How financially literate are women? An overview and new insights (original) (raw)
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This paper reviews what we have learned over the past decade about financial literacy and its relationship to financial decision-making around the world. Using three questions, we have surveyed people in several countries to determine whether they have the fundamental knowledge of economics and finance needed to function as effective decision-makers. We find that levels of financial literacy are low not only in the United States but also in many other countries including those with well-developed financial markets. Moreover, financial illiteracy is particularly acute for some demographic groups, especially women and the less-educated. These findings are important since financial literacy is linked to borrowing, saving, and spending patterns. We also offer new evidence on financial literacy among high school students drawing on the 2012 Programme for International Student Assessment implemented in 18 countries. Last, we discuss the implications of this research for policy.
How Financial Literacy Affects Household Wealth Accumulation
American Economic Review, 2012
This study isolates the causal effects of financial literacy and schooling on wealth accumulation using a new household dataset and an instrumental variables (IV) approach. Financial literacy and schooling attainment are both strongly positively associated with wealth outcomes in linear regression models, whereas the IV estimates reveal even more potent effects of financial literacy. They also indicate that the schooling effect only becomes positive when interacted with financial literacy. Estimated impacts are substantial enough to imply that investments in financial literacy could have large wealth payoffs.
How financially literate are women? Some new perspectives on the gender gap*
2012
Ben Rump and Audrey Brown for their excellent research and editorial assistance, and Mijke van den Broeke and two anonymous referees for their feedback. They are also grateful to the participants at the FCAC-OECD conference on financial literacy, held in Toronto in May 2011, and at the Netspar conference on Pension Communication and Choices, held in The Hague in April 2012, for their comments. Financial support from Netspar is gratefully acknowledged. The views expressed in this paper are those of the authors and do not necessarily reflect the views of De Nederlandsche Bank. Any errors are solely the authors' responsibility.
Financial literacy: A comparative study across four countries
International Journal of Consumer Studies, 2013
This study analysed differences in financial literacy across four countries: Canada, Italy, the UK and the US. The purpose was to understand whether factors associated with financial literacy in one country can be generalized to other countries as well or whether unique national characteristics make it necessary to examine financial literacy in each country individually. A financial literacy index, based on the number of correct answers to four multiple-choice questions, was used to test the relevance of country of origin to financial literacy. Results suggest significant differences among countries indicating that there are national and cultural differences in what households know and need to know about their personal finances. Policy makers should consider these differences when developing financial literacy assessment tools for their respective countries.
Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education
Business Economics, 2007
Economists are beginning to investigate the causes and consequences of financial illiteracy to better understand why retirement planning is lacking and why so many households arrive close to retirement with little or no wealth. Our review reveals that many households are unfamiliar with even the most basic economic concepts needed to make saving and investment decisions. Such financial illiteracy is widespread: the young and older people in the United States and other countries appear woefully under-informed about basic financial concepts, with serious implications for saving, retirement planning, mortgages, and other decisions. In response, governments and several nonprofit organizations have undertaken initiatives to enhance financial literacy. The experience of other countries, including a saving campaign in Japan as well as the Swedish pension privatization program, offers insights into possible roles for financial literacy and saving programs.
Financial Literacy, Retirement Planning and Household Wealth*
The Economic Journal, 2012
There is ample empirical evidence documenting widespread financial illiteracy and limited pension knowledge. At the same time, the distribution of wealth is widely dispersed and many workers arrive on the verge of retirement with few or no personal assets. In this paper, we investigate the relationship between financial literacy and household net worth, relying on comprehensive measures of financial knowledge designed for a special module of the DNB (De Nederlandsche Bank) Household Survey. Our findings provide evidence of a strong positive association between financial literacy and net worth, even after controlling for many determinants of wealth. Moreover, we discuss two channels through which financial literacy might facilitate wealth accumulation. First, financial knowledge increases the likelihood of investing in the stock market, allowing individuals to benefit from the equity premium. Second, financial literacy is positively related to retirement planning, and the development of a savings plan has been shown to boost wealth. Overall, financial literacy, both directly and indirectly, is found to have a strong link to household wealth.
Public Finance Quarterly, 2017
Between 2010 and 2015, the economic and financial situation of Hungary and the Hungarian population was marked by fundamental changes. In our research, we sought to find out how this affected the financial literacy of the population. Our research database was based upon the OECD surveys conducted in 2010 and 2015 on the assessment of domestic financial literacy. The differences between the answers to the same questions of the two surveys were examined by means of regression analysis and variance analysis. We found that there were several significant changes between the two surveys. In 2015, there were fewer persons who entrusted their financial decisions to others, and there is also a lower number of persons struggling with financial problems, but at the same time the number of those preparing budgets and having savings has also decreased. We performed less well in financial knowledge related issues in 2015. From the point of view of attitudes, a shift can be observed towards lower ...
Financial Literacy and its Determinants
International Journal for Research in Applied Science and Engineering Technology IJRASET, 2020
In today's advance and sophisticated financial landscape, financial literacy is important because it doesn't only influence and impact upon financial decisions at the firm level but also a country's wider financial wellbeing and socioeconomic development. This study compares the financial literacy levels of urban areas by utilizing the results of the survey from the questionnaire developed by the OECD and by examining demographic and socio economic factors that influence the level of financial literacy. The results show that overall, the extent of monetary literacy in both areas is low and necessary measures should be taken by the government to extend awareness of monetary related matters. The literature findings also reveal that demographic, economic, social, and psychological factors are the most determinants, that some common themes appear with reference to the results of monetary literacy on investment decisions, demographic factors, methodology and program effectiveness, and that gaps exist in the literature of financial literacy in Urban area with respect to types of investment and risk tolerance, measurement of monetary literacy, methodology and sources of data.
Financial Literacy and Retirement Planning: New Evidence from the Rand American Life Panel
SSRN Electronic Journal, 2000
The present paper introduces a new dataset, the Rand American Life Panel (ALP), which offers several appealing features for an analysis of financial literacy and retirement planning. It allows us to evaluate financial knowledge during workers' prime earning years when they are making key financial decisions, and it offers detailed financial literacy and retirement planning questions, permitting a finer assessment of respondents' financial literacy than heretofore feasible. We can also compare respondents' selfassessed financial knowledge levels with objective measures of financial literacy, and most valuably, we can investigate prior financial training which permits us to identify key causal links. By every measure, and in every sample we examine, financial literacy proves to be a key determinant of retirement planning. We also find that respondent literacy is higher when they were exposed to economics in school and to company-based financial education programs.
Financial Literacy Level of Individuals and Its Relationships to Demographic Variables
Mediterranean Journal of Social Sciences
Families act in an environment of financing system which includes the pressure of the economic powers. Under these economic conditions, standards of living of individuals who fail to take optimal financial decisions and to exhibit due financial behaviors undergo some change. Individuals’ self-consciousness on financial issues will not only prepare them for prospective hard economic conditions that may emerge in the future but also supports the development of the country on strong basis. In this perspective, the awareness of financial literacy will help to use the limited sources more affectively. Recently in this economic pressure financial literacy has become an increasingly important topic. The main purpose of this study is examining individual’s financial literacy level and determining the relationship between demographic variables and financial literacy. Participants in the study consist of individual who are employees in iron and steel industry and dwelling in Karabuk, Turkey. ...