Building Financial Resilience Through Financial and Digital Literacy in South Asia and Sub-Saharan Africa

43 Pages Posted: 18 Dec 2019 Last revised: 20 May 2021

See all articles by Angela Lyons

Angela Lyons

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Josephine Kass-Hanna

University of Saint Joseph (Beirut) - Faculty of Business Administration and Management

Fan Liu

Xi'an Jiaotong-Liverpool University (XJTLU)

Date Written: May 18, 2021

Abstract

Globally, 1.7 billion adults still lack access to formal financial services, with a large percentage living in South Asia and Sub-Saharan Africa. Current financial inclusion strategies seek to enhance these vulnerable populations’ access to financial services with the aim of building more inclusive and financially resilient societies. With the Fintech movement and over 67% of the world’s population having a mobile phone, digital financial literacy is gaining momentum. Nevertheless, negligible research has measured its impacts on financial behavior. This study uses data from the InterMedia Financial Inclusion Insights (FII) surveys for seven South Asian and Sub-Saharan African countries to investigate the relationship between multidimensional measures of financial and digital literacy and resilience-building financial behaviors, including saving, borrowing, and risk management. The findings consistently show that both financial and digital literacy are key factors to building inclusiveness and financial resilience. Heterogeneities are identified across regions, as well as for poor, rural, and female households. A robustness check is also included to address potential endogeneity. The results emphasize the need to redefine traditional financial literacy to include digital literacy, with important implications for countries considering both as a dual approach to improving households’ long-run financial resilience.

Keywords: financial inclusion, financial services, financial literacy, digital literacy, South Asia, Sub-Saharan Africa

JEL Classification: D14, G20, G50, O53, O55, R20

Suggested Citation

Lyons, Angela and Kass-Hanna, Josephine and Liu, Fan, Building Financial Resilience Through Financial and Digital Literacy in South Asia and Sub-Saharan Africa (May 18, 2021). Available at SSRN: https://ssrn.com/abstract=3496562 or http://dx.doi.org/10.2139/ssrn.3496562

Angela Lyons (Contact Author)

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

1301 W. Gregory Drive
Urbana, IL 61801
United States
1-217-244-2612 (Phone)

Josephine Kass-Hanna

University of Saint Joseph (Beirut) - Faculty of Business Administration and Management ( email )

Campus of Social Sciences, Huvelin Street
P.O. box 17-5208 Mar Mikhael
Beirut, 1104 2020
Lebanon
+9611421000 (Phone)

HOME PAGE: http://www.usj.edu.lb/

Fan Liu

Xi'an Jiaotong-Liverpool University (XJTLU) ( email )

111 Renai Road, SIP
Suzhou, JiangSu province 215123
China

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