Does financial literacy influence financial decisions?

Luc Arrondel, M. Debbich and Frédérique Savignac

Rue de la Banque, 2015, issue 02

Abstract: Financial literacy is a specific component of human capital which allows individuals to deal with fundamental financial issues so as to take adequate financial decisions. This Rue de la Banque presents recent studies about the link between financial literacy and the financial decisions of the population in France. Using an original survey, individuals’ level of financial literacy is assessed. The results suggest that financial literacy varies across the population. It is correlated with education but also with gender, age and political affiliation. This latter point could reflect differences in opinion regarding the role of the welfare state and individual responsibility. Finally, the link between financial literacy and some financial behaviors (the propensity to formulate a specific financial plan in the long run on the one hand and the propensity to own stocks on the other hand) is evaluated: in both cases positive correlations with financial literacy variables are found.

Date: 2015
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