Financial Literacy: The Role of the Local Context

Abstract

In this article, we investigate the role of local factors associated with the financial literacy of Italian adults (no. 945). Using a multilevel regression model, together with the common socioeconomic and sociodemographic variables already used in previous studies, we also add certain environmental variables at the local level. We separately analyze the three indexes that define the OECD financial literacy index—Financial Attitude Index (FAI), Financial Knowledge Index (FKI), and Financial Behavior Index (FBI)—because they show a dynamic of their own in each region. Our findings confirm that the FKI and the FAI are associated to some extent with environmental traits, while the FBI is not. We conclude that not only the sociodemographic and socioeconomic conditions of individuals but also certain features of the regional context where they live have an impact on their financial literacy. Consequences for financial education programs are highlighted.

Financial literacy: A systematic review and bibliometric analysis

“…Major factors determining financial literacy are gender, education, income, household investments, financial knowledge, financial attitude and financial behaviour (Santini et al., 2019). Regional differences in the environment one lives in impact financial literacy index, along with demographic and socio‐economic factors (Cucinelli, Trivellato, & Zenga, 2019). OECD (2018) also recognizes the need for using digital technologies to improve financial literacy.…”

“…In the expanse of antecedents, demographics such as age (Lusardi et al., 2010; OECD, 2005), gender (Chen & Volpe, 2002), income (Lusardi & Tufano, 2015), years of work and socio‐economic factors (Herd, Holden, & Su, 2012) impact the financial literacy of individuals. Other factors like personal/psychological (Aydin & Akben Selcuk, 2019), structural (Bavafa et al., 2019), cultural (Brown et al., 2018) and regional (Cucinelli et al., 2019) are the critical antecedents analysed in the research so far. In the context of outcomes, literature clarifies that financial literacy has positive economic returns attributed to better planning, investment, borrowing, financial well‐being, financial capability and financial inclusion, as discussed above in content analysis.…”

The role of national culture in financial literacy:Cross‐countryevidence

“…Recently, Cucinelli et al . (2019) examined whether the level of adult financial literacy in 14 different Italian regions is related to regional contextual factors. They conclude that financial literacy is not only associated with individual sociodemographic traits but is also impacted by the socioeconomic context of individuals.…”

Financial Behaviour of Users of Solomo Platforms during the COVID-19 Pandemic

“…They refer to an older target group represented by the elderly and people with lower education showing insufficient financial literacy as well as bad habits as part of their financial behaviour. [10] For the last ten years, not only the number but also the complexity of financial products has rapidly increased with people wishing to take control of their financial decisions. As a result, it is important to boost average financial literacy across all levels of education.…”