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on Financial Literacy and Education |
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Issue of 2024‒04‒29
four papers chosen by |
| By: | Andriy Tsapin (National Bank of Ukraine; National University of Ostroh Academy); Oleksandr Faryna (National Bank of Ukraine; National University of Kyiv-Mohyla Academy) |
| Abstract: | Using survey data from the USAID Financial Sector Transformation Project, this paper examines whether or not financial literacy influences households' expectations about future prices and whether or not it anchors inflation expectations to the central bank's target. We find that higher financial literacy lowers average uncertainty about one-year inflation, but increases three-year inflation expectations. The results from quantile regressions confirm the asymmetric effects of financial literacy and its components on inflation. Inverse effects of financial literacy on expected inflation are at work for the upper end of the distribution (unanchored expectations), while positive effects are seen in the lower end of the distribution (anchored expectations). Our findings also suggest that financial literacy significantly improves inflation perceptions and the accuracy of individuals' predictions about inflation. The conclusions from this research are beneficial and have strong policy implications for the central bank's monetary policy. |
| Keywords: | c inflation expectations, inflation perceptions, financial literacy, monetary policy |
| JEL: | C81 D80 D82 E31 E52 E58 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:ukb:wpaper:02/2024&r=fle |
| By: | Anusorn Minphimai |
| Abstract: | This study examines the impact of innovations in the payment system on household finance, focusing on consumption behaviors and financial literacy among low-income households. The investigation utilizes Thailand’s introduction of the cashless State Welfare Card to low-income households in 2017 as a quasi-experiment setting. The primary data sources for this study include the large-scale countrywide household socioeconomic survey (SES) conducted by Thailand’s National Statistical Office (NSO) and survey data from individuals in four provinces of Thailand. The empirical strategy in this study is primarily fuzzy regression discontinuity design. The results of the study reveal that individuals who receive the cashless State Welfare Card experience effective increases in consumption of the food and beverage items that are the target of the policy. Contrary to concerns about adverse impacts, such as overconsumption or using the card for unintended items like cigarettes, there is no evidence supporting these claims. Instead, people using the state welfare card exhibit better financial literacy and reduced risk-taking consumption behavior. The result underscores the importance of financial literacy training provided alongside the card. However, the study does not find sufficient evidence to suggest a significant impact on trust in the financial system. |
| Keywords: | Household Finance; Financial Technology; State Welfare Card; Fuzzy Regression Discontinuity Design |
| JEL: | E12 D12 D14 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:pui:dpaper:219&r=fle |
| By: | Zixuan Huang; Ms. Amina Lahreche; Mika Saito; Ursula Wiriadinata |
| Abstract: | E-money development has important yet theoretically ambiguous consequences for monetary policy transmission, because nonbank deposit-taking e-money issuers (EMIs) (e.g., mobile network operators) can either complement or substitute banks. Case studies of e-money regulations point to complementarity of EMIs with banks, implying that the development of e-money could deepen financial intermediation and strengthen monetary policy transmission. The issue is further explored with panel data, on both monthly (covering 21 countries) and annual (covering 47 countries) frequencies, over 2001 to 2019. We use a two-way fixed effect estimator to estimate the causal effects of e-money development on monetary policy transmission. We find that e-money development has accompanied stronger monetary policy transmission (measured by the responsiveness of interest rates to the policy rate), growth in bank deposits and credit, and efficiency gains in financial intermediation (measured by the lending-to-deposit rate spread). Evidence is more pronounced in countries where e-money development takes off in a context of limited financial inclusion. This paper highlights the potential benefits of e-money development in strengthening monetary policy transmission, especially in countries with limited financial inclusion. |
| Keywords: | Monetary policy transmission; banks; nonbank financial institutions; e-money; panel data |
| Date: | 2024–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/069&r=fle |
| By: | Steve Agnew (University of Canterbury); Valerie A. Sotardi2 |
| Abstract: | This study investigated the impact of family financial socialisation on the financial perceptions and behaviours of adolescents. Drawing from social learning theory, Gudmunson and Danes’ model of family financial socialisation, and the theory of planned behaviour, we examined the influence of family affluence, financial anxiety, and values on adolescents’ financial confidence, intentions, and behaviours. The research also explores gender differences and the distinct effects of family socialisation in banking and budgeting contexts. With a large sample of adolescents in New Zealand (n = 5, 370), results using structural equation modelling reveal that family affluence corresponds with a higher perception of family financial anxiety and a stronger emphasis on financial values on savings. We highlight the significant role of family financial values in shaping adolescents’ general confidence in money management, which influences their confidence in specific financial domains. Our results also highlight a gap between confidence and action in financial behaviours, with gender differences impacting this dynamic. The findings offer insights for parents, policymakers, and financial institutions, emphasising the importance of family financial socialisation in fostering responsible financial practices among young people. |
| Keywords: | family socialisation; financial socialisation; adolescents; affluence; confidence |
| JEL: | D14 J16 D91 Z13 |
| Date: | 2024–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:24/05&r=fle |