The Causal Mechanism of Financial Education : Evidence from Mediation Analysis

The Causal Mechanism of Financial Education : Evidence from Mediation Analysis

This paper uses a field experiment in India with multiple financial education treatments to investigate the causal mechanisms between financial education and financial behavior. Focusing on the mediating role of financial literacy, the paper propos...

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Main Authors: Carpena, Fenella, Zia, Bilal
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2018
Subjects:
FINANCIAL SERVICES
FINANCIAL INCLUSION
FINANCIAL EDUCATION
FINANCIAL LITERACY
FINANCIAL KNOWLEDGE
CAUSAL MEDIATION ANALYSIS
IMPACT EVALUATION
FINANCIAL AWARENESS
PERSONAL FINANCE
Online Access:http://documents.worldbank.org/curated/en/472901540223638588/The-Causal-Mechanism-of-Financial-Education-Evidence-from-Mediation-Analysis
http://hdl.handle.net/10986/30601
id okr-10986-30601
recordtype oai_dc
spelling okr-10986-306012021-06-08T14:42:48Z The Causal Mechanism of Financial Education : Evidence from Mediation Analysis Carpena, Fenella Zia, Bilal FINANCIAL SERVICES FINANCIAL INCLUSION FINANCIAL EDUCATION FINANCIAL LITERACY FINANCIAL KNOWLEDGE CAUSAL MEDIATION ANALYSIS IMPACT EVALUATION FINANCIAL AWARENESS PERSONAL FINANCE This paper uses a field experiment in India with multiple financial education treatments to investigate the causal mechanisms between financial education and financial behavior. Focusing on the mediating role of financial literacy, the paper proposes a broader definition of financial knowledge that includes three dimensions: numeracy skills, financial awareness, and attitudes toward personal finance. The analysis then employs causal mediation analysis to investigate the proportion of the treatment effect that can be attributed to these three channels. Strikingly, numeracy does not mediate any effects of financial education on household outcomes. For simple financial actions such as budgeting, both awareness and attitudes serve as critical pathways, while for more complex financial activities such as opening a savings account, attitudes play a more prominent role. These findings underscore the importance of changing perceptions about financial products and services as a vital mechanism for the success of financial education. 2018-10-24T17:12:40Z 2018-10-24T17:12:40Z 2018-10 Working Paper http://documents.worldbank.org/curated/en/472901540223638588/The-Causal-Mechanism-of-Financial-Education-Evidence-from-Mediation-Analysis http://hdl.handle.net/10986/30601 English Policy Research Working Paper;No. 8619 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper South Asia India
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic FINANCIAL SERVICES
FINANCIAL INCLUSION
FINANCIAL EDUCATION
FINANCIAL LITERACY
FINANCIAL KNOWLEDGE
CAUSAL MEDIATION ANALYSIS
IMPACT EVALUATION
FINANCIAL AWARENESS
PERSONAL FINANCE
spellingShingle FINANCIAL SERVICES
FINANCIAL INCLUSION
FINANCIAL EDUCATION
FINANCIAL LITERACY
FINANCIAL KNOWLEDGE
CAUSAL MEDIATION ANALYSIS
IMPACT EVALUATION
FINANCIAL AWARENESS
PERSONAL FINANCE
Carpena, Fenella
Zia, Bilal
The Causal Mechanism of Financial Education : Evidence from Mediation Analysis
geographic_facet South Asia
India
relation Policy Research Working Paper;No. 8619
description This paper uses a field experiment in India with multiple financial education treatments to investigate the causal mechanisms between financial education and financial behavior. Focusing on the mediating role of financial literacy, the paper proposes a broader definition of financial knowledge that includes three dimensions: numeracy skills, financial awareness, and attitudes toward personal finance. The analysis then employs causal mediation analysis to investigate the proportion of the treatment effect that can be attributed to these three channels. Strikingly, numeracy does not mediate any effects of financial education on household outcomes. For simple financial actions such as budgeting, both awareness and attitudes serve as critical pathways, while for more complex financial activities such as opening a savings account, attitudes play a more prominent role. These findings underscore the importance of changing perceptions about financial products and services as a vital mechanism for the success of financial education.
format Working Paper
author Carpena, Fenella
Zia, Bilal
author_facet Carpena, Fenella
Zia, Bilal
author_sort Carpena, Fenella
title The Causal Mechanism of Financial Education : Evidence from Mediation Analysis
title_short The Causal Mechanism of Financial Education : Evidence from Mediation Analysis
title_full The Causal Mechanism of Financial Education : Evidence from Mediation Analysis
title_fullStr The Causal Mechanism of Financial Education : Evidence from Mediation Analysis
title_full_unstemmed The Causal Mechanism of Financial Education : Evidence from Mediation Analysis
title_sort causal mechanism of financial education : evidence from mediation analysis
publisher World Bank, Washington, DC
publishDate 2018
url http://documents.worldbank.org/curated/en/472901540223638588/The-Causal-Mechanism-of-Financial-Education-Evidence-from-Mediation-Analysis
http://hdl.handle.net/10986/30601
_version_ 1764472468283588608

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