literacy is predictive of liquid savings even among high illiquid wealth households. This suggests that the phenomenon of "wealthy hand-to-mouth" families may reflect financial mistakes rather than portfolio optimization. Our paper highlights the importance of financial knowledge in explaining families' preparedness to deal with unexpected expenses or disruption in their income. |
| Keywords: | Financial Literacy; Savings; Liquidity; Household Wealth; Household Finance |
| JEL: | D14 D91 G50 G51 G53 |
| Date: | 2021–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2021-76&r= |
| By: | Brindusa Anghel (Banco de España); Aitor Lacuesta (Banco de España); Federico Tagliati (Banco de España) |
| Abstract: | This paper analyses the financial literacy of Spanish enterprises with fewer than 50 employees (small enterprises) based on a survey conducted by the Banco de España between March and May 2021 as part of a project launched by the Organisation for Economic Co-operation and Development’s International Network on Financial Education. The survey includes a series of questions aimed at measuring firms’ financial literacy (financial knowledge, attitudes and behaviour) and the financial instruments held by them, the impact of the COVID-19 crisis on their activity and their level of digitalisation. The business owners should answer these questions as long as they are involved in taking financial decisions for the business. The main results of the survey suggest that, in Spain, owners of enterprises with fewer than 20 employees have little financial knowledge compared with those of enterprises with 20 to 49 employees. The same is true of firms in the accommodation and food service activities, construction and real estate activities, and other personal services sectors (the latter being a mixed group of sectors which would include firms in education, repairs, laundry services, etc.) compared with firms in other sectors. In terms of financial attitudes, business owners with ten or more employees have a greater tendency to set long-term financial goals than owners of firms with fewer than ten employees. Some financial behaviours (such as having strategies to cope with theft or considering different options for their financial product and service providers) are less widespread among smaller firms, especially those with fewer than five employees. Lastly, the percentage of Spanish small enterprises, regardless of size, whose owners have thought about how they will fund their own retirement is remarkably low. The use of capital instruments and other more recent types of financing (such as sustainable bonds, business angels or crowdfunding) is marginal in small Spanish enterprises. Likewise, the use of property and, particularly, business interruption insurance is limited among these firms. There are no discernible, significant differences in financial knowledge, attitudes or behaviours in terms of the gender of the business owner. Also, in general, the average financial literacy of small enterprises improves with the level of educational attainment only if the owner has specific training in business, economics or finance. Other characteristics positively associated with financial competencies, irrespective of educational attainment, are having more than ten years’ experience as a business owner or having a business owner for a parent. The impact of the COVID-19 crisis on the level of turnover, profit and debt was quite similar for firms with different degrees of financial literacy. However, the negative impact on employment and liquidity was somewhat lower for the higher quartiles of owners’ financial literacy. Additionally, higher financial knowledge was associated with being more likely to apply for and obtain a new loan or benefit from a public guarantee. Firms with less financial knowledge did make greater use of income transfers and rental moratoria. Lastly, there is a positive correlation between financial literacy and a higher pre-pandemic level of digitalisation in the firm. However, there is no such correlation between financial literacy and digital activities following COVID-19. |
| Keywords: | financial literacy, small enterprises, online survey, COVID-19, digitalisation |
| JEL: | C81 D25 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:2129e&r= |
| By: | Yiheng Sun; Tian Lu; Cong Wang; Yuan Li; Huaiyu Fu; Jingran Dong; Yunjie Xu |
| Abstract: | The prosperity of mobile and financial technologies has bred and expanded various kinds of financial products to a broader scope of people, which contributes to advocating financial inclusion. It has non-trivial social benefits of diminishing financial inequality. However, the technical challenges in individual financial risk evaluation caused by the distinct characteristic distribution and limited credit history of new users, as well as the inexperience of newly-entered companies in handling complex data and obtaining accurate labels, impede further promoting financial inclusion. To tackle these challenges, this paper develops a novel transfer learning algorithm (i.e., TransBoost) that combines the merits of tree-based models and kernel methods. The TransBoost is designed with a parallel tree structure and efficient weights updating mechanism with theoretical guarantee, which enables it to excel in tackling real-world data with high dimensional features and sparsity in $O(n)$ time complexity. We conduct extensive experiments on two public datasets and a unique large-scale dataset from Tencent Mobile Payment. The results show that the TransBoost outperforms other state-of-the-art benchmark transfer learning algorithms in terms of prediction accuracy with superior efficiency, shows stronger robustness to data sparsity, and provides meaningful model interpretation. Besides, given a financial risk level, the TransBoost enables financial service providers to serve the largest number of users including those who would otherwise be excluded by other algorithms. That is, the TransBoost improves financial inclusion. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2112.02365&r= |
| By: | Ozili, Peterson K |
| Abstract: | This paper reviews the recent advances in central bank digital currency research in a way that would help researchers, policy makers and practitioners to take a closer look at central bank digital currency (CBDC). The review shows a general consensus that a central bank digital currency is a liability of the issuing central bank and it has cash-like attributes. The review also presents the motivation and benefits of issuing a central bank digital currency such as the need to improve the conduct of monetary policy, the need to enhance the efficiency of digital payments and the need to increase financial inclusion. The review also shows that many central banks are researching the potential to issue CBDCs due to its many benefits. However, a number of studies have called for caution against over-optimism about the potential benefits of CBDC due to the limiting nature of CBDC design and its inability to meet multiple competing goals. Suggested areas for future research are identified such as the need to find the optimal CBDC design that meets all competing objectives, the need for empirical evidence on the effect of CBDC on the cost of credit and financial stability, the need to undertake country-specific and regional case studies of CBDC design, and the need to find a balance between limiting the CBDC holdings of users and allowing users to hold as much CBDC as they want. The implication of the findings of this review is that central bankers need to pay more attention to the design features of CBDC. Central bankers need to first identify the goals they want to achieve with CBDC, and design the CBDC to have those features. Where possible, there should be opportunities to re-design and re-invent the CBDC to meet changing central bank objectives. |
| Keywords: | Keywords: Digital currency, Money, Central bank digital currency, CBDC, Digital finance, Cryptocurrency, Financial inclusion, CBDC design, Blockchain, Distributed ledger technology. |
| JEL: | E42 E51 E52 E58 E59 G21 G28 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111389&r= |
| By: | Gaar, Eduard |
| Abstract: | Die vorliegende Dissertation untersucht den Zusammenhang zwischen der Altersvorsorge individueller Privatpersonen und dem Kapitalmarkt in Deutschland und Europa. Im Fokus steht dabei die finanzielle Bildung von Privatpersonen, die nötig ist, um adäquat vorzusorgen, die Befähigung sich dieses Wissen anzueignen und die Fähigkeit des Kapitalmarkts, die Basis für eine kapitalmarktbasierte Altersvorsorge zu sein. Die ersten Kapitel bieten Literaturüberblicke zum Thema Finanzwissen und Finanzbildung, welche außerdem die Basis für die weiteren Arbeiten darstellen. Diese zeigen bereits ein mittelmäßiges bis schlechtes Kompetenzniveau der Finanzbildung in Deutschland und damit schlechte Voraussetzungen, um angemessen, also vermögenssteigernd und rentensichernd, für die Altersvorsorge vorzusorgen. Basierend auf dieser Erkenntnis werden Studierende mit Bezug zu den Wirtschaftswissenschaften in Russland und Deutschland in einer Umfrage zu grundlegendem Finanzmarktwissen befragt. Es wird unterstellt, dass die Studierenden durch ihre fachliche Nähe eine überdurchschnittliche Finanzbildung haben und damit als Multiplikatoren fungieren könnten. Es wurde zwar ein besseres Finanzwissen im Vergleich zur Allgemeinheit nachgewiesen, jedoch haben auch die Studierenden Probleme, alle Fragen richtig zu beantworten. Folglich sind Studierende nur bedingt in der Lage, als Multiplikatoren für Finanzwissen zu fungieren, wobei sich die Frage stellt, ob dieses Ergebnis zufällig aufgetreten ist oder eine systematische Verzerrung vorliegt. Literaturüberblicke zum home und self-serving bias zeigen, dass diese oft und weit verbreitet sowohl auf dem Kapitalmarkt als auch unter professionellen Anlegern vorkommen. Eine weitere Umfrage unter Studierenden in Russland und Deutschland zeigt, dass auch sie dem home bias unterliegen, während eine Gruppe von internationalen Studierenden keinen home bias zeigt. Dies lässt vermuten, dass internationale Erfahrung den home bias zu reduzieren scheint. Neben der Befähigung von Privatpersonen zu einer adäquaten Altersvorsorge stellt sich auch die Frage, ob der Kapitalmarkt in Deutschland eine gute Grundlage für eine Altersvorsorge bilden kann. Die Notierungszahlen im Regulierten Markt sind seit Jahren rückläufig, wobei dieser Rückgang nicht durch Insolvenzen, sondern hauptsächlich durch Fusionen und Rückzüge vom Kapitalmarkt zu erklären ist. Um diesen Vorgang aufzuhalten und umzukehren, bedarf es junger Unternehmen, die den Schritt an die Börse wagen. Ein Beispiel dafür, wie junge Unternehmen an die Börse gelockt werden können, liefert das Einstiegssegment NewConnect in Warschau. Sie verzeichnet seit mehreren Jahren starke Zuwächse und kann somit ein Beispiel für die deutsche Scale sein. Abschließend richtet sich der Blick auf den gesamten europäischen Markt. Die abschließende Untersuchung fokussiert sich auf europäische börsennotierte Unternehmen und den Zusammenhang zwischen der Aktienkursperformance und dem systematischen Risiko, in Abhängigkeit des Immobilienbesitzes der Unternehmen. Es zeigt sich, dass Unternehmen Investitionen in Immobilien in unsicheren Zeiten vermeiden, obwohl Immobilien das systematisch Risiko senken. Gleichzeitig erhöht der Immobilienbesitz die Performance in sicheren Zeiten, während in unsicheren Zeiten der Immobilienbesitz zu einer schlechteren Aktienkursperformance führt. Die kumulative Dissertation besteht aus neun eigenständigen Aufsätzen, wobei vier bereits veröffentlicht bzw. zur Veröffentlichung angenommen sind, zwei Kapitel bei einem wissenschaftlichen Journal unter Begutachtung sind und drei weitere als Arbeitsdokumente in dieser Dissertation vorzufinden sind. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:129922&r= |