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Banks Information Policies, Financial Literacy and Household Wealth

  • Fort, Margherita

    ()

    (University of Bologna)

  • Manaresi, Francesco

    ()

    (Bank of Italy)

  • Trucchi, Serena

    ()

    (University of Bologna)

We investigate the causal effect of financial literacy on financial assets, exploiting banks information policies for identification. In Italy, banks who belong to the PattiChiari consortium have implemented policies aimed at increasing transparency and procedural simplification. These policies may affect individuals' financial literacy without involving any direct cost for clients in terms of time, effort or resources, as we show in the paper. We exploit confidential information on whether individuals have their main bank account in one bank in the PattiChiari consortium to instrument their financial literacy level. We show that these policies have a positive and significant effect on both knowledge of financial instruments and household financial assets. Our results suggest that banks information policies have the potential to be an effective tool to increase individuals' financial literacy and that the relationship between financial literacy and wealth is largely underestimated by standard regression models.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6989.

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Length: 43 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6989
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  1. Tullio Jappelli, 2010. "Economic Literacy: An International Comparison," Economic Journal, Royal Economic Society, vol. 120(548), pages F429-F451, November.
  2. Christelis, Dimitris & Jappelli, Tullio & Padula, Mario, 2010. "Cognitive abilities and portfolio choice," European Economic Review, Elsevier, vol. 54(1), pages 18-38, January.
  3. Jappelli, Tullio & Padula, Mario, 2011. "Investment in Financial Literacy and Saving Decisions," CEPR Discussion Papers 8220, C.E.P.R. Discussion Papers.
  4. Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, 05.
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  8. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy and retirement planning in the United States," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 509-525, October.
  9. Alejandro Drexler & Gregory Fischer & Antoinette Schoar, 2014. "Keeping it simple: financial literacy and rules of thumb," LSE Research Online Documents on Economics 46797, London School of Economics and Political Science, LSE Library.
  10. Jappelli, Tullio & Pischke, Jörn-Steffen & Souleles, Nicholas, 1995. "Testing for Liquidity Constraints in Euler Equations with Complementary Data Sources," CEPR Discussion Papers 1138, C.E.P.R. Discussion Papers.
  11. Tabea Bucher-Koenen & Annamaria Lusardi, 2011. "Financial Literacy and Retirement Planning in Germany," CeRP Working Papers 109, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  12. Annamarie Lusardi & Olivia S. Mitchell, 2005. "Financial Literacy and Planning: Implications for Retirement Wellbeing," Working Papers wp108, University of Michigan, Michigan Retirement Research Center.
  13. Elsa Fornero & Chiara Monticone & Serena Trucchi, 2011. "The effect of financial literacy on mortgage choices," CeRP Working Papers 121, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  14. Fornero, Elsa & Monticone, Chiara, 2011. "Financial literacy and pension plan participation in Italy," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 547-564, October.
  15. Richard Disney & John Gathergood, . "Financial Literacy ad Indebtedness: New Evidence for UK Consumers," Discussion Papers 11/05, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
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  17. repec:fth:pennfi:69 is not listed on IDEAS
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