Targeting the unbanked-financial literacy's magic bullet?
AbstractAdult financial illiteracy is a major problem in the US and elsewhere. Financial fraud and poor performance in managing personal finances go hand in hand. The nation’s bankruptcy and home mortgage foreclosure rates rate have continued to climb despite improving employment opportunities, rapid growth in the nation’s income and bankruptcy reform aimed at making bankruptcy filing less necessary and more difficult. America’s personal savings rate hovers in negative territory. As new financial services and technologies proliferate, many low income persons are being left in the dust, often unable to participate in cost saving or high-return opportunities, or they are offered new services only on very unfavorable terms. At the same time, lack of financial and technological safeguards has made it easier to exploit all individuals through identity theft, mortgage fraud, or legal, but financially dubious, new products. In some cases, new technology is being forced on low-income individuals by a coordinated federal push for electronic payment of benefits. While an imposition on the otherwise unbanked, increasing access to financial institutions may provide a useful introduction to a higher level of financial information and literacy, as well as enhancing their confidence and ability in financial management.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 4266.
Date of creation: 14 Nov 2006
Date of revision:
Unbanked; financial literacy; financial institutions; bank deposits;
Find related papers by JEL classification:
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
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