This paper analyzes the importance of numerical abilities, conscientiousness, and financial literacy for individuals' financial decision making and participation in formal financial markets. Our analysis is based on the Financial Capabilities Survey, which was applied in four countries of the Andean Region: Bolivia, Colombia, Ecuador, and Peru. The empirical analysis underlines the centrality of numerical abilities, different subfacets of conscientiousness (propensity to plan, perseverance, and scrupulosity), and financial literacy in developing a propensity to save and borrow, and in participating in the formal financial sector.

Several initiatives have been undertaken over the last few decades to promote the adoption of insurance products among vulnerable populations in developing countries. Since the 1990s, the use of microinsurance-insurance product characterized by low premiums and low caps coverage-has shown demonstrable benefits for people with low income (Cheston, 2018). Today, these products are part of wider trends, such as inclusive insurance or mass insurance, that expand the insurance market to all those who have not been served by traditional insurance. These products are characterized by

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MotivationWomen are especially vulnerable to not being able to cover the costs of living or to meet sudden demands for funds to pay for emergencies (financial vulnerability). The COVID‐19 pandemic put additional stress on household incomes and the ability to meet emergency expenses, thereby bringing into sharp relief women's lack of inclusion in formal financial systems, and the gender gaps between them and men.PurposeHow financially vulnerable are women in Latin America? What causes vulnerability? How do financial inclusion, personality traits, cognitive characteristics, and financial literacy effect financial vulnerability?Methods and approachUsing Financial Capabilities Surveys, we use regression to model the determinants of an index of financial vulnerability for eight countries of Latin America — Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador, Paraguay, and Peru. We use Oaxaca‐Blinder decomposition to establish the extent to which the gender arises from the different characteristics of men and women, or from the way in which such characteristics affect groups.FindingsWe find a gender gap in financial vulnerability in most of the eight countries. The individual characteristics that often explain this gap are socioeconomic, such as belonging to a low socioeconomic class and not having a regular income. In addition to gender and socioeconomic characteristics, use of savings products, some personality traits (tendency to plan, self‐control), economic preferences, and numeracy skills also drive financial vulnerability.Policy implicationsInterventions to reduce financial vulnerability need to address, first and foremost, socioeconomic conditions: people on low incomes will always be financially vulnerable. In addition, programmes to widen financial inclusion and to educate people on finances can help. Given significant gender gaps, more effort must be made to reduce such gaps in education, employment and social norms.