Can You Help Someone Become Financially Capable? A Meta-Analysis of the Literature

Abstract

This paper presents a systematic and comprehensive meta-analysis of the literature on financial education interventions that focuses on financial education studies designed to strengthen the financial knowledge and behaviors of consumers. The analysis identifies 188 papers and articles that present impact results of interventions designed to increase consumers' financial knowledge (financial literacy) or skills, attitudes, and behaviors (financial capability). These papers are diverse across a number of dimensions, including objectives of the program intervention, expected outcomes, intensity and duration of the intervention, delivery channel used, and type of population targeted. However, there are a few key outcome indicators where a subset of papers are comparable, including those that address savings behavior, defaults on loans, and financial skills such as record keeping. The results from the meta-analysis indicate that financial literacy and capability interventions can have a positive impact in some areas (e.g., increasing savings) but not in others (e.g., reducing loan defaults). Financial education, financial literacy, meta Analysis. JEL codes: C93, D03, D14, O12, O17 A decade ago there was limited interest in the topic of financial literacy. Now this issue is at the top of the policy agenda for national regulators, international organizations, researchers, and private financial institutions. An important reason for the increased attention to financial literacy is the global financial crisis, which highlighted the importance of financial knowledge and skills for consumers. Anecdotal evidence from the crisis immediately suggested that people had taken on financial products-and risks-that they did not fully understand. Empirical studies confirmed this relationship, including Klapper et al.

Why Financial Advice Cannot Substitute for Financial Literacy?

“…The effectiveness of such financial education programs regarding financial outcomes is still debated (Miller et al 2014). However, the simple model I propose shows that financial literacy is not only important for financial decision making but also for being able to receive relevant advice.…”

Financial Education for Long-term Savings and Investments

“…The primary systematic review used as an initial starting point is Miller et al (2013), in which a literature scan was conducted including searches of peer-reviewed papers in Econlit under the broad terms "financial awareness, financial capability, financial competence, financial education, financial knowledge and financial literacy" between January 2000 and September 2013, bibliographic entries from previous literature reviews starting in 2007, and recent OECD, World Bank, Global Partnership for Financial Inclusion, and Alliance for Financial Inclusion (AFI) papers.…”

Financial Education for the Disadvantaged? A Review

“…However, the interpretation of overall averages is limited. As likewise stated by Miller et al (2015), the great heterogeneity of results makes it impossible to calculate a meaningful effect size as a general benchmark. Both meta-studies, especially the one by Kaiser and Menkhoff (2017), also look at different subsamples of which the subsample of low-income is of primary interest for this survey.…”

“…Different from comprehensive meta-analysis by Fernandes et al (2014), Miller et al (2015 and Kaiser and Menkhoff (2017), we review research papers on a studyby-study basis in order to focus on those studies which allow us to gain some knowledge on the impact of financial education on groups at the bottom of financial inequality. Moreover, we analyze methodological discrepancies, which are often related to the question whether randomized control trials (RCT) are applied or not.…”