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Exploring Differences in Financial Literacy Across Countries: The Role of Individual Characteristics and Institutions

Andrej Cupak (), Pirmin Fessler (), Maria Silgoner and Elisabeth Ulbrich ()
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Elisabeth Ulbrich: Johannes Kepler University

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2021, vol. 158, issue 2, No 2, 409-438

Abstract: Abstract We explore microdata from the OECD/INFE survey on financial literacy of adult individuals. We find considerable differences in financial literacy across countries and decompose them into a part explainable by varying individual characteristics and a remainder. We show that individual characteristics matter with regard to differences in average financial literacy, but do not fully explain the gaps. We decompose financial literacy across its distribution and directly relate it to different policies. We then correlate the unexplained differences to institutional macroeconomic variables. We find strong correlations between unexplained differences and life expectancy, social contributions rate, PISA math scores, and internet usage, suggesting room for harmonization of environments across countries to close the financial literacy gap.

Keywords: Financial literacy gaps; Decomposition analysis; Personal finance; Survey data (search for similar items in EconPapers)
JEL-codes: D14 D91 I20 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11205-021-02713-8

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