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Roots of Financial Literacy

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  • Grohmann, Antonia
  • Kouwenberg, Roy
  • Menkhoff, Lukas

Abstract

Our study aims to uncover the roots of financial literacy. Better financial literacy predicts more informed savings and borrowing decisions in our sample, covering the urban middle-class in an emerging economy. We then test education at school, family background, parental teaching, and childhood experiences with money as potential determinants of financial literacy. In addition to risk tolerance and having basic numeracy skills, we find that family variables matter most, in particular better education of the mother and encouragement to save by parents. Our findings suggest that regular formal education may play only a limited role in shaping financial literacy

Suggested Citation

  • Grohmann, Antonia & Kouwenberg, Roy & Menkhoff, Lukas, 2014. "Roots of Financial Literacy," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100550, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc14:100550
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    Cited by:

    1. Menkhoff, Lukas & Grohmann, Antonia & Hübler, Olaf & Kouwenberg, Roy, 2014. "Financial literacy and financial behavior: Do women lag behind?," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100415, Verein für Socialpolitik / German Economic Association.

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D20 - Microeconomics - - Production and Organizations - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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