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Financial Literacy, Household Investment and Household Debt: Evidence from Switzerland

  • Brown, Martin

    ()

  • Graf, Roman

    ()

We use a novel, representative survey to document the level of financial literacy among Swiss households and to examine how financial literacy is related to household investment and borrowing. We find that half of the respondents were able to answer three questions on basic financial concepts (compound interest, inflation and risk diversification) correctly. Financial literacy is lower among low-income and immigrant households as well as among women. Young households seem to be less familiar with the concept of inflation, while retirees are less familiar with the concepts of compound interest and risk diversification. We find that financial literacy is strongly correlated with financial market participation, voluntary retirement saving and mortgage borrowing.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/sfwpfi/WPF-1301.pdf
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Paper provided by University of St. Gallen, School of Finance in its series Working Papers on Finance with number 1301.

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Length: 31 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:usg:sfwpfi:2013:01
Contact details of provider: Phone: +41 71 243 40 11
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Web page: http://www.unisg.ch/de/Schools/Finance.aspx

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  1. McCarthy, Yvonne, 2011. "Behavioural Characteristics and Financial Distress," Research Technical Papers 6/RT/11, Central Bank of Ireland.
  2. Diana Crossan & David Feslier & Roger Hurnard, 2011. "Financial Literacy and Retirement Planning in New Zealand," CeRP Working Papers 113, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  3. Maarten van Rooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," CeRP Working Papers 66, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  4. Annamaria Lusardi & Peter Tufano, 2009. "Debt Literacy, Financial Experiences, and Overindebtedness," CeRP Working Papers 83, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  5. Crossan, Diana & Feslier, David & Hurnard, Roger, 2011. "Financial literacy and retirement planning in New Zealand," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 619-635, October.
  6. 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.
  7. Sekita, Shizuka, 2011. "Financial literacy and retirement planning in Japan," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 637-656, October.
  8. Alessie, Rob & Van Rooij, Maarten & Lusardi, Annamaria, 2011. "Financial literacy and retirement preparation in the Netherlands," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 527-545, October.
  9. Johan Almenberg & Jenny Säve-Söderbergh, 2011. "Financial Literacy and Retirement Planning in Sweden," CeRP Working Papers 112, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  10. Dean Karlan & Jonathan Zinman, 2008. "Lying About Borrowing," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 510-521, 04-05.
  11. Stephan Meier & Charles Sprenger, 2010. "Present-Biased Preferences and Credit Card Borrowing," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 193-210, January.
  12. Gathergood, John, 2012. "Self-control, financial literacy and consumer over-indebtedness," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 590-602.
  13. Klapper, Leora & Panos, Georgios A., 2011. "Financial literacy and retirement planning : the Russian case," Policy Research Working Paper Series 5827, The World Bank.
  14. Almenberg, Johan & Säve-Söderbergh, Jenny, 2011. "Financial literacy and retirement planning in Sweden," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 585-598, October.
  15. Shizuka Sekita, 2011. "Financial Literacy and Retirement Planning in Japan," CeRP Working Papers 108, Center for Research on Pensions and Welfare Policies, Turin (Italy).
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