Does Financial Regulation Unintentionally Ignore Less Privileged Populations? The Investigation of a Regulatory Fintech Advancement, Objective and Subjective Financial Literacy

In 2013-2015, the Israeli insurance and long term savings regulator reached out to the Israeli population, recommending the use of a new centralized Internet portal created by the regulator to help individuals find inactive retirement plans and withdraw inactive funds. We find that the government's effort did not result in withdrawals of the majority of the accounts, and did not reach all subpopulations equally. Provident fund records indicate that those who took action and withdrew funds following the campaign live in central locations that have higher socioeconomic rankings, and they are relatively older. Using survey data, we found evidence that those with low financial literacy and confidence in their knowledge of retirement planning and the unemployed were less likely to have been aware of the financial regulatory campaigns. It seems that confidence in one's financial knowledge is more important for financial action than objective literacy. The survey further shows the importance of gender, age, education, and immigration status. We conclude that less privileged populations were less likely to have been aware of the campaign, to enter the Internet portal, and to have taken action based on the information.