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The impact of financial literacy on the quality of self-reported financial information

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  • Madeira, Carlos
  • Margaretic, Paula

Abstract

Household finance surveys are now common in many countries. However, the validity of the self-reported financial information is still understudied, especially for complex choices. Using a unique matched dataset between the Chilean Household Finance Survey and the banking system’s loan records, we find a positive effect of financial literacy on the accuracy of loan reporting. These findings are robust to the use of several proxies for financial literacy, such as the OECD INFE measure, the knowledge of the respondent’s personal pension account type, or the use of electronic means of payments. Using a nearest neighbor matching estimator, we confirm that the effect of financial literacy on the accuracy of loan reporting is causal even after controlling for several observable characteristics.

Suggested Citation

  • Madeira, Carlos & Margaretic, Paula, 2022. "The impact of financial literacy on the quality of self-reported financial information," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    • Handle: RePEc:eee:beexfi:v:34:y:2022:i:c:s2214635022000223
    DOI: 10.1016/j.jbef.2022.100660
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    More about this item

    Keywords

    Credit; Financial literacy; Financial education; Mortgage refinancing; Household finance surveys; Saving behavior; Measurement errors;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G50 - Financial Economics - - Household Finance - - - General
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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