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Does Financial Literacy Improve Financial Inclusion? Cross Country Evidence

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  • Klühs, Theres
  • Grohmann, Antonia
  • Menkhoff, Lukas

Abstract

We study the effect of financial literacy on financial inclusion at the cross country level. Financial literacy is strongly related to higher financial inclusion (i.e. access and use of fin. services) and IV-regressions support a causal interpretation.Studying heterogeneous effects of financial literacy across countries shows that the marginal effect of financial literacy on financial inclusion is largest in countries with lower income, a less developed financial sector, and fewer bank branches.

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  • Klühs, Theres & Grohmann, Antonia & Menkhoff, Lukas, 2017. "Does Financial Literacy Improve Financial Inclusion? Cross Country Evidence," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168165, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168165
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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