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Making Sense of Financial Capability Surveys around the World
A Review of Existing Financial Capability and Literacy
Measurement Instruments
The World Bank
Siegfried Zottel/Valeria Perotti
Russia-OECD-World Bank Conference
Moscow, 13-14 June, 2013
2
Purpose of the Review
o Guide policy makers on existing measurement instruments
o Useful for policy makers who prioritize FC, FI, or FCP
o Describe and compare key instruments that are:
• Innovative
• Focused on demand-side (household vs. business)
• Well established
• Well documented
Consumer Consumer Fraud USFraud US WB FCCPWB FCCP
PortugalPortugal
Jump$tartJump$tart
Singapore
Eurobarometer
Survey of Survey of ConsumersConsumers
New Zealand
UK FSA
US Health & Retirement
Study
Ghana FSS
OECD/INFE
CP KenyaKenya FinAccess
FinScope
FijiFiji
WB/Russia FLITWB/Russia FLIT
Financial Diaries
Findex
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Surveys Reviewed
FSA Consumer FSA Consumer Awareness Awareness
4
Content of the review
o Key questions addressed by the survey review:
1. How can a survey support policy making?
2. What do these surveys measure and how?
3. How can the data be analyzed?
1. How can a survey support policy 1. How can a survey support policy making?making?
• Baseline assessment of weak areas/targets• Identify potential channels for info or FE• Understand knowledge/behavior relationship• Understand behavior related to personal or household finances
• Baseline assessment of weak areas/targets• Identify potential channels for info or FE• Understand knowledge/behavior relationship• Understand behavior related to personal or household finances
• Determine what products people use• Understand reasons for limited use• Understand how people use information• Understand attitudes towards fin. issues
• Determine what products people use• Understand reasons for limited use• Understand how people use information• Understand attitudes towards fin. issues
• Assess awareness of CP laws, mechanisms• Identify potential victims of fraud• Assess attitudes and trust in providers and regulators
• Assess awareness of CP laws, mechanisms• Identify potential victims of fraud• Assess attitudes and trust in providers and regulators
Capability
Inclusion
Consumer Protection
2. What do these surveys measure and 2. What do these surveys measure and how?how?
Financial Capability
Knowledge of financial concepts
Awareness of financial products
and services
PracticalKnow-how
inflation compound interest
Risk diversification
returns on investmentinsurance
budgeting
Questions on…
money illusion
Financial Capability
Knowledge of financial concepts
Awareness of financial products
and services
PracticalKnow-how
Questions on…
Awareness of product existence
Basic product features
Advantages of using productsRisks and costs
Financial Capability
Knowledge of financial concepts
Awareness of financial products
and services
PracticalKnow-how
Questions on…
How to set up a budget
How to keep financial records
How to make payments
How to open a bank account
How to seek for recourse
Financial Capability
Questions on…
BudgetingPaying bills on time
Overspending
Saving
Borrowing
Making choices
Dealing with unexpected expenses/income loss
Planning for old age
Behavior Attitudes
Financial Capability
Questions on…
Reasons for saving, borrowing, investing, budgeting, and choosing specific financial products
Attitudes toward impulse purchases
Attitudes towards the future
Confidence in own retirement plansPropensity to save
Behavior Attitudes
Financial Inclusion
Questions on…
Types and number of financial products used
Ways of accessing financial services
Frequency and modality of use
What products are used for
Behavior Attitudes
Financial Inclusion
Questions on…
Reasons for/for not using specific financial products
Perceptions on service accessibility
Reasons for changing a product
Barriers in accessing services
Behavior Attitudes
Financial Consumer Protection
Behavior ExperienceAttitudes
Questions on…
Actions taken to resolve issues with fin. service providers
Where complaints were filed
Entities consulted in case of disagreement
Financial Consumer Protection
Behavior ExperienceAttitudes
Questions on…
Satisfaction with financial products and service providers
Trust in service providers
Perceptions on financial regulators and supervisors
Confidence in resolving disputes
Financial Consumer Protection
Behavior ExperienceAttitudes
Questions on…
Experience with pyramid schemes
Being billed for a service not received/product not requested
3. How can the data be analyzed?3. How can the data be analyzed?
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How to develop indicators
WB Tajikistan FCCP Survey 2013.
Frequencies and proportions of
individual questions
Combining data by creating simple
scores
Figure 1: % of respondents who answered FL questions correctly
Figure 2: Discrete frequency distribution of FL scores.
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How to develop indicators
WB Tajikistan FCCP Survey 2013.
Creating advanced scores (by utilizing factor
analysis)
Figure 3: Average FC scores.
Due to the multifaceted nature of some topics, it may not always be meaningful to construct a single composite score or index!
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How to identify potential target groups
Use cross tabulations
Figure 4: Average FC score related to ‘saving’, in different regions.
Figure 5: Average FC score related to ‘saving’, by household income.
Figure 6: Average FC score related to ‘saving’, by respondent’s childhood savings behavior.
WB Tajikistan FCCP Survey 2013.
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How to identify potential target groups
Regression analysis
Cluster analysis
Can improve the understanding of the relationship between socio-demographic characteristics and FC, FI, or FCP
Can be used to segment populations and to identify groups that show similarities in their scores
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THANK YOU!
Contacts:
vperotti@worldbank.org
szottel@worldbank.org
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