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MEASURING FINANCIAL LITERACY: RESULTS OF OECD/INFE SURVEY
Empower Consumers of Financial Products and Services through Improving Financial Literacy/Capability and Effective Consumer Protection
G20 Russia, OECD, World Bank 13 - 14 June 2013, Moscow
CHIARA MONTICONE – OECD
with the support of the Russia/World Bank/OECD Trust Fund
Monograph collecting results on the 14 countries that undertook the initial OECD/INFE survey about:
• Financial literacy• Analysis by gender and
other socio-demographics
• Financial inclusion
Results of the OECD/INFE survey
Simple division: most people can do it, basic maths is not a problem
Simple interest + compounding: problematic for a relatively large proportion of respondents across all countries – In Albania and Peru, fewer than 1 in 5 people
were able to apply their knowledge to this– In every country except Norway, at least half
of the population failed to identify the impact of compounding
Diversification is another key difficulty in many countries
Financial knowledge
Financial knowledge A
lbania
Arm
enia
Cze
ch R
epublic
Est
onia
Germ
any
Hungary
Irela
nd
Mala
ysia
Norw
ay
Peru
Pola
nd
South
Afr
ica
Unit
ed K
ingdom
BV
I
45% 46%
57%61%
58%
69%
60%
51%
40% 41%
49%
33%
53%
57%
• Eight knowledge questions – rescaled to 0-100 – “high” knowledge with at least 3/4 of correct answers
• In AL, AR, NO, PE, ZA fewer than half of the respondents achieved a “high” score
• No country had more than 70% of their population who could answer at least 3/4 of the questions
Percentage of respondents who gave at least ¾ correct answers to the financial knowledge questions
Shopping around for financial products is uncommon (UK most likely at just 16%)
Setting long term goals and striving to achieve them is also quite uncommon in some countries (e.g. Albania 30%)
Borrowing to make ends meet is not widespread, but still a problem for a large minority in certain countries. – 47% of Armenians had resorted to borrowing
the last time their income fell short of their expenditure
– in Albania, Peru and South Africa over a quarter of respondents had also done so
Financial behaviour
Financial behaviourA
lbania
Arm
enia
Cze
ch R
epublic
Est
onia
Germ
any
Hungary
Irela
nd
Mala
ysia
Norw
ay
Peru
Pola
nd
South
Afr
ica
Unit
ed K
ingdom
BV
I
39% 41%
48%
27%
67%
38%
57%
67%
59% 60%
43% 43%
51%
71%
Percentage of respondents who exhibit at least 2/3 positive financial behaviours
• Overall we looked for 9 positive behaviours (rescaled to 0-100) - relatively high score if exhibit 2/3 of the behaviours
• At least 30% of respondents in each country exhibit fewer than 6 of them
• Three attitudinal statements – 54% of respondents in South Africa have
attitudes that tend towards the longer term compared with just 10% in Armenia
– 64% of Peruvians and 61% of Albanians found saving satisfying against only 8% in Armenia and 19% in Poland
– About half of Albanians and Peruvians disagree that money is there to be spent, but only 2% of Armenians and 12% of Polish respondents
Financial attitudes
Results by socio-demographics A
lbania
*
Arm
enia
*
Cze
ch R
epublic
*
Est
onia
*
Germ
any
*
Hungary
Irela
nd *
Mala
ysia
*
Norw
ay
*
Peru
*
Pola
nd *
South
Afr
ica *
UK
*
BV
I *
0
20
40
60
80
100 Male Female • Women typically have lower levels of knowledge. Average overall scores in every country are either lower for women, or the same for both genders
• Higher income and higher education are associated with higher overall scores, as is middle age
Average financial knowledge score by gender – Score based on 8 questions and rescaled on a 0-100 scale
Financial literacy and inclusion
Alb
ania
Arm
enia
Cze
ch R
epublic
Est
onia
Germ
any
Hungary
Irela
nd
Mala
ysia
Norw
ay
Peru
Pola
nd
South
Afr
ica
UK
BV
I
29%
1%
92%
20%
90%
14%
76%
90%
76%
8%
20%
31%
69%
87%
51%
1%
98%
25%
97%
20%
83%
97%
86%
10%
34%31%
83%
95%
Incorrect Correct• The survey allows to study the correlation between financial literacy and financial inclusion: o product
awareness o product holding o active choice
• For instance, knowing about interest compounding is associated to holding savings or investments
Percentage of respondents who hold a savings/investment product by ability to answer the interest compounding question
Initial OECD/INFE survey instrument
Albania, Armenia, British Virgin Islands,
Czech Republic, Estonia,
Germany, Hungary, Ireland,
Malaysia, Norway, Peru, Poland, South Africa, United
Kingdom
Revised survey instrument
Part/all questions to the national population: Iceland, Jamaica,
Lithuania, New Zealand, Puerto Rico, Serbia, South Africa, South
Korea, Turkey
Part/all questions to sub-populations: Canada, India,
United States
Way forward: revised OECD/INFE questionnaire
THANK YOU!
Questions and feedback welcome
OECD INFE www.financial–education.org
Russia/World Bank/OECD Financial Literacy and Education Trust Fund http://www.finlitedu.org/