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The impact of financial literacy on the quality of self-reported financial information

Carlos Madeira () and Paula Margaretic

Journal of Behavioral and Experimental Finance, 2022, vol. 34, issue C

Abstract: Household finance surveys are now common in many countries. However, the validity of the self-reported financial information is still understudied, especially for complex choices. Using a unique matched dataset between the Chilean Household Finance Survey and the banking system’s loan records, we find a positive effect of financial literacy on the accuracy of loan reporting. These findings are robust to the use of several proxies for financial literacy, such as the OECD INFE measure, the knowledge of the respondent’s personal pension account type, or the use of electronic means of payments. Using a nearest neighbor matching estimator, we confirm that the effect of financial literacy on the accuracy of loan reporting is causal even after controlling for several observable characteristics.

Keywords: Credit; Financial literacy; Financial education; Mortgage refinancing; Household finance surveys; Saving behavior; Measurement errors (search for similar items in EconPapers)
JEL-codes: D14 D18 E21 G21 G50 G53 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:34:y:2022:i:c:s2214635022000223

DOI: 10.1016/j.jbef.2022.100660

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