Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185765 
Year of Publication: 
2018
Series/Report no.: 
Discussion Paper No. 95
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
While financial inclusion is typically addressed by improving the financial infrastructure, we show that a higher degree of financial literacy also has a clear beneficial effect. We study this effect at the cross-country level, which allows us to consider institutional variation. Regarding \"access to finance\", financial infrastructure and financial literacy are mainly substitutes. However, regarding the \"use of financial services\", the effect of higher financial literacy strengthens the effect of more financial depth. The causal interpretation of these results is supported by IV-regressions. Moreover, the positive impact of financial literacy holds across income levels and several subgroups within countries.
Subjects: 
financial inclusion
financial literacy
financial institutions
financial development
JEL: 
O01
G02
Document Type: 
Working Paper

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