First of all, considering only the 2016 survey, we conduct the analysis using the Big Three questions, which assess the basic knowledge needed to be considered financially literate, following the approach of Lusardi and Mitchell ( 2011). 1 Due to the structure of the SHIW data, this paper adopts two different measures of financial literacy. Of particular interest are the 2006, 2008, 2010, and 2016 surveys in which financial literacy questions are included. To investigate the relationship between financial literacy and household financial stability in Italy, we use the Bank of Italy Survey on Household Income and Wealth (SHIW). 2020 Lusardi and Mitchell 2014) the results converge: The higher the knowledge, the better the financial performance. While there is strong debate in the literature on how to measure financial literacy (Kaiser and Menkhoff 2017 D’Alessio et al. Mainstream literature finds that better financial practices are more likely among financially literate people. Only 47 % of women and 55 % of men around the world have access to an account at a formal financial institution and they have lower access to formal credit (Worldbank 2013). The lowest participation is found among vulnerable groups, notably the young, women, and senior citizens. They also are factors in economic disparity, including in developed countries, since greater financial constraints lead to lower participation in economic and social life. These considerations carry implications for policy focused on household stability. Householders who have not been exposed to this modeling as children carry a disadvantage. This means household wealth management offers the first financial socialization opportunity for children. Finally, empirical evidence shows that the best financial practices are learned in the family and translate into better economic behavior in adulthood (Bucciol et al. Second, the ongoing technological evolution of payment instruments and the trend toward a cashless society both accelerate the risk of households losing control of their money and depleting their budget resources prematurely (Hasler et al. 2020) and the failure among a large segment of those households to address unexpected expenses (Lusardi 2019) are also contributors. First, while monthly income serves as a limit in satisfying the needs and aspirations among the 8 million households in Italy, a lack of basic financial knowledge (D’Alessio et al. Three main considerations factor into a householders’ ability to make ends meet. To the best of our knowledge, this is the first paper to investigate the relationship between financial literacy and financial stability-as measured by the ease in making ends meet-in Italy. There is an urgent need to understand financial literacy’s impact on the ability to make ends meet and enjoy economic well-being. Therefore, to achieve higher economic well-being, households must engage in robust wealth management. Monthly income serves as a limit on a household’s pursuit of its needs and its aspirations. Overall, our results underscore the economic importance of financial literacy in ensuring social and economic well-being.Įven before the outbreak of the Covid-19 crisis, financial mismanagement practices and the lingering effects of past exogenous financial shocks threatened the financial stability of households throughout the world (Hasler et al. Our estimates are robust to different models such as OLS, Probit and Ordered Probit and financial literacy specifications. Household financial stability is lower in southern regions of Italy and among women householders, but no findings support differential effects on women. When we apply a more comprehensive financial literacy indicator (21-score) based on the Organisation for Economic Co-operation and Development (OECD) methodology, the effect is even stronger (13.5 percentage points). Householders who correctly answer the Big Three questions-the standard assessment of financial literacy-are 8 percentage points more likely to make ends meet easily. We use subsamples from the Bank of Italy Survey on Household Income and Wealth (SHIW) and find that the data support the positive impact of higher financial literacy. Then we focus on any financial literacy differential effects on female householders. First of all, we investigate financial literacy’s effect on householders’ ability to easily make ends meet. However, even before the economic upheaval of the Covid-19 pandemic, many households around the world had trouble making ends meet. Financial stability is an important contributor to economic and psychological well-being.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |