Financial Literacy and Savings Account Returns

Roman Inderst, Dimitris Georgarakos and Florian Deuflhard

No 9882, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Savings accounts are owned by most households, but little is known about the performance of households? investments. We create a unique dataset by matching information on individual savings accounts from the DNB Household Survey with market data on account-specific interest rates and characteristics. We document considerable heterogeneity in returns across households, which can be partly explained by financial sophistication. A one-standard deviation increase in financial literacy is associated with a 13% increase compared to the median interest rate. We isolate the usage of modern technology (online accounts) as one channel through which financial literacy has a positive association with returns.

Keywords: Financial literacy; Household finance; Interest rates; Savings accounts (search for similar items in EconPapers)
JEL-codes: D12 E21 G11 G21 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Financial Literacy and Savings Account Returns (2019)
Working Paper: Financial literacy and savings account returns (2015)
Working Paper: Financial literacy and savings account returns (2015)
Working Paper: Financial Literacy and Savings Account Returns (2014)
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