FINANCIAL LITERACY:

GLOBAL TRENDS, POLICIES AND

PRACTICES

Flore-Anne Messy Head of the Financial Affairs Division, OECD Executive Secretary, International Network on Financial Education Flore-anne.messy@oecd.org

OUTLINE

2

The financial education framework and the OECD/INFE

(Low) levels of financial literacy around the world

Improving the situation:

policy responses; the roles of BI; and digitalisation

Future areas of work for the OECD and its INFE

Financial education is one part of a multi-

dimensional approach to financial empowerment

Financial Education

Financial Consumer Protection

Financial Inclusion

G20 (2010)

Principles

for Innovative

Financial Inclusion

G20 (2016) High-

Level Principles for

Digital Financial

Inclusion

G20 (2011) High-Level

Principles on Financial

Consumer Protection

developed by the OECD

OECD/INFE (2012)

High-Level Principles on

National Strategies for

Financial Education

3

INFE created in 2008

10th Anniversary next year!

120 economies approx 250 public

authorities

A Technical Committee and Working Groups

Oversight from an Advisory Board

Community outreach and inputs through:

INFE Research Committee

Partnerships with NGOS and

private sector

Regular global events

Regional platforms and roundtables

Asia

Latin America and the Caribbean

Eurasia (CIS)

OECD International Network on Financial Education

(OECD/INFE) Project on Financial Education

Work started in 2002. Serviced by 2 OECD Committees

→ News, events and publications:

www.financial-education.org

TOO MANY ADULTS HAVE LOW LEVELS OF FINANCIAL

LITERACY

SOURCE: OECD/INFE SURVEYS ON

FINANCIAL LITERACY AND INCLUSION 2016, 2017

Survey instrument to capture financial literacy…

• …a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being

…in a representative sample of adults, and available in a Toolkit

• Questionnaire (core) and optional questions

• Methodological notes; Interviewer briefings

G20 Leaders welcomed and supported its use in 2013, and

agreed to use an updated version in 2017 to measure financial

literacy in G20 countries

Available online for anyone to use: please consider sharing data with

the OECD

OECD/INFE survey to measure

financial literacy and financial inclusion

Countries covered

Note: Chile collected data with the OECD/INFE toolkit but its data have not yet been included in the analysis

Low levels of financial literacy globally

(with variations)

Sum of average financial knowledge, behaviour and attitudes scores (Max 21)

Source: OECD/INFE financial literacy and inclusion survey. The combined financial literacy score (sum of the three components) is reported in brackets next to the country name

0

5

10

15

20

Sa

ud

i A

rab

ia (

9.6

)

Ita

ly (

11.0

)

Arg

enti

na

(11

.4)

Ca

mb

od

ia (

11.5

)

Vie

t N

am

(11

.6)

Po

lan

d (

11.6

)

Bel

aru

s (1

1.7

)

Ind

ia (

11.9

)

Cro

ati

a (

12.0

)

Bra

zil

(12

.1)

Mex

ico

(12

.1)

Ru

ssia

n F

eder

ati

on

(12

.2)

Ma

lay

sia

(12

.3)

Geo

rgia

(12

.4)

Hu

ng

ary

(12

.4)

Tu

rkey

(12

.5)

Cze

ch R

epu

bli

c (1

2.6

)

Jo

rda

n (

12.6

)

Alb

an

ia (

12.7

)

Th

ail

an

d (

12.8

)

Bri

tish

Vir

gin

Isl

an

ds …

Un

ited

Kin

gd

om

(13

.1)

La

tvia

(13

.3)

Ind

on

esia

(13

.4)

Est

on

ia (

13.4

)

Net

her

lan

ds

(13

.4)

OE

CD

Av

era

ge-

20

(13

.4)

Lit

hu

an

ia (

13.5

)

Ger

ma

ny

(13

.8)

Ko

rea

(13

.9)

Po

rtu

ga

l (1

4.0

)

Ch

ina

(14

.1)

Au

stri

a (

14.2

)

Bel

giu

m (

14.3

)

New

Zea

lan

d (

14.4

)

Ho

ng

Ko

ng

, C

hin

a (

14.4

)

Ca

na

da

(14

.6)

No

rwa

y (

14.6

)

Fin

lan

d (

14.8

)

Fra

nce

(14

.9)

Knowledge Behaviour Attitudes

Large variation in % of population reaching the

minimum target score on financial knowledge

Percentage of adults who can answer correctly at least 5 financial knowledge questions out of 7

Source: OECD/INFE financial literacy and inclusion survey

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Ca

mb

od

ia

Vie

t N

am

S

ou

th A

fric

a

Ind

ia

Ita

ly

Ma

lay

sia

B

riti

sh V

irg

in I

sla

nd

s B

ela

rus

Arg

enti

na

M

exic

o

Th

ail

an

d

Alb

an

ia

Ru

ssia

n F

eder

ati

on

C

roa

tia

J

ord

an

U

nit

ed K

ing

do

m

Bra

zil

Ind

on

esia

S

au

di

Ara

bia

C

zech

Rep

ub

lic

Po

lan

d

Geo

rgia

T

urk

ey

OE

CD

Av

era

ge-

20

G

erm

an

y

Fra

nce

H

un

ga

ry

Bel

giu

m

Lit

hu

an

ia

Po

rtu

ga

l C

an

ad

a

Ch

ina

K

ore

a

New

Zea

lan

d

Net

her

lan

ds

Au

stri

a

La

tvia

N

orw

ay

F

inla

nd

E

sto

nia

H

on

g K

on

g (

Ch

ina

)

Men tend to have higher financial knowledge

than women in most countries

Percentage of male and female adults who can answer correctly at least 5 financial knowledge questions out of 7

Source: OECD/INFE financial literacy and inclusion survey. Countries and economies where the gender difference is statistically significant at the 5% level are marked in a darker colour.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

So

uth

Afr

ica

Ma

lay

sia

Ita

ly

Ind

ia

Bel

aru

s

Bri

tish

Vir

gin

Isl

an

ds

Arg

enti

na

Th

ail

an

d

Alb

an

ia

Cro

ati

a

Mex

ico

Ru

ssia

n F

eder

ati

on

Ind

on

esia

Bra

zil

Cze

ch R

epu

bli

c

Sa

ud

i A

rab

ia

Po

lan

d

Jo

rda

n

Un

ited

Kin

gd

om

Geo

rgia

Hu

ng

ary

Ch

ina

Tu

rkey

OE

CD

Av

era

ge-

20

Ko

rea

Fra

nce

Po

rtu

ga

l

La

tvia

Lit

hu

an

ia

Bel

giu

m

Au

stri

a

Ger

ma

ny

Ca

na

da

New

Zea

lan

d

Est

on

ia

Fin

lan

d

Net

her

lan

ds

No

rwa

y

Ho

ng

Ko

ng

(C

hin

a)

Female Male

More than half adults in most countries do not

just “live for today”

Source: OECD/INFE financial literacy and inclusion survey

0

10

20

30

40

50

60

70

80

90

Sa

ud

i A

rab

ia

Jo

rda

n

Ho

ng

Ko

ng

(C

hin

a)

Ind

ia

Po

lan

d

Mex

ico

Ita

ly

Cze

ch R

epu

bli

c

Ind

on

esia

Ma

lay

sia

Bra

zil

Cro

ati

a

Arg

enti

na

La

tvia

Ru

ssia

n F

eder

ati

on

Th

ail

an

d

Est

on

ia

Ko

rea

Un

ited

Kin

gd

om

Ch

ina

Tu

rkey

So

uth

Afr

ica

Ja

pa

n

Ger

ma

ny

Net

her

lan

ds

OE

CD

Av

era

ge-

21

Bri

tish

Vir

gin

Isl

an

ds

Ca

mb

od

ia

Bel

aru

s

Hu

ng

ary

Bel

giu

m

Alb

an

ia

Lit

hu

an

ia

Po

rtu

ga

l

Ca

na

da

Au

stri

a

Vie

t N

am

Fra

nce

Geo

rgia

New

Zea

lan

d

Fin

lan

d

No

rwa

y

Disagrees with "I tend to live for today and let tomorrow take care of itself"

Disagrees with "I find it more satisfying to spend money than to save it for the long term"

Disagrees that "Money is there to be spent" %

When money is tight, many adults resort to

borrowing, showing a lack of financial resilience

Source: OECD/INFE financial literacy and inclusion survey

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ko

rea

N

orw

ay

G

erm

an

y

Ho

ng

Ko

ng

(C

hin

a)

Au

stri

a

Sa

ud

i A

rab

ia

Po

lan

d

Cze

ch R

epu

bli

c U

nit

ed K

ing

do

m

Est

on

ia

Bel

giu

m

Un

ited

Sta

tes

Net

her

lan

ds

Hu

ng

ary

O

EC

D A

ver

ag

e-2

1 It

aly

L

ith

ua

nia

F

inla

nd

J

ord

an

C

an

ad

a

Bri

tish

Vir

gin

Isl

an

ds

New

Zea

lan

d

Cro

ati

a

Po

rtu

ga

l R

uss

ian

Fed

era

tio

n

Bra

zil

La

tvia

C

am

bo

dia

F

ran

ce

Ch

ina

In

do

nes

ia

Ma

lay

sia

In

dia

S

ou

th A

fric

a

Tu

rkey

A

lba

nia

M

exic

o

Bel

aru

s G

eorg

ia

Th

ail

an

d

Arg

enti

na

Respondent reported that their income did not always cover their living costs

Respondent borrowed to make ends meet (% of all respondents)

UNFORTUNATELY YOUNG PEOPLE (STUDENTS) DO NOT DISPLAY BETTER FINANCIAL

LITERACY

SOURCE: PISA FINANCIAL LITERACY 2012, 2015

The PISA financial literacy test

In 2015, around 48 000 students were assessed in financial literacy, representing about 12 million 15-year-olds in the schools of the 15 participating countries and economies

Students in countries and economies that participated in the financial literacy answered

• a two-hour combination of tasks in science, reading and mathematics

• A one-hour test in financial literacy (43 items) after the core assessment

• Questions about their experience with money such as discussing money matters with parents, basic financial products and sources of money (through a ‘money management questionnaire’)

• … in addition to the standard questions about their personal background

B-S-J-G (China)

Belgium (Flemish) Canadian

provinces

Russia Netherlands Australia

United States Poland

Italy

Spain

Lithuania Slovak Republic

Chile

Peru Brazil

380

400

420

440

460

480

500

520

540

560

580

Students’ mean performance in financial literacy

Mean financial

literacy score:

Green – above

OECD average

Amber – OECD

average

Red – below

OECD average

Figure IV.3.6

13 22 22 13

19 20 20 20 22 22 25

32 35 38 48

53

33 11 24 22 17 15 6 8

10 12 6 4 6 3

1 3

80

60

40

20

0

20

40

60

80

100

B-S

-J-G

(C

hin

a)

Russia

Belg

ium

(F

lem

ish)

Canadia

n p

rovin

ces

Neth

erlan

ds

Austr

alia

Italy

Pola

nd

United S

tate

s

OE

CD

avera

ge

-10

Sp

ain

Lithuania

Slo

vak R

epublic

Chile

Peru

Bra

zil

Students’ financial literacy by proficiency levels

%

BANK ERROR - Evaluate a potential financial

fraud and respond appropriately to a financial

scam e-mail message – Level 5

INVOICE Question 2 - Identify a delivery cost that

is explicitly stated on an invoice – Level 2

INVOICE Question 1 – Recognise the purpose of

an invoice - Below Level 2

PAY SLIP - Read a pay slip and recognise that

the employer will only pay net salary into the

employee’s bank – Level 4

INVOICE Question 3 (partial credit) - Interpret

various elements on the same invoice to correct a

mistake in the billing – Level 3

Many students hold basic financial products

or earn money from work

0

10

20

30

40

50

60

70

80

90

100

Neth

erlan

ds

Austr

alia

Canadia

n

pro

vin

ces

Belg

ium

(F

lem

ish)

OE

CD

avera

ge

-10

Italy

United S

tate

s

Spain

B-S

-J-G

(C

hin

a)

Russia

Slo

vak

Republic

Lithuania

Chile

Pola

nd

%

Student has both a bank account and a prepaid debit card

Student has a bank account but no prepaid debit card

Figure IV.2.1

Experience with money seems to matter…

-20

0

20

40

60

80

100

Slo

va

k R

ep

ub

lic

Ru

ssia

Lith

ua

nia

Pola

nd

B-S

-J-G

(C

hin

a)

Ch

ile

Un

ite

d S

tate

s

OE

CD

ave

rag

e-1

0

Ita

ly

Be

lgiu

m (

Fle

mis

h)

Au

str

alia

Spain

Ca

na

dia

n p

rovin

ce

s

Ne

the

rla

nd

s

Sco

re-p

oin

t d

iffe

ren

ce

After accounting for socio-economic status

Before accounting for socio-economic status

Difference between students who have a bank account and students who do not

Source: OECD PISA 2015 Volume IV Students ‘Financial Literacy

POLICY RESPONSES

Steady development of national strategies

Status of national

strategies in 2012

Status of national strategies in 2017

20

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area

OECD/INFE work on national strategies

for financial education

21

2012 High-level Principles

endorsed by G20 Leaders

and supported by APEC

Ministers of Finance

2013 Publication on

NS status in G20 economies

welcomed by G20 Leaders

2015 Policy

handbook on the

implementation of NS

2017-2018 Ongoing work

on Implementation and Evaluation

including consolidation of

OECD FE instruments

USING BEHAVIOURAL INSIGHTS AND DIGITAL

TOOLS TO IMPROVE LEVELS OF FINANCIAL

LITERACY

• OECD Consumer Policy Toolkit, 2010

• Regulatory Policy and Behavioural Economics, OECD, 2014

• Behavioural insights and public policy, OECD, 2017

Application to general public

policies

• Focused papers, such as:

• Can behavioural economics be used to make financial education more effective? OECD, 2011

• Behavioural economics and FCP, G20/OECD, 2017

• Current approaches and good practices:

• Policy handbook on national strategies for financial education, G20/OECD, 2015

• Pensions Outlook, OECD, 2016

Application to financial

empowerment policies

The OECD has long recognised

the potential contribution of behavioural insights…

• the United Kingdom, Australia, the Netherlands, New Zealand, US, Armenia, Italy, Denmark, Indonesia, Peru, Thailand, Italy, Serbia, Spain, Namibia…

BI are employed in the design and implementation of financial

education initiatives:

• New Zealand (FMA; MINDSPACE and EAST), Peru (EAST methodology)

• UK (COM-B model) • Thailand (Field experiments)

Scientific frameworks are being applied to initiatives designed to

change behaviour

• Armenia (Deep interviews, prototyping, testing, mystery shopping),

• Peru (mystery shopping and experimental labs)

Various behaviour-centric approaches are used

• Armenia, Australia and New Zealand

Scientific methods such as randomized control trials are

being used to identify the impact of initiatives on behaviour

…and is currently working on a joint publication

on the application of BI with IOSCO C8

be salient and meaningful, and incorporate:

•Rules of thumbs, plain language, framing •Step-by-step guides, a focus on key concepts

be appealing and actionable:

•Make information entertaining •Encourage learning by doing •Overcome limited attention and present bias •Promote self-commitment

Providing a single source of information and

comparative tools at teachable moments can address:

• Ambiguity aversion • Procrastination

Applying BI to improve financial education

outcomes

The OECD is also leading work on understanding the

benefits and challenges of financial digitalisation for

consumers/investors and MSMEs (1)

A global phenomenon

DFS - Any financial transactions using digital technology,

including electronic money, mobile

financial services, online financial

services and branchless banking

The promise

- Easier and timely access

- More affordable

- Wider reach

- Seamless experience tailored to individual

needs

FL outcomes

* Better understanding of

finance/investment opportunities for all

* Interactive/fun platforms leading to

quick financial learning

* Increased awareness

(demystifying finance)

Financial digitalisation presents major opportunities for consumers and MSMEs…

Report delivered to G20 FMCBG in April 2017 focusing on financial literacy and digital finance

The OECD is also leading work on understanding the

benefits and challenges of financial digitalisation for

financial consumers (2)

Ris

ks

ha

ve

em

erg

ed

du

e t

o t

he

s

pre

ad

of

dig

ita

l in

no

va

tio

n..

• Market driven:

• New types of fraud; misselling; data safety and confidentiality

• Use of digital profiling

• Easier access to short-term credit (notably) and questionable market practices reinforce behavioural biases

• Regulation and supervision driven: Uneven protection within (inadequate disclosure and redress mechanisms) and across countries (variety of providers, cross border selling, regulatory arbitrage)

• Consumer driven: increased digitalisation but low digital and financial literacy

…p

ote

nti

ally im

pa

cti

ng

co

ns

um

ers

an

d s

mall b

usin

esse

s

• Lack or uneven safety and trust in DFS

• New types of exclusion:

• for particular groups; elderly, women, MSMEs, low level of digital and financial literacy

• from particular policies: insurance, credit

• Over-indebtedness of particular groups (potentially especially young)

Digital tools can be part of the financial literacy

solution and use BI findings

Smart and evaluated use of technology can support financial education outcomes

Improving access to financial information, advice and training

(e.g. through websites, online courses)

Developing competencies, confidence and experiences with finance

(e.g. through gamification)

Enhancing money management skills and control over finances

(e.g. through application, budget tools)

Addressing consumers’ biases (e.g. through self-commitment tools & alerts)

• Making investments, financial decisions on your own

*Robo-advisor technologies e.g. Sigfig, Motif, Betterment, Wealthfront, Acorns (automated micro-investments)

*Other apps such as Stash (includes educational content customised to your investment preferences)

• Getting investment, finance information, market news

*Digital portals and mobile apps e.g. Bloomberg apps, YahooFinance, CNBC ‘pro’ app (exclusive investment tips and analysis, emails, alerts, ad-free video clips, and live TV)

• Accessing real-time market data and more sophisticated investment platforms

*Stocktrading apps e.g.Robinhood

*Market intelligence, e.g. Benzinga, TD Ameritrade

*Also advanced platforms, e.g. thinkorswim and TradeArchitect

New digital finance tools for investors

WHAT NEXT?

ONGOING AND FUTURE AREAS OF WORK

Policy tools and evidence to address pressing

issues and accelerate regional and global efforts

31

• Drawing on existing tools, principles and guidance and latest findings A modern, comprehensive policy

standard on financial education

• Using the OECD/INFE Toolkit and PISA financial literacy option

Repeated global measures of financial literacy of adults (2020)

and students (2021)

• Feeding into the G20 agenda, and collaborating with G20 Task Force on FCP

Forward looking research and policy guidance on topical issues such as digitalisation and credit

• Identifying core competencies needed by this group and creating a tailored survey instrument

Focused work on the needs of specific target groups including

micro and small enterprises

• Further work to identify and disseminate good practices for the implementation of NS

Global and regional guidance on the implementation of policy standards and good practices

• Annual meeting of the OECD CVM Centre on Financial Education and Literacy in Latin America and the Caribbean (LAC)

• G20/OECD Task Force Research Seminar on Financial Consumer Protection

• Seminar on Technology and Innovation in the Brazilian and Latin American Financial Sector

Rio de Janeiro, Brazil – 11-14 December

• OECD/INFE biannual meetings

• 5th OECD-GFLEC Global Policy Research Symposium to Advance Financial Literacy ”A decade of financial literacy: What relationship with inclusive and sustainable growth?”

Paris, France – 16-18 May 2018

Upcoming global and regional events