Adult financial literacy and households’ financial assets: the role of bank information policies

an article by Margherita Fort, Francesco Manaresi and Serena Trucchi (University of Bologna, CESifo and IZA; Banca d’Italia; and University College London, University of Bologna and CeRP-Collegio Carlo Alberto) published in Economic Policy Volume 31 Issue 88 (October 2016)

Abstract

We investigate the role of bank information policies in fostering the accumulation of financial knowledge.

Exploiting the exogenous variability induced by the presence of a consortium of banks in Italy (PattiChiari), we find that these policies are effective for a small subsample of the population (5–10%) and lead to an increase in financial literacy by about 10%, on average.

Compliance is highest among low-educated respondents older than 60 years.

We use these policies as an instrumental variable to estimate the effect of financial literacy on financial assets.

We find that one standard deviation increase in financial literacy determines an increase in household financial assets by 35% of a standard deviation (8,000 euros). Effects are heterogeneous in the population and highest among elderly low-educated households.

JEL classification: D14, G11

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