|
on Financial Literacy and Education |
|
Issue of 2024‒11‒04
six papers chosen by Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca |
| By: | Nartey Menzo, Benjamin Prince; Mogre, Diana; Asuamah Yeboah, Samuel |
| Abstract: | This paper investigates the complex interplay of factors contributing to credit risk in developing countries. Focusing on borrower characteristics, we examine the interconnected roles of income levels, employment stability, and credit history. The analysis reveals how lower income, volatile employment, and limited credit access can significantly amplify credit risk. The paper explores the challenges posed by these factors in developing economies and proposes strategies to mitigate credit risk and foster financial inclusion. By understanding these dynamics, policymakers and financial institutions can implement targeted interventions to enhance economic resilience and promote sustainable development. |
| Keywords: | Credit risk, Developing countries, Income levels, Employment stability, Credit history, Financial inclusion, Economic resilience, Policy interventions Credit risk, Developing countries, Income levels, Employment stability, Credit history, Financial inclusion, Economic resilience, Policy interventions Credit risk, Developing countries, Income levels, Employment stability, Credit history, Financial inclusion, Economic resilience, Policy interventions |
| JEL: | G21 O16 O17 |
| Date: | 2024–08–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122364 |
| By: | Sami Ben Naceur; Bertrand Candelon; Farah Mugrabi |
| Abstract: | This study contributes to the literature by analyzing the impact of financial inclusion (FI) on various bank risk dimensions, including systemic risk, which has been underexplored. We expand on recent research by examining not only the type of financial services, but also the source of FI, particularly the role of non-commercial banks (NCB). Our findings reveal that contrary to developed countries, credit expansions are linked to lower commercial banking risks, underscoring the benefits of loan diversification in developing and emerging economies, . However, while FI in deposits generally reduces individual banking risks, its effect on systemic risk is weaker in these countries, likely due to limited asset diversification. Moreover, NCBs tend to increase systemic and idiosyncratic risks for commercial banks through competitive pressures in the loan and deposit markets. Our results suggest that coordinating macroprudential policies with credit developments further reduces systemic risk by discouraging excessive risk-taking when banks’ capital is more at stake. Banks with stronger Basel capital ratios show reduced idiosyncratic risks, yet there is evidence that banks may relax these ratios to accommodate lending demands. These insights underscore the necessity for regulators to synchronize macroprudential policies with FI developments and consider NCBs’ role in financial stability. |
| Date: | 2024–09–20 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/203 |
| By: | Aswathi Rebecca Asok (University of Portsmouth); Joe Cox (University of Portsmouth) |
| Abstract: | There has been limited systematic exploration of the intersection of poverty, gender, and psychological well-being; particularly in developing countries. Analysing data from a representative sample of both male and female primary financial decision-makers of 608 rural poor households in Kerala, this exploratory study examines the gender dimensions of the relationship between three latent concepts—debt-related stress, debt attitudes, and debt literacy—under multiple economic constraints. Findings indicate that the debt attitudes of our respondents can be characterised by three dimensions; general acceptability of debt, circumstantial acceptability of debt, and debt prudence. Consistent with prior findings, significant gender differences in debt stress and debt literacy were observed, with females typically reporting higher degrees of debt stress and lower levels of debt literacy compared with males. The study highlights the role of gender in predicting debt stress; with debt attitudes being key predictors for males, while individual-level factors such as financial decision-making power, income, and educational attainment explain more of the variation in debt stress among females. The analysis further provides preliminary evidence for the potential influence of male decision-makers’ debt stress and debt attitudes on the level of debt stress experienced by female decision-makers within the same household. From a policy perspective, the study advocates gender-specific and targeted financial education and financial literacy programmes, complemented by public policies aimed at improving material conditions of the population to mitigate the overall debt stress experienced by the rural poor in developing countries. |
| Keywords: | Debt stress, Debt attitudes, Debt literacy, Gender |
| JEL: | I30 J16 O53 R51 Z13 |
| Date: | 2024–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:pbs:ecofin:2024-05 |
| By: | Bair, Sabrine; Miquel-Florensa, Josepa; Ozyilmaz, Hakan |
| Abstract: | This study examines the underadoption of digital wallets as network goods through a field experiment conducted in Jordan. We elicit consumers’ and merchants’ willingness-to-pay (WTP) for interoperable mobile wallets using an incentive-compatible mechanism and measure their expectations regarding cross-market adoption. Our findings indicate a low demand for digital wallets across both sides of the market, with consumers and merchants willing to pay approximately 35% and 40% of the market price, respectively. While consumers’ aggregate expectations of merchant adoption are accurate, they exhibit considerable individual heterogeneity. Crucially, consumers’ sensitivity to cross-network effects is limited: a 1 p.p. increase in crossside adoption expectations translates into a 0.013 USD increase in WTP. Meanwhile, merchants significantly underestimate consumer adoption and demonstrate approximately half the sensitivity of consumers to cross-side network effects. These results hold significant implications for designing interventions that exploit network effects in order to increase digital wallet adoption. |
| Keywords: | financial inclusion, network effects, digital wallet, digital financial literacy |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129817 |
| By: | Lidia Cruces (GOETHE UNIVERSITY FRANKFURT); Isabel Micó-Millán (BANCO DE ESPAÑA); Susana Párraga (EUROPEAN CENTRAL BANK) |
| Abstract: | This paper studies the relationship between married couples’ portfolio choices and property division rules. Using rich household survey data, we exploit the regional variation in marital laws across Spain to estimate the causal effects of property division rules on household financial investment. We find that separate-property couples hold riskier financial portfolios than community-property ones when wives take charge of the household finances. To understand this gap in risky asset holdings, we develop a financial portfolio choice model where couples are subject to divorce risk but differ in their property division regimes and the gender of the spouse making the financial decisions. A model in which the costs of dissolving a community property regime in the event of divorce are sufficiently high for women is likely to replicate the empirical estimates. High dissolution costs of marital assets upon divorce reduce spouses’ future disposable income in the event of divorce, encouraging precautionary savings in the form of safe assets during marriage as compared with their separate-property counterparts who bear no cost. Greater transfers of savings between couples in divorce attenuate this mechanism, while lower income levels reinforce it. |
| Keywords: | personal finance, portfolio choice, marriage, gender, family law |
| JEL: | D14 G11 J12 J16 K36 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2434 |
| By: | Pablo Brañas-Garza (LoyolaBehLAB, Universidad Loyola Andalucía); Jaromír Kovárík (University of the Basque Country and University of West Bohemia); Ericka G. Rascon-Ramirez (Division of Economics, CIDE and Middlesex University London) |
| Abstract: | Although mobile banking is seen as a solution to limited access to banking and financial services in the developing world, its adoption rates-especially among women-fall well below expectations. Hence, how can we promote its adoption among the socially and economically disadvantaged? We compare the effectiveness of two strategies, seeded diffusion via incentivised local leaders and a traditional marketing campaign, to promote the adoption of mobile banking among poor women in rural Peru. For the first one, we exploit the existence of local leaders who were trained by a local firm to promote the diffusion of a mobile banking application. For the sec- ond, we take advantage of an on-going regional marketing campaign. Our findings show that the personalized seeded diffusion via local leaders is an effective promo- tion strategy. It significantly outperforms the traditional campaign, during which adoption rates are statistically indistinguishable from zero and similar to those in our control areas. We additionally show that the seeded incentivised diffusion relies on features of the underlying community networks known to promote trust. Our results emphasize the necessity of personalized approaches to promote technological products such a mobile banking among vulnerable populations. |
| Keywords: | VAmobile banking, field/natural experiments, network diffusion, marketing campaign, gender, innovation, word-of-mouth communication |
| JEL: | C93 D85 G21 O10 O33 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:emc:wpaper:dte641 |