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Financial Literacy Promotes Financial Inclusion in Both Poor and Rich Countries

Author

Listed:
  • Antonia Grohmann
  • Lukas Menkhoff

Abstract

For social and economic reasons, national economies benefit from the inclusion of as many people as possible in financial services. In a cross country study, the present study shows that financial literacy for the general population promotes financial inclusion. This relationship goes beyond the effect of higher economic or financial development. And the effect of higher levels of financial literacy is greatest on the “use of financial products” in financial systems that are more developed. On the contrary, the educational effect on “access to finance” is greatest for countries that are financially less developed. Economic policy that targets financial inclusion should therefore not only concentrate on financial infrastructure, but also on improving financial literacy.

Suggested Citation

  • Antonia Grohmann & Lukas Menkhoff, 2017. "Financial Literacy Promotes Financial Inclusion in Both Poor and Rich Countries," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 7(41), pages 399-407.
    • Handle: RePEc:diw:diwdeb:2017-41-1
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.566831.de/diw_econ_bull_2017-41-1.pdf
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    Citations

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    Cited by:

    1. Gallego-Losada, María-Jesús & Montero-Navarro, Antonio & García-Abajo, Elisa & Gallego-Losada, Rocío, 2023. "Digital financial inclusion. Visualizing the academic literature," Research in International Business and Finance, Elsevier, vol. 64(C).
    2. Antonia Grohmann & Lukas Menkhoff, 2020. "The Relationship between Financial Literacy and Financial Inclusion," Discussion Papers of DIW Berlin 1914, DIW Berlin, German Institute for Economic Research.
    3. Basha, Shabeen Afsar & Bennasr, Hamdi & Goaied, Mohamed, 2023. "Financial literacy, financial development, and leverage of small firms," International Review of Financial Analysis, Elsevier, vol. 86(C).
    4. Moreno-Herrero, Dolores & Salas-Velasco, Manuel & Sánchez-Campillo, José, 2018. "Factors that influence the level of financial literacy among young people: The role of parental engagement and students' experiences with money matters," Children and Youth Services Review, Elsevier, vol. 95(C), pages 334-351.

    More about this item

    Keywords

    financial inclusion; financial literacy; financial institutions;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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