Japanese Asset Formation and Financial Literacy

Shizuka Sekita
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Shizuka Sekita: Associate Professor, the Faculty of Economics, Kyoto Sangyo University

Public Policy Review, 2020, vol. 16, issue 7, 1-19

Abstract: As the Japanese social security system is a pay-as-you-go system, it is an urgent challenge for Japan, a country experiencing an aging society with a low birthrate, to encourage asset accumulation by the people. This paper focuses on financial literacy, which is considered to be one of important factors for encouraging asset accumulation, analyzing its effects on asset accumulation, the paths of transmission of the effects, and its determinant factors. As a result of an empirical analysis conducted based on micro data from the Preference Parameters Study survey that was conducted in 2010, it was found that financial literacy has positive effects on asset accumulation and that its quantitative effects are substantial. The analysis results also indicated that financial literacy produces positive effects on asset accumulation by encouraging stockholding and developing savings plans. It was also found that people with low financial literacy typically have the following attributes: being young, being a woman, having poor academic achievement, having low grades in Japanese and mathematics, having low income, having many children, being over-confident, being risk-averse, having a high time discount rate, and being careless.

Keywords: financial literacy; asset accumulation; retirement planning; stockholding; financial education (search for similar items in EconPapers)
JEL-codes: C26 D14 J26 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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