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Micro-entrepreneurs and the twin green and digital transitions. Does financial literacy play a role?

Author

Listed:
  • Alessio D'Ignazio

    (Bank of Italy)

  • Daniela Marconi

    (Bank of Italy)

  • Massimiliano Stacchini

    (Bank of Italy)

Abstract

The digital and sustainable transitions are two strategic drivers of growth and innovation for micro, small and medium-sized enterprises. This is especially relevant for micro-firms, which lag significantly behind larger firms in these areas. Financial literacy can play a key role in guiding small entrepreneurs to make sound financial choices and make the twin transition successful. We exploit a survey conducted by the Bank of Italy in 2021 – involving about 2,000 non-financial firms with fewer than 10 employees – to investigate whether financial literacy acts as a driver for the twin transition. Through instrumental variable estimation, we find evidence of a causal link between financial literacy and both digitalization and engagement in sustainable activities.

Suggested Citation

  • Alessio D'Ignazio & Daniela Marconi & Massimiliano Stacchini, 2024. "Micro-entrepreneurs and the twin green and digital transitions. Does financial literacy play a role?," Questioni di Economia e Finanza (Occasional Papers) 858, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_858_24
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    References listed on IDEAS

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    More about this item

    Keywords

    financial literacy; digitalization; sustainability; micro-firms;
    All these keywords.

    JEL classification:

    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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