Micro-entrepreneurs and the twin green and digital transitions. Does financial literacy play a role?

Alessio D'Ignazio (), Daniela Marconi and Massimiliano Stacchini ()
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Alessio D'Ignazio: Bank of Italy
Massimiliano Stacchini: Bank of Italy

No 858, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The digital and sustainable transitions are two strategic drivers of growth and innovation for micro, small and medium-sized enterprises. This is especially relevant for micro-firms, which lag significantly behind larger firms in these areas. Financial literacy can play a key role in guiding small entrepreneurs to make sound financial choices and make the twin transition successful. We exploit a survey conducted by the Bank of Italy in 2021 – involving about 2,000 non-financial firms with fewer than 10 employees – to investigate whether financial literacy acts as a driver for the twin transition. Through instrumental variable estimation, we find evidence of a causal link between financial literacy and both digitalization and engagement in sustainable activities.

Keywords: financial literacy; digitalization; sustainability; micro-firms (search for similar items in EconPapers)
JEL-codes: G53 (search for similar items in EconPapers)
Date: 2024-06
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