FINANCIAL LITERACY IN THE CIS AND AT A GLOBAL LEVEL

Transcription

1 FINANCIAL LITERACY IN THE CIS AND AT A GLOBAL LEVEL Chiara MONTICONE OECD OECD-Russia Global Symposium Advancing financial literacy globally: implementation and innovation 4-5 Oct 2018, Moscow

2 OECD/INFE financial literacy survey Results comparable across countries and over time Behaviour Budgeting, saving, Choosing products, Paying bills on time, Retirement planning etc Knowledge Simple and compound interest, Inflation, Time value of money, Risk and return, Risk diversification Attitudes Propensity to save vs spend, Time preference, etc. Financial inclusion Financial products awareness, use and recent choice as well as on its relationship with Socio-demographics Age, Gender, Education, Work, Income Wellbeing; Fraud; self-assessment of financial knowledge

3 OECD/INFE survey to measure financial literacy and financial inclusion 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 Next coordinated exercise planned for 2019

4 Saudi Arabia (9.6) Azerbaijan (10.9) Tajikistan (11.0) Italy (11.0) Kyrgyz Republic (11.1) Argentina (11.4) Armenia (11.4) Cambodia (11.5) Viet Nam (11.6) Poland (11.6) Average CIS (11.9) India (11.9) Croatia (12.0) Brazil (12.1) Mexico (12.1) Russian Federation (12.2) Malaysia (12.3) Georgia (12.4) Hungary (12.4) Turkey (12.5) Czech Republic (12.6) Jordan (12.6) Average G20 (12.7) Albania (12.7) Thailand (12.8) British Virgin Islands (13.0) United Kingdom (13.1) Kazakhstan (13.1) Latvia (13.3) Indonesia (13.4) Estonia (13.4) Belarus (13.4) Netherlands (13.4) Lithuania (13.5) Germany (13.8) Korea (13.9) Portugal (14.0) China (14.1) Austria (14.2) Belgium (14.3) New Zealand (14.4) Hong Kong, China (14.4) Canada (14.6) Norway (14.6) Finland (14.8) France (14.9) Overall financial literacy scores Average scores out of a maximum of 21 Low average scores in all countries Lower in the CIS than at global (G20) level Knowledge Behaviour Attitudes

5 Tajikistan Kyrgyz Republic Cambodia Azerbaijan Viet Nam Armenia Average CIS South Africa India Italy Malaysia British Virgin Islands Argentina Mexico Thailand Kazakhstan Albania Belarus Russian Federation Croatia Jordan United Kingdom Brazil Average G20 Indonesia Saudi Arabia Czech Republic Poland Georgia Turkey Germany France Hungary Belgium Lithuania Portugal Canada China Korea New Zealand Netherlands Austria Latvia Norway Finland Estonia Hong Kong (China) Financial knowledge % of adults who can answer correctly at least 5 questions out of 7 100% 90% Lower financial knowledge in the CIS than at global level 80% 70% 60% 50% 40% 30% 20% 10% 0%

6 Financial knowledge % of adults who can answer correctly to questions on these topics Interest compounding Calculation of interest plus principal Time value of money Countries in the CIS struggle on all topics But particularly on simple and compound interest, time value of money 58% on average said that they did not know the answer to at least one question Diversification Definition of inflation Risk and return Interest paid on loan Average CIS Average G20

7 Saudi Arabia Armenia Jordan Hong Kong India Poland Kazakhstan Azerbaijan Average CIS Belarus Georgia Malaysia Latvia Russian Croatia Kyrgyz Republic Tajikistan Argentina Mexico Italy Czech Republic Thailand Average G20 Turkey South Africa China Brazil France Korea Estonia Germany Japan British Virgin Lithuania Belgium Netherlands United Kingdom Austria Finland Albania Hungary Portugal Canada Norway New Zealand Indonesia Financial attitudes % of adults with long-term oriented financial attitudes 100% 90% 80% Financial attitudes are more oriented towards the short term in the CIS than at global level 70% 60% 50% 40% 30% 20% 10% 0%

8 Hungary Argentina Italy Poland Georgia Brazil Turkey Estonia Croatia Mexico Czech Republic Azerbaijan Russian Federation Albania Netherlands Latvia Armenia Lithuania Kyrgyz Republic Average G20 Tajikistan United Kingdom Average CIS India Malaysia Korea Norway Indonesia Korea Jordan Germany New Zealand Thailand Hong Kong (China) Saudi Arabia Portugal Canada Austria China Belgium Finland British Virgin Islands Kazakhstan Belarus France Financial behaviour % of adults who report at least 6 financially savvy behaviours out of 9 100% 90% 80% Average behaviour score in the CIS similar to G20 level, with Wide dispersion of behaviour scores across the CIS Very high scores in Kazakhstan and Belarus 70% 60% 50% 40% 30% 20% 10% 0%

9 Financial behaviour % of adults who in engage in these behaviours Close watch on financial affairs Timely bill payment Considered purchase Responsible for decisions and has a budget Financial control Average CIS Average G20 Active saving Striving to achieve long-term financial goals Borrowing to make ends meet Financial resilience Average CIS Average G20 Making informed financial product choices Used independent info or advice Some attempt to make informed decision or sought some advice Average CIS Average G20 Adults in CIS countries Appear to have good financial control But many are borrowing to make ends meet And could make more informed choices

10 Variations across subgroups in the CIS Women have lower financial knowledge then men in 4 out of 7 CIS countries; but lower behaviour scores only in 1 country and no variation by gender in attitudes Variations by age are not very large, once other factors are taken into account. But the elderly have lower financial knowledge in 2 countries; lower behaviour scores in 1 country People living in rural areas have lower financial knowledge and behaviour in 3 countries Above median income and education beyond high school are strongly correlated with knowledge and behaviour; the association with attitudes is not very strong

11 СПАСИБО!

12 New vulnerable groups in a digitizing world Olaf Simonse Ministry of Finance, the Netherlands

13 Digitization opportunities and risks 2

14 Financial administration in a digital age At least 40% of the Dutch population has difficulty managing their financial administration Two groups with increased risk: Young adults (18-35 years) People that lack digital skills (underrepresented in the study) keeping records checking my -environments opening mails on a daily basis paying bills on time talking about money matters 3

15 Many people lack literacy and numeracy skills... * Adult pupulation (16+): 14.4 million 4

16 ... and digital skills 20% of the Dutch population (16-74) has insufficient digital skills (Eurostat, 2015) 1,2 million Dutch (12+) have never used the internet (Central Bureau for Statistics, 2016) 5

17 Literacy and debts There is a clear link between literacy/numeracy/digital skills and financial problems E.g. 50% of the people with problematic debts have a low level of literacy We need new ways to address the needs of these groups 6 moneywiseplatform.nl october

18 Financially healthy employees website Website for employers including: Signalling tools: how do you recognize financial distress? Checklist per life event Tips to have the conversation Referral tool to counseling, advice, help Information about attachment of earnings Behavioral insights and organisation tips LinkedIn page and news letter Strategic goal: making financial health part of HR policy 7

19 Levels of Financial Literacy at A Regional and Global Level: Indonesia Experience Sarjito Deputy Commissioner of Financial Education and Consumer Protection Indonesia Financial Services SikapiUangmu OJK5Sikapi Kontak OJK5157

20 A G E N D A Why is Financial Literacy Measurement Needed? Indonesia FSA, World Bank, and OECD Survey National Financial Literacy and Inclusion Survey 2016 Follow-up of National Survey Inputs for Next Survey 2

21 Why is Financial Literacy Measurement Needed?

22 Why is Financial Literacy Measurement Needed? To identify current condition of financial literacy POLICY To give an input in formulating framework of financial literacy policies EVALUATION Measurement tool for evaluating the effectiveness and efficiency of financial literacy programs RECOMMEN- DATION Input for both regulator and financial institution to determine effective education program and innovative financial products 4

23 Indonesia FSA, World Bank, and OECD Survey

24 Indonesia FSA, World Bank, and OECD Survey National Financial Literacy and Inclusion Survey (2016) Respondents 44 Questions Financial Capability Survey (2013) & Global Financial Inclusion Index (2017) ±1.000 Respondents/ country 48 Questions (Findex) 2015 OECD/INFE Toolkit for Measuring Financial Literacy and Financial Inclusion & Programme for International Students Assessment (PISA) ±1.000 Respondents/ country (OECD Toolkit) 55 Questions (OECD Toolkit) 6

25 THE ASPECTS : Indonesia FSA, World Bank, and OECD Survey FINANCIAL LITERACY Knowledge Confidence Skill Attitude Behaviour FINANCIAL CAPABILITY Knowledge Attitude Behaviour FINANCIAL LITERACY Awareness Knowledge Skills Attitude Behaviour FINANCIAL INCLUSION Usage of financial products and/or services FINANCIAL INCLUSION Proportion of individuals and firms that use financial services. FINANCIAL INCLUSION Affordability Timely and adequate access 7

26 National Financial Literacy and Inclusion Survey 2016

27 National Financial Literacy and Inclusion Survey 2016 GEOGRAPHICAL COVERAGE AND RESPONDENT S PROFILING Measuring financial literacy and inclusion in 6 financial industries: Banking, Capital Market, Insurance, Financing Institution, Pension Fund, and Pawnshop 7 Provinces established less than 20 1 City 24 Provinces with normal 2 Cities 3 Provinces with largest 3 Cities 9680 RESPONDENTS COVER ALL PROVINCES (34), 64 CITIES Indonesia Financial Services Authority conducts National Survey on Financial Literacy and Inclusion every 3 years. The next survey will be in

28 National Financial Literacy and Inclusion Survey 2016 GEOGRAPHICAL COVERAGE AND RESPONDENT S PROFILING AGE y.o y.o y.o y.o > 50 y.o GENDER Man Woman Occupation Entrepreneur Employee and Professional Student/college student Housewife Pensions Others Margin of Error 5% REGION Rural Urban EDUCATION Have no formal education/ Not graduated from primary school Primary School Graduate Secondary School Graduate High School Graduate College or University Graduate EXPENDITURE A Class B Class C Class D Class E Class Data Collection Face to Face Interview Survey Sampling Method Multi- stage stratified random sampling Number of Questions 44 questions on profiling respondent, financial literacy, financial inclusion, & supporting questions 10

29 National Financial Literacy and Inclusion Survey 2016 National Financial Literacy Survey (2013) National Financial Literacy and Inclusion Survey (2016) LITERACY Knowledge Skill Confidence INCLUSION LITERACY INCLUSION Knowledge Attitude Usage Skill Usage Behaviour Confidence In 2016, we added 2 new aspects (attitude and behaviour) to the definition of financial literacy which implied in the way we measure financial literacy level. DEFINITION OF FINANCIAL LITERACY knowledge, skill, and confidence that affect attitude and behavior to improve the financial decision making and management in order to achieve financial well being. In 2016, we also added an index for financial literacy and financial inclusion sharia 11

30 National Financial Literacy and Inclusion Survey 2016 FINANCIAL LITERACY AND FINANCIAL INCLUSION INDEX FINANCIAL LITERACY INDEX Literate 21.8% Literate 29.7% FINANCIAL INCLUSION INDEX Inclusion 59.7% Inclusion 67.8% *) α =5% Source: OJK, 2016 v Indonesia financial literacy index is increasing above our expectation that is 2% increase per year. The result of the survey shows that Indonesia s financial literacy index is rising for 7.9%. v Similar growth also shown for financial inclusion index which increases for 8.1%. v In 2019, we aim to reach 35% for financial literacy index and 75% for financial inclusion 12 index.

31 Follow Up of National Survey

32 Follow-up of National Survey Development of Financial Literacy Initiatives (1): Issuing OJK REGULATION No. 76/2016 on Raising Financial Literacy and Inclusion in the Financial Services Sector for Consumers and/or the Public OBJECTIVES OF FINANCIAL LITERACY PROGRAM increasing the quality of financial decision making of individuals changing attitude and behavior of individuals for better financial management to make them capable of determining and utilizing financial institutions, products and services that suit the needs and capabilities of the consumer and society in order to achieve prosperity. Revising Indonesian National Strategy for Financial Literacy (revised 2017) Highly'financial' literate'population' who'thus'can'take'advantage'of'suitable'financial products'and'services'to'achieve'sustainable'financial'well:being' MISION Financial'Education Broadening'Access' to Financial Services STRATEGIC. PROGRAMS Financial' Competence Financial Wise' (Behavior'and'Attitude) Financial' Access 14 INITIATIVE PROGRAMS Knowledge,'Skill,' and'confidence Infrastructure Financial'Goals'and' Planning Financial'Management' Ability To'Broaden'and'Ease' Financial'Access Availability'of'Financial' Products'and'Services

33 Follow-up of National Survey Development of Financial Literacy Initiatives (2): Continue to improve in developing financial literacy programs, materials and infrastructures, such as: Material for Formal Financial Education (Students and College Students) Financial Literacy Book For Senior High School Financial Literacy Book For Junior High School Financial Literacy Book for Elementary School Financial Literacy Book Series for College Students Board Game for Elementary School E-book version of Financial Literacy Book For Senior High School E-learning version of Financial Literacy Book For Elementary and Junior High Material for Financial Education for Communities Financial Literacy Series Brochure and Booklets Braille version of Financial Planning Book Practical Books of Financial Literacy Series for Professionals and Retirees

34 Follow-up of National Survey Development of Financial Literacy Initiatives (3): Continue to improve in developing financial literacy programs, materials and infrastructures, such as: Financial Education Programs ü Education for Teachers/Educators in formal education program ü Education for Targeted Communities including: women, remote communities, farmers and fishermen, migrant workers, etc ü Financial Education using using Financial Financial Literacy Car (SIMOLEK) ü Financial Literacy Car Consumer (SIMOLEK) Care (FCC) Financial Education Programs through Digital sikapiuangmu.ojk.go.id Mobile Application Sikapiuangmu Instagram Twitter Facebook 16

35 Follow-up of National Survey 17 Development of Financial Inclusion Initiatives: Non-cash Social assistance program (BPNT) Non- cash social assistance program is provided in the context of poverty reduction programs which include social protection, social security, social empowerment, social rehabilitation, and basic services. The distribution of non- cash social assistance is carried out through the transfer of funds to recipient s account. People who do not have a savings account required to open an account at the beginning. Student Savings (SIMPEL) Saving for student that is nationally issued by Indonesian banks with easy and simple process, in order to educate student a good saving behaviour and include them in financial system from the early stage. LAKU PANDAI / Branchless banking is the government s effort in supporting financial inclusion program which provide simple and easy-to-understand financial products, and relevant with society s needs that have not been covered with financial services so far. The products provided: 1) Basic Saving Account (BSA), 2) Loans/financing for micro business customers, and 3) Other financial products such as micro insurance. Acceleration Team for Regional Financial Access (TPAKD) Coordination forum between related institutions and stakeholders to improve acceleration of regional financial inclusion in order to boost regional economic growth and also to achieve welfare.

36 Inputs for Next Survey

37 Inputs for Next Survey Based on the evaluation of survey implementation in 2016, there are few findings that will be used as an inputs for the next survey: LITERASI IMPROVE Knowledge THE SAMPLING METHODOLOGY Skill In order to get more representative Confident data of Indonesia which consist of such heterogeneous population. REDUCE NUMBER OF QUESTIONS Some respondents find the questionnaire a bit too long, causing the interview becoming less focus and respondents no longer give full concentration to the question. SIMPLIFY THE LANGUAGE OF QUESTIONNAIRE Use no sophisticated language nor complicated financial term to made it easy for respondents to understand, especially those who came from middle to low economy background. 19

38 Thank You SikapiUangmu OJK5Sikapi Kontak OJK5157

39 Annex SikapiUangmu OJK5Sikapi Kontak OJK5157

40 FINANCIAL LITERACY LEVEL BY REGION 100% 80% National Financial Literacy and Inclusion Survey 2016 FINANCIAL LITERACY LEVEL BY GENDER 60% 40% 20% 33.2% 23.9% 33,2% 25,5% 0% Urban Area Rural Area FINANCIAL INCLUSION LEVEL BY REGION FINANCIAL INCLUSION LEVEL BY GENDER 100% 80% 60% 71.2% 63.2% 69,6% 66,2% 40% 20% 0% Rural Area Urban Area 22

41 FINANCIAL LITERACY LEVEL BY OCCUPATION National Financial Literacy and Inclusion Survey 2016 FINANCIAL LITERACY LEVEL BY EDUCATION LEVEL Employee and Professional Retiree Entrepreneur Student/College Student Others 39.9% 35.3% 27.7% 23.4% 22.8% University- Level Education Complete secondary school (High School) Complete primary school Complete some secondary school (Junior high) 11.3% 9.0% 38.2% 67.4% Housewife 15.3% No formal education 3.6% 23 0% 20% 40% 60% 80% 100% FINANCIAL INCLUSION LEVEL BY OCCUPATION Retiree Employee and Professional Entrepreneur Student/College Student Housewife Unemployed and Others 22.8% 66.6% 64.2% 61.4% 74.0% 73.9% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% FINANCIAL INCLUSION LEVEL BY EDUCATION LEVEL University- Level Education Complete secondary school (High School) Complete primary school Complete some secondary school (Junior high) No formal education 39.6% 60.0% 57.4% 72.8% 88.0% 0% 20% 40% 60% 80% 100%

42 National Financial Literacy and Inclusion Survey 2016 RESULT #1 : FINANCIAL KNOWLEDGE (1) FORMAL FINANCIAL SERVICES PROVIDER Banking 99.8% MOST KNOWN FORMAL FINANCIAL PRODUCTS IN EACH INDUSTRY Banking 99.3% Insurance 60.3% Insurance 60.2% Pawnshop 58.2% Pawnshop 56.6% Financing Institutions 49.8% Financing Institutions 39.0% Pension Fund 22.4% Pension Fund 20.9% Capital Market 15.7% Capital Market 15.0% 24

43 National Financial Literacy and Inclusion Survey 2016 RESULT #1 : FINANCIAL KNOWLEDGE (2) FINANCIAL PRODUCTS CHARACTERISTICS 82.7% - Features 40.6% - Accessibility Office ATM DELIVERY CHANNELS 96.2% 92.1% 36.1% - Risks 86.0% - Benefits EDC Mobile Banking 23.5% 17.2% 66.0% - Fines 37.6% - Costs Agent Online Transaction 16.5% 12.1% Phone Banking 12.0% 36.1% - Obligations 40.5% - Rights Bancassurance 3.3% 25 25

44 National Financial Literacy and Inclusion Survey 2016 RESULT #2 & #3: FINANCIAL SKILL & CONFIDENCE SKILL 36.8% respondents state that they have the ability to calculate the interest rate, installments, investment return, transaction costs, fines, and/or inflation rate. 93.6% respondents can correctly answer simple arithmetic questions. 90.5% CONFIDENCE 42.2% 37.1% 27.0% 17.4% 9.0% Only 30.7% respondents express that they can calculate interest rate, BUT 62.1% respondents actually give right answer regarding interest rate computing. 11.1% respondents state that they are able to estimate inflation rate and 13.4% respondents provide the correct answer about inflation concept. The result shows that the respondents underestimate their skills to calculate interest rate and understanding about inflation concept. Banking Pawnshop Insurance Financing Institutions Pension Fund Capital Market Respondents are most confident with banking institution. but only 17% respondents state they have confidence to manage their finance. 26

45 National Financial Literacy and Inclusion Survey 2016 RESULT #4 & #5: FINANCIAL ATTITUDE & BEHAVIOUR ATTITUDE BEHAVIOUR 96.7% of respondents reveal that they have a financial goal. The top three of the financial goals are: To achieve their financial goal, people tend to choose short term attempt which is in line with their financial goal. 69.0% Fulfill daily needs and continue their daily life 12.6% Pay for education purposes 6.3% Retirement planning 74.6% Savings 41.8% Create financial budgeting 38.0% Working/ Find a job 27

46 National Financial Literacy and Inclusion Survey 2016 RESULT #4 & #5: FINANCIAL ATTITUDE & BEHAVIOUR ATTITUDE More than half the respondents convey that they have monthly financial budgeting (54.9%). Yet, only 27.5% of them have detailed monthly budgeting. BEHAVIOUR Most of the respondents use financial products to save their funds (57.8%), for daily financial transaction (55.0%) and to provide safety (45.3%). 45.1% Yes No 54.9% 72.5% 27.5% General Detailed 57.8% Fund Savings 55.0% Daily Financial Transactions 45.3% Provide sense of security 28

47 National Financial Literacy and Inclusion Survey 2016 RESULT ON FINANCIAL INCLUSION: USAGE OF FORMAL FINANCIAL PRODUCTS IN EACH INDUSTRY Banking Insurance Financing Institutions Pawnshop Pension Fund 4.7% 12.1% 11.8% 10.5% 63.6% Phone Banking Mobile Banking Bancassurance USAGE OF DELIVERY CHANNELS Office ATM Online Agent EDC 4.9% 4.3% 4.2% 4.1% 0.9% 0.4% 71.8% 80.5% Capital Market 1.3% Savings and transfer are the top most used products and services. This data is in line with the people s objective of using financial products that is for saving and daily transaction. Most of the respondents prefer to go to financial provider offices to make financial transactions. Meanwhile, only limited percentage of respondents choose digital financial delivery channel (e.g. phone banking, mobile banking). 29

48 National Financial Literacy and Inclusion Survey 2016 RESULT ON SHARIA INDEX: NATIONAL SHARIA FINANCIAL LITERACY INDEX Pension Fund 0.00% 0.00% 8,11% NATIONAL SHARIA FINANCIAL INCLUSION INDEX Capital Market Financing Pawnshop Insurance 0.02% 0.01% 0.19% 0.24% 1.63% 0.71% 2.51% 1.92% 11,6% 11,6% 6.63% Banking 9.61% 0.00% 5.00% 10.00% 15.00% 20.00% Financial Literacy Financial Inclusion 30 *) α =5% Source: OJK, 2016

49 OECD Survey

50 409/ 40.90% 32 LITERASI Knowledge Skill Confident DATA RESULT OF OECD QUESTIONNAIRE OECD Survey using 2015 OECD/INFE Toolkit for Measuring Financial Literacy and Inclusion out of National Survey Respondents also answered Questions from OECD Questionnaire REGION Urban 591/ 59.10% Rural 461/ 46.10% Technical/vocational education beyond secondary school level Complete secondary school (high school) Some secondary school (complete some secondary school) Male GENDER Female EDUCATION LEVEL University- level education Complete primary school No formal education 70 (7,00%) 6 (0,60%) 539/ 53.90% 105 (10,50%) 227 (22,70%) AGE GROUP 57/5.70% 157/ 15.70% 453 (45,30%) 139 (13,90%) / 0,5% 62/ 6.20% 191/ 19.10% 259/ 25.90% 269/ 26.90% Student/College Student In paid employment (work for someone else) / Professional 69/6.90% 225/22.50% OCCUPATION Not working and other Retired Housewives Self- employed EXPENDITURE 17 (1,70%) 416/41.60% 156/ 15.60% A B C D E 30 (3,00%) 159 (15,90%) 66(6,60%) 265 (26,50%) / 13.40% 463 (46,30%)

51 OECD Survey Result Indonesia (1) DATA RESULT OF OECD QUESTIONNAIRE using 2015 OECD/INFE Toolkit for Measuring Finansial Literacy and Inclusion Financial Knowledge Financial Behaviour LITERASI Knowledge Skill Financial Attitude Confident 33

52 OECD Survey Result Indonesia (2) DATA RESULT OF OECD QUESTIONNAIRE using 2015 OECD/INFE Toolkit for Measuring Finansial Literacy and Inclusion Overall Score on Financial Knowledge, Attitude, and Behaviour LITERASI Knowledge Skill Confident 34 In this report, the result of the survey shows that Indonesia is above average, G20 countries (12,7) with total score of financial knowledge, attitude, and behavior = 13,4