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Financial technology and financial capability: Study of the European Union

Author

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  • Nourallah, Mustafa
  • Öhman, Peter
  • Hamati, Samer

Abstract

Enhancing household financial capability is important for mitigating severe economic challenges. In the European Union (EU), financial technology (FinTech) solutions are considered critical for managing household finance, but their role in enhancing financial capability is ambiguous. Herein, we measure financial capability in the EU and investigate the effect of FinTech using three waves of panel data from Global Findex (2014, 2017, and 2021) and Eurostat Databases. According to the analyses, EU countries vary greatly in terms of FinTech and financial capability, with countries in the Union's north scoring remarkably high. Results emphasize a considerable effect of FinTech on financial capability and highlight an increase in the latter when the Human Development Index increases. Practical guidelines for measuring financial capability are also presented to assist countries that require additional efforts to effectively address financial capability challenges.

Suggested Citation

  • Nourallah, Mustafa & Öhman, Peter & Hamati, Samer, 2024. "Financial technology and financial capability: Study of the European Union," Global Finance Journal, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:glofin:v:62:y:2024:i:c:s1044028324000802
    DOI: 10.1016/j.gfj.2024.101008
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    Keywords

    Financial capability; Financial technology; Financial well-being; Personal finance; European Union; JEL: D14; G51; G53; O52;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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