FINANCIAL EDUCATION POLICIES IN ASIA Chiara Monticone OECD OECD/Thailand Seminar on Financial Inclusion and Financial Literacy in Asia 16-17 December 2014 – Bangkok, Thailand

Challenges and

opportunities

State of financial

education policies: national

strategies

Policy suggestions

going forward

Outline

• Africa (2012), Latin America and the Caribbean (2013), Europe (forthcoming)

Part of a series of regional reports

Will be released as an OECD working paper in the course of 2015

• Thanks to all who contributed: comments are welcome

• It is still possible to reply and send more input by 30 January 2015

Based on a dedicated questionnaire among members of the OECD INFE, previous surveys and publications, and desk research

Draft report on

financial education in Asia

CONTEXT AND RATIONALE

Sustained growth

Decreasing poverty

Reformed and strengthened financial institutions

Poverty

Inequality

Informality

Illiteracy

Social and financial exclusion

Gre

at

imp

rov

emen

ts..

. ...o

pen

cha

lleng

es Context

1. Financial exclusion

2. New and potentially complex products

3. Low financial literacy

4. Population ageing

Rationale for financial education

Low inclusion in formal financial

markets and services on average…

0

10

20

30

40

50

60

70

80

90

100

Middle East& NorthAfrica

(developingonly)

Sub-SaharanAfrica

(developingonly)

South Asia LatinAmerica &Caribbean

(developingonly)

Europe &Central Asia(developing

only)

World East Asia &Pacific

(developingonly)

High income:OECD

Account at a formal financial institution (% age 15+)

Debit card (% age 15+)

Source: Demirguc-Kunt and Klapper (2012)

% of adults (15+) with an account at a formal financial institution,

by region

….and especially among some

population segments

0

10

20

30

40

50

60

70

80

90

100

Tu

rkm

enis

tan

Ca

mb

od

ia

Afg

ha

nis

tan

Pa

kis

tan

Aze

rba

ija

n

Ind

on

esia

Vie

t N

am

Jo

rda

n

Ph

ilip

pin

es

Ind

ia

Le

ba

no

n

Ba

ng

lad

esh

Ka

zak

hst

an

Sa

ud

i A

rab

ia

Ch

ina

Ma

lay

sia

Th

ail

an

d

Ho

ng

Ko

ng

(C

hin

a)

Isra

el

Ko

rea

Ja

pa

n

Sin

ga

po

re

Bottom 40% of income All Top 60% of income

Source: Demirguc-Kunt and Klapper (2012)

% of adults (15+) with an account at a formal financial institution,

by income level

New and potentially complex products

• Even when people are included, developing financial markets mean new and potentially complex products (eg. digital financial services) >> raising financial consumer protection and financial education issues

Low financial literacy

0102030405060708090

100

Division Interest paidon loan

Risk andreturn

Definition ofinflation

Time-valueof money

Calculationof interest

plusprincipal

Japan 2011

Korea 2012

Malaysia 2010

Thailand 2013

Sources: Japan: Central Council for Financial Services Information (2012); Korea: correspondence with the Bank of Korea; Malaysia: Atkinson and Messy (2012); Thailand: Bank of Thailand (2013)

% of adults giving a correct answer to each question

• Both in terms of low financial knowledge and of • potentially harmful financial behaviours (eg. growing

shares of people in debt)

Additional challenges related to ageing

coming soon in some countries…

China

India

Indonesia

Japan

Korea

Thailand

0

5

10

15

20

25

30

35

40

2010 2015 2020 2025 2030 2035 2040 2045 2050

%

Source: OECD (2013b), Pensions at a Glance Asia/Pacific 2013, OECD Publishing.

Projected share of people age 65+ as a % of total population

POLICY RESPONSES

APEC Finance Ministers – 2012

• supported the development and implementation of strategies for financial education drawing on the methodologies and tools developed by the World Bank and the OECD/INFE

• adopted a Policy Statement on Financial Literacy and Education encouraging APEC economies to use the OECD/INFE Guidelines for Financial Education in Schools, and to consider the participation in PISA financial literacy assessment

APEC Human Resources Development WG – 2012/2014

• project on Education on Financial and Economic Literacy

• publication of an APEC Guidebook on Financial and Economic Literacy in Basic Education (November 2014)

ASEAN – 2013

• Chairman’s Statement of the 23rd ASEAN Summit in 2013 – reiterated the importance of promoting financial literacy in the region

Regional recognition

A NS is a nationally coordinated approach to financial education which consists of an adapted framework or programme that:

• Recognises the importance of financial education and defines its meaning and scope at the national level in relation to identified national needs and gaps;

• Involves the co-operation of different stakeholders as well as the identification of a national leader or coordinating body/council;

• Establishes a roadmap to achieve specific and predetermined objectives within a set period of time; and,

• Provides guidance to be applied by individual programmes in order to efficiently and appropriately contribute to the NS.

Among over 50 countries worldwide, 15 Asian countries and economies are developing a national strategy:

>> 7 are being implemented

>> 8 are being developed

National strategies

for financial education

National strategies’ development

Financial consumer protection

Financial education

Financial inclusion

Policy priorities and links

Close links between financial inclusion, financial consumer protection, and financial education, for instance:

• Institutional and policy links between FE and FCP in China Indonesia and Korea

• Financial education as an important element of financial inclusion policies in India and Malaysia

• Collaborations between public authorities and private financial institutions to promote financial education and financial inclusion in India, Indonesia, Malaysia, Singapore

Low-income and marginalised people

• China • India • Israel • Malaysia • Pakistan • Saudi

Arabia • Singapore

Students and/or young people

• Indonesia • Israel • Japan • Korea • Lebanon • Malaysia • Singapore

Women

• Indonesia • Malaysia • Lebanon • Pakistan • Saudi

Arabia

Migrants

• China, • India • Indonesia • Philippin

es

MSMEs

• Indonesia • Malaysia • Pakistan

Elderly

• Singapore

Main targets

Financial education topics integrated in the school curriculum

• at different levels (primary/secondary) and in different subjects in China, Hong Kong (China), Indonesia, Japan, Korea, Thailand, Singapore

Efforts to strengthen and expand provision

• Specific financial education curricula at regional/local level in China

• Proposal for integration in the national curriculum in Malaysia

• ongoing revision of learning outcomes in Japan

• Qualitative research to better understand needs and opportunities in Hong Kong

Financial education in schools

POLICY SUGGESTIONS

Policy suggestions

• More cross-country comparable evidence on financial literacy and not only on financial knowledge

Collect more evidence on financial literacy

• Financial institutions’ involvement can have pros and cons

• Recently approved OECD/INFE Guidelines

Ensure coordination and stakeholders’ monitoring

• Integrate FE in compulsory subjects, develop dedicated learning frameworks and professional teachers’ training

Strengthen financial education in schools

• in the relevant countries, which may build on the experience of Europe and North America

Address challenges of ageing population

• little evidence to date of programme impact • Conduct evaluation systematically and share

its results

Support programme evaluation

THANK YOU!

Feedback and additional input welcome

Chiara.Monticone@oecd.org

www.financial–education.org

www.oecd.org/finance/financial-education