Deficit De Alfabetização Financeira Induz Ao Uso De Empréstimos Em Mercados Informais

Abstract

Deficit de alfabetização financeira induz ao uso de empréstimos em mercados informais Déficit de educación financiera induce el uso de préstamos en mercados informales ABSTRACTFinance literature documents associations between a family's financial literacy and its propensity to borrow. However, most studies focus exclusively on formal loan markets. Based on 2,023 observations about financial behavior of Brazilian families, we examined the impacts of financial literacy on informal borrowing, such as loans from friends or moneylenders. Using multinomial logit models, we compared financial literacy's effects on the propensity to take informal loans between families that did not borrow at all and those who took bank loans. Financial literacy is measured by the investment in capitalization bonds, a financial instrument in the Brazilian market. The results suggest that financial literacy's relevance to informal loans may exceed that for formal credit channels. KEYWORDS |

Financial Illiteracy and customer credit history

“…In the worst-case scenario, individuals who bought a capitalization bond have 57% more chance of having a derogatory mark. This result is consistent with Santos et al (2018), who found that capitalization bonds are the worst fixed income security that an individual can buy in Brazil and only financially illiterate individuals would acquire this asset. Thus, financially illiterate individuals would be more prone to delaying their payments and having a derogatory mark.…”

“…Financial illiteracy is measured by the acquisition of capitalization bonds. Santos et al (2018) argue that investing in a capitalization bond is irrational. They use the real example of holding a 36-month capitalization bond with a yield of 3.36% p.a.…”

“…For this reason, he recommends the use of proxies to identify whether the individual has satisfactory financial literacy. Therefore, this paper will follow Santos et al (2018) and use capitalization bonds (títulos de capitalização, in Portuguese) as a proxy for financial literacy.…”

The profile of the Portuguese regarding the perception of financial literacy

“…The studies on financial literacy focus on diverse variables, such as age, education level, region, marital status, professional situation, income, training in economics/finance, experience and knowledge in finance, job and work (Bannier and Schwarz, 2018; Fonseca et al. , 2012; Santos et al. , 2018).…”

“…Being financially knowledgeable is a fundamental requirement for the effective growth of today's society, improving the economic-financial well-being and supporting social inclusion. Different individuals do not make the same financial decisions because these depend on a set of sociodemographic factors (Bannier and Schwarz, 2018;Fonseca et al, 2012;Santos et al, 2018). Therefore, this article aims to identify the profile of the Portuguese regarding the perception of financial literacy, that is, it intends to answer the following research questions: How many profiles of financial literacy perception is it possible to find in the Portuguese population?…”