Fintech and financial literacy in the Lao PDR

Morgan, Peter J.; Long, Trinh Q. Working Paper Fintech and financial literacy in the Lao PDR ADBI Working Paper Series, No. 933 Provided in Cooperation with: Asian Development Bank Institute (ADBI), Tokyo Suggested Citation: Morgan, Peter J.; Long, Trinh Q. (2019) : Fintech and financial literacy in the Lao PDR, ADBI Working Paper Series, No. 933, Asian Development Bank Institute (ADBI), Tokyo This Version is available at: https://hdl.handle.net/10419/222700 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/3.0/igo/ ADBI Working Paper Series FINTECH AND FINANCIAL LITERACY IN THE LAO PDR Peter J. Morgan and Long Q. Trinh No. 933 March 2019 Asian Development Bank Institute The Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI’s working papers reflect initial ideas on a topic and are posted online for discussion. Some working papers may develop into other forms of publication. Suggested citation: Morgan, P. J. and L. Q. Trinh. 2019. Fintech and Financial Literacy in the Lao PDR. ADBI Working Paper 933. Tokyo: Asian Development Bank Institute. Available: https://www.adb.org/publications/fintech-and-financial-literacy-lao-pdr Please contact the authors for information about this paper. Email: [email protected] Peter J. Morgan is Senior Consulting Economist and Vice Chair, ADBI. Long Q. Trinh is Project Consultant, ADBI. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms. Working papers are subject to formal revision and correction before they are finalized and considered published. Asian Development Bank Institute Kasumigaseki Building, 8th Floor 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan Tel: +81-3-3593-5500 Fax: +81-3-3593-5571 URL: www.adbi.org E-mail: [email protected] © 2019 Asian Development Bank Institute ADBI Working Paper 933 Morgan and Trinh Abstract Financial literacy is gaining increasing importance as a policy objective in many countries. A growing literature has examined the role of financial literacy in an individual’s income, saving behavior and the use of various financial products. However, so far, no one has examined the relationship between financial literacy and the awareness and adoption of financial technology (fintech) products, i.e., financial products provided via internet-based and mobile-based platforms. This paper examines this relationship in a developing country, the Lao People’s Democratic Republic (PDR). We use information collected in the Lao PDR using the standardized questionnaire developed by the Organization for Economic Cooperation and Development International Network on Financial Education (OECD/INFE) to calculate our financial literacy. We find that a higher level of financial literacy has strong and positive effects on an individual’s awareness of fintech products. This result still holds when we use a set of instrumental variables for the financial literacy variable. However, there is insufficient data to find a significant relationship between financial literacy and the use of fintech products. Keywords: financial literacy, financial behavior, fintech, awareness of fintech, household saving, Lao PDR JEL Classification: D14, G11, J26 ADBI Working Paper 933 Morgan and Trinh Contents 1. INTRODUCTION ......................................................................................................... 1 2. FINTECH AND FINTECH DEVELOPMENT IN THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS (TO BE ELABORATED) .................................... 2 2.1 An Overview of Fintech ................................................................................... 2 2.2 Fintech Development in the Lao PDR ............................................................. 3 3. LITERATURE SURVEY .............................................................................................. 4 4. FINANCIAL LITERACY AND FINTECH IN LAO PDR ................................................. 5 4.1 Measurement of Financial Literacy ................................................................. 5 4.2 Data Collection ................................................................................................ 6 4.3 Stylized Facts of Financial Literacy in the Lao PDR ........................................ 7 4.4 ICT Adoption and Financial Literacy................................................................ 9 5. EFFECTS OF FINANCIAL LITERACY ON FINTECH AWARENESS ....................... 13 5.1 Empirical Results ........................................................................................... 13 6. CONCLUSIONS AND RECOMMENDATIONS ......................................................... 16 REFERENCES ..................................................................................................................... 17 APPENDIX 1: SAMPLE DISTRIBUTION .............................................................................. 19 ADBI Working Paper 933 Morgan and Trinh 1 1. INTRODUCTION In the literature, there are several widely used definitions of financial literacy. In their review article, Lusardi and Mitchell (2014) define financial literacy as “peoples’ ability to process economic information and make informed decisions about financial planning, wealth accumulation, debt, and pensions.” The Organization for Economic Cooperation and Development and the International Network on Financial Education (OECD/INFE) (2016) define financial literacy as “[a] combination of awareness, knowledge, skill, attitude and behavior necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.” Thus, this concept of financial literacy is multi-dimensional, reflecting not only knowledge but also skills, attitudes and actual behavior. Financial literacy has gained an important position in the policy agenda of many countries, and the importance of collecting informative, reliable data on the levels of financial literacy across the adult population has been widely recognized (OECD/INFE 2015b). This parallels the stress placed on increasing financial inclusion, i.e., access to financial products and services. If individuals do not well understand financial principles, they will not be able to profit from such increased access. Also, the trend of switching to defined-contribution plans from defined-benefit pension plans implies that individuals will increasingly need to manage their own retirement savings and pensions. At their summit in Los Cabos, Mexico in 2012, Group of Twenty (G20) leaders endorsed the High-Level Principles on National Strategies for Financial Education developed by OECD/INFE, thereby acknowledging the importance of coordinated policy approaches to financial education (G20 2012). At the same time, surveys consistently show that the level of financial literacy is relatively low, even in advanced economies (OECD/INFE 2016, 2017, 2018a). This indicates that the need for high levels of financial literacy is rising. Rapid developments in financial technology (fintech) highlight the need to improve financial literacy in order to use innovative financial products and services. With the development of information–communication technology (ICT), there is a growing breed of fintech companies that provides services through internetand mobile-based platforms, including Uber, Grab, and Airbnb. Recent literature has shown that fintech (especially mobile money) has helped to increase financial inclusion in developing economies where the traditional bank-based financial system is underdeveloped. Other studies have discovered factors that affect the adoption of mobileand internet-based financial services (Jack, Ray and Suri 2013; Suri 2017). However, we are not aware of any papers that investigate the role of financial literacy in the awareness and/or use of fintech products. This paper attempts to fill this gap by using newly collected data in a less-developed country with a rather low level of ICT development—the Lao People’s Democratic Republic (PDR). More specifically, our question is whether those with a higher level of financial literacy are more likely to be aware of and use fintech products. To answer this question, we construct a financial literacy score based on OECD/INFE (2015a, 2015c) and use both ordinary least squares (OLS) and instrumental variable (IV) estimation methods. We find that higher financial literacy is significantly related to awareness of fintech products. Therefore, improvements in financial literacy could speed the adoption of fintech products and services, and thereby promote financial inclusion. ADBI Working Paper 933 Morgan and Trinh 2 The paper is organized as follows. Section 2 provides some background on fintech development in general, and in the Lao PDR in particular. Section 3 reviews literature on the effects of financial literacy. Data collection, the definition of the financial literacy score used in this study and some descriptive analyses are presented in Section 4. Econometric approaches and results are reported in Section 5, followed by some concluding remarks in Section 6. 2. FINTECH AND FINTECH DEVELOPMENT IN THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS (TO BE ELABORATED) 2.1 An Overview of Fintech “Fintech” to refers “any technological innovation in—and automation of—the financial sector, including advances in financial literacy, advice and education, as well as streamlining of wealth management, lending and borrowing, retail banking, fundraising, money transfers/payments, investment management and more” (Investopedia 2018). Earlier generations of finance-related technology typically focused on providing services to already-established financial firms, but today’s fintech companies are increasingly providing services directly to consumers. Fintech is changing finance in fundamental ways, from investment management to capital–raising, to the very form of currency itself. In each of these areas, fintech innovation has lowered the barriers to entry, expanded access to financial services and challenged the traditional understanding of how finance works. Major categories of financial services offered by fintech firms include: • Payments and transfers (e-commerce payments; mobile banking, mobile wallets; person-to-person (P2P) payments and transfers; digital currency; and cross-border transactions including remittances and business-to business (B2B) payments) • Personal finance (robo-advisors; mobile trading and personal financial management) • Alternative financing (crowdfunding, alternative lending and invoice and supply-chain finance) Table 1 provides an overview of the size, composition and regulatory status of fintech markets in some Association of Southeast Asian Nations (ASEAN) economies. ADBI Working Paper 933 Morgan and Trinh 3 Table 1: Fintech in ASEAN: A Snapshot No. of Fintech Companies Investment in 2017 (USD million) Key Sectors Regulatory Sandbox Indonesia 262 26 (370% yoy growth) Mobile payments, alternative lending Yes Malaysia 196 75 (1,500% yoy growth) Payments, consumer finance Yes Philippines 115 78 (1,300% yoy growth) Payments (incl. remittances) Yes Singapore 490 141 (68% yoy growth) Wealth management, alternative lending, payments Yes Thailand 128 12 (–40% yoy growth) Payments Yes Viet Nam 77 3 Payments No yoy = year-on-year. Source: EY (2018). 2.2 Fintech Development in the Lao PDR Digital financial services (e.g., savings, credit, insurance and payment facilities through electronic devices) are at a very nascent stage in the Lao PDR. Mobile “top ups” and utility bill payments through a formal bank account, the internet or cell phones are the only digital financial activities currently prevalent in the Lao PDR. Moreover, in current circumstances, no fintech startup can pose any threat to incumbent formal financial institutions. The Banque Pour Le Commerce Exterieur Lao (BCEL) and other financial institutions are preparing for the adoption of digital financial services. • BCEL has a mobile application (app) to facilitate cardholders’ payments and transactions; • BCEL and UNITEL plan to launch a mobile app through which people can deposit money that can be used as e-money (i.e., transfer money via the mobile app); and, • The Central Bank of Lao PDR is preparing to launch branchless banking. 2.2.1 Internet Infrastructure in the Lao PDR Mobile connectivity has grown rapidly in the Lao PDR, but internet services do not seem to be adequate to facilitate the use of digital finance services. According to the Lao Statistics Bureau (LSB) (2017), in the financial year 2015-16: • 14% owned a home telephone; • 85% used cell phones; • 16% used computers; and, • 20% had access to the internet. ADBI Working Paper 933 Morgan and Trinh 4 Internet access in the Lao PDR is still relatively underdeveloped (LSB 2017). The breakdown of access by the level of the network is: • 1.5% with 4G network; • 61% with 3G network; and • 90% with 2G network. The environment for fintech startups in the Lao PDR is still difficult. Two government departments deal with startups: the Department of Small and Medium Enterprise Promotion (DOSMEP) and the Ministry of Science and Technology (MOST). However, government agencies believe that small-scale industries and startups are similar, so there are no new guidelines under which startups are registered. They are registered under small and medium enterprise (SME) rules. Tax authorities, too, treat SMEs and startups alike. There is no tax incentive or registration subsidy from the government for any startup firms at present. Even laws on foreign investment make it difficult for foreign investors to collaborate or invest in any startup in the country. Many experts suggest that the government should provide incentives and encourage regulation for startups to boost the startup eco-system in the Lao PDR. 3. LITERATURE SURVEY The literature on financial literacy focuses on two main areas: (i) the determinants of financial literacy, including age, gender, level of education and occupation; and (ii) the effects of financial knowledge on various aspects of financial behavior, including saving, use of credit, preparation for retirement and awareness and adoption of various financial services. There is already a long history of efforts to develop quantifiable measures of financial literacy based on surveys that can be subjected to empirical testing. One of the earliest examples was that of the Jump$tart Coalition for Personal Financial Literacy program for high school and college students in the United States in 1997, described in Mandell (2009). Lusardi and Mitchell (2006) added a set of financial literacy questions to the 2004 Health and Retirement Study (HRS), a survey of US households ages 50 and older, which have served as models for later surveys. The three core questions in the original survey were designed to assess understanding of some key financial concepts: compound interest, real rates of return, and risk diversification. Later surveys, including the OECD/INFE survey, have built on this base, but also added questions about financial attitudes, financial behavior and financial experience. The methodology for calculating scores from the survey responses is described below in Section 4.1. Lusardi and Mitchell (2014) provide an extensive review of the literature on factors related to financial literacy. Financial literacy tends to follow a hump-shaped pattern with respect to age, rising and then declining in old age. Interestingly, elderly persons’ confidence in their financial literacy shows no similar decline. Women generally score lower than men in financial literacy, and the reasons for this are still debated. However, women tend to be more willing than men to admit that they do not know an answer. Higher levels of education and higher levels of parents’ education are positively correlated with financial literacy. These findings were generally confirmed in the analysis of the results of the OECD/INFE survey in the above-mentioned sample of 30 countries in OECD/INFE (2016). ADBI Working Paper 933 Morgan and Trinh 11 Figure 5: Internet Users Source: Authors’ calculation. Figure 6: Awareness of Fintech Products Source: Authors’ calculation. Figure 7 shows the relationship between the financial literacy score and internet access, smartphone usage and awareness of fintech products. Those who access the internet and use smartphones have higher financial literacy scores than those who do not access the internet and did not use smartphones. The average financial score of those who access the internet is 13.1, higher than those who do not access the internet by 0.9 point. The difference in score between those who use smartphones and those who use normal phones is 0.5 point, while the score of those who did not use a phone is much lower (11.0). Also, the financial literacy of those who have heard about fintech products is 1.4 points higher than that of those who have not heard about fintech products. This indicates a positive correlation between financial literacy and awareness of fintech products. ADBI Working Paper 933 Morgan and Trinh 12 Figure 7: Fintech Use and Financial Literacy Scores Source: Authors’ calculation. We further examined the differences in each of three sub-components of financial literacy among different groups (Figure 8). In general, more financially aware groups (i.e., those who have internet access, use smartphones and/or are aware of fintech products) have higher financial knowledge, financial behavior and financial attitude scores than those in the less knowledgeable groups. The differences in each sub-component score are largest between groups of individuals who are aware of fintech products and those who are not. Figure 8: FinTech Use and Three Sub-components of Financial Literacy Score Source: Authors’ calculation. ADBI Working Paper 933 Morgan and Trinh 13 5. EFFECTS OF FINANCIAL LITERACY ON FINTECH AWARENESS 5.1 Empirical Approach In this paper, we only estimate the effect of financial literacy on the awareness of financial products. There was not sufficient data to estimate the impact of financial literacy on fintech use. To quantify the effect of financial literacy on the awareness of fintech products, the following equation is estimated: 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹ℎ𝑖𝑖=𝛽𝛽0+𝛽𝛽1𝐹𝐹𝐿𝐿𝑖𝑖+𝑋𝑋𝑖𝑖𝛽𝛽2+𝜂𝜂𝑖𝑖 of which • 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹ℎ𝑖𝑖 is a dummy variable, taking the value of one if the individual has heard of any types of fintech products, and zero otherwise. • 𝐹𝐹𝐿𝐿𝑖𝑖 is the financial literacy score, and 𝛽𝛽1 measures the effects of financial literacy on fintech awareness. • The control variables (𝑋𝑋𝑖𝑖) include income level, individual’s age, education level, gender, occupation, rural versus urban residence, and province. With regard to age, we divided the sample into three age groups: those under 30-years old, those over 30-years old but under 60-years old and those over 60-years old. We used the group of over-60-years-old individuals as the base group. For educational level, we combined the categories into three groups: (i) those with some, or completed, primary education (called the “some primary education” group) ; (ii) those with some, or completed, secondary education (called the “some secondary education” group); and (iii) those with at least some technical education beyond secondary education or university-level education (called the “tertiary education” group). The last group is used as the base group. With regard to occupations, we combined homemakers, retired and disabled people and voluntarily unemployed persons into one group and used this as the base group in this study. The remaining groups were self-employed people, salaried employees and apprentices/students. • To account for the possible endogeneity of 𝐹𝐹𝐿𝐿𝑖𝑖, we use three instrumental variables: (i) mean financial literacy score at the district level; (ii) respondent’s numerical skills; and (iii) financial shocks experienced by parents or siblings. We further explain our instrumental variables in the empirical results section. 5.2 Empirical Results Table 2 reports our estimation results on the relationship between financial literacy and the awareness of fintech products. The first column reports the result from the OLS estimator, while columns 2 and 3 show the results using two-stage least squares with instrumental variables for the financial literacy variable. The result in column 1 shows that financial literacy is positively associated with the likelihood of awareness of fintech products and this relationship is statistically significant at the 1% level. A one-standard deviation increase in the financial literacy score is associated with an increase in the probability of knowing fintech product by 8.3%. The result also suggests that those with incomes higher than 3.5 million kips (per month) have a higher likelihood of being aware of fintech product than those with income lower than 2 million kips (the reference group), ADBI Working Paper 933 Morgan and Trinh 14 while there is no statistically significant difference in awareness of fintech product between the reference group and those with incomes from 2 million to 3.5 million kips. This result suggests that only a small proportion of high-income people are more likely to know about fintech products. Even when financial literacy and income are controlled for, individuals with higher education levels have a significantly higher likelihood of awareness of fintech products. For example, an individual with tertiary education tends to have a higher probability of awareness of fintech products than those with some secondary and some primary education, by 34.6% and 20.7%, respectively. Interestingly, if we control for income and education levels, the likelihood of knowing about fintech products is not statistically significantly related to age groups, gender or rural versus urban location. However, paid employees have a higher likelihood of knowing about fintech products than do unemployed people (the reference group). However, the above estimates may be biased due to endogeneity problems (including reverse causality or the existence of unobservable factors that affect both the awareness of fintech products and financial literacy). In order to address these potential endogeneity problems, we used an instrumental variable (IV) approach. Following Fernandes et al. (2014) and Murendo and Mutsonziwa (2017), we used the mean financial literacy score at the district level as the first instrument for individual financial literacy. One may argue that areas with a higher level of economic development may also have better financial development and thus the average financial literacy will tend to be higher in such areas. To address this issue, we controlled for the development of the district by the share of people who have income higher than country’s median income. We also followed Grohmann (2018) and Grohmann et al. (2016) to use respondents’ numerical skills when they were in school as an additional instrumental variable. This variable is a binary variable which takes the value of one if the respondent was as good as other friends at mathematics in their last year of education, and zero otherwise. The third indicator is whether or not their parents and siblings experienced any financial shocks in the last year. This type of instrumental variable is used in Van Rooji et al. (2011). We expected that these instrumental variables did not directly affect the respondents’ knowledge of fintech, but did only indirectly through their financial literacy level. The test statistics indicate that our set of instrumental variables does not suffer from under-identification or weak instrument problems. The Sargan test also suggests that our instrumental variables satisfy the exclusion condition. The estimation results show a positive and significant impact of financial literacy on financial inclusion; actually larger than the OLS estimate. This result is consistent with other studies that use IV’s for financial literacy such as Agnew, Bateman, and Thorp (2013), Bucher-Koenen and Lusardi (2011) and Morgan and Trinh (2017). According to Lusardi and Mitchell (2006), the true effect of financial literacy seems to be biased downward, although the larger magnitude of the IV coefficient may be attributed to either measurement errors or a larger response from those who are affected by the instruments. We also find when we use the IV approach that the effect of income on awareness of financial products loses its significance. People with incomes higher than 3.5 million kips still have a higher likelihood of knowing about fintech products than those with incomes less than 2 million kips, but this difference is no longer statistically significant. Meanwhile, the results for other variables such as education and occupation are not qualitatively different from the OLS estimation, although the magnitude of the estimate coefficient is reduced slightly. Those in the age 30–60 group have significantly less knowledge than those under age 30. ADBI Working Paper 933 Morgan and Trinh 15 Table 2: Effect of Financial Literacy on Awareness of Fintech Products OLS IV 2nd Stage 1st Stage Financial literacy 0.083*** 0.153*** [0.013] [0.039] From 2M to 3.5M Kip 0.008 –0.045 0.308*** [0.032] [0.036] [0.073] More than 3.5M Kip 0.104** 0.042 0.286*** [0.047] [0.046] [0.098] Some secondary education –0.207*** –0.183*** –0.174* [0.053] [0.049] [0.106] Some primary education –0.346*** –0.298*** –0.354*** [0.055] [0.055] [0.112] Age 30–60 –0.054 –0.077** 0.196*** [0.034] [0.034] [0.072] Age over 60 –0.051 –0.058 –0.025 [0.044] [0.048] [0.106] Male 0.026 0.033 –0.032 [0.027] [0.027] [0.060] Self–employed 0.049 0.026 0.215** [0.037] [0.046] [0.098] Paid employees 0.135** 0.121** 0.089 [0.054] [0.057] [0.124] Cannot work/students/retired 0.112 0.083 0.223 [0.071] [0.071] [0.154] Rural area 0.004 0.024 0.078 [0.040] [0.039] [0.086] Average literacy at district level 0.898*** [0.086] Whether as good at math as friends 0.287*** [0.067] Parents/siblings experienced shocks 0.131** [0.058] Intercept 0.704*** 0.649*** –0.242 [0.075] [0.082] [0.189] Anderson canon. corr. LM statistic 119.883 Cragg–Donald Wald F statistic 44.461 Sargan statistics (p-value) 0.205 R-squared 0.253 0.2417 0.2422 N 989 989 989 Note: Figures in bracket are standard deviations. ***, ** and * denote coefficient is statistically significant at the 1%, 5% and 10% levels, respectively. The dependent variable is the fintech knowledge dummy variable. The weighted sample is used for all estimations. Source: Authors’ estimates. ADBI Working Paper 933 Morgan and Trinh 16 6. CONCLUSIONS AND RECOMMENDATIONS This study is one of the first to examine the relationship between financial literacy and awareness of fintech development. It focuses on a developing country with a low level of ICT development—the Lao PDR. We used the OECD/INFE standardized survey instruments to collect data on financial literacy. Moreover, we also included some extra questions to assess fintech awareness and fintech usage. Following Morgan and Trinh (2017), we also attempted to use several instrumental variables to mitigate the possible endogeneity bias of awareness of fintech products on financial literacy. Our data and empirical analysis show that: • 30% of the respondents have access to smartphones, especially young people (under age 30) and urban residents. • The level of financial literacy is relatively high when compared with per capita income, comparable to Viet Nam. • 31% of respondents were aware of fintech products, but only 4% have used them. • Financial literacy is positively associated with higher fintech awareness, along with educational attainment, job status and age (negative relationship). • Fintech use is negatively correlated with age, and positively correlated with urban residence, education level and income. However, we do not yet have sufficient data to estimate the determinants of fintech use econometrically—more data and analysis are needed. • General and financial education programs could raise the demand for fintech services. Not only does the low level of financial literacy explain the low level of awareness and adoption of fintech products; it is also related to the underdeveloped state of ICT infrastructure in the country. Therefore, in addition to general and financial education programs, the country needs to put more effort into the development of the ICT infrastructure as a necessary condition for fintech development. ADBI Working Paper 933 Morgan and Trinh 17 REFERENCES Agnew, J.R., Bateman, H. and Thorp, S. 2013. “Financial Literacy and Retirement Planning in Australia.” Numeracy 6 (2): 7. Bernheim, B. 1995. “Do Households Appreciate Their Financial Vulnerabilities? An Analysis of Actions, Perceptions, and Public Policy.” In Tax Policy and Economic Growth, 1–30. Washington, D.C.: American Council for Capital Formation. Bernheim, B. 1998. “Financial Literacy, Education, and Retirement Saving.” In Living with Defined Contribution Pensions: Remaking Responsibility for Retirement, edited by Olivia S. Mitchell and Sylvester J. Schieber, 38–68. Philadelphia: University of Pennsylvania Press. Bucher-Koenen, T.A.B.E.A and and Lusardi, A. 2011. “Financial literacy and retirement planning in Germany.” Journal of Pension Economics & Finance 10 (4): 565. Campbell, J. 2006. “Household Finance.” Journal of Finance 61 (4): 1553–604. Christelis, D., T. Jappelli, and M. Padula. 2010. “Cognitive Abilities and Portfolio Choice.” European Economic Review 54 (1): 18–38. de Bassa Scheresberg, C. 2013. “Financial Literacy and Financial Behavior among Young Adults: Evidence and Implications.” Numeracy 6 (2). EY. 2018. ASEAN FinTech Census 2018. Available at https://www.ey.com/Publication/ vwLUAssets/EY-asean-fintech-census-2018/$FILE/EY-asean-fintech-census2018.pdf. Fernandes, D., J. Lynch and R. Netemeyer. 2014. The Effect of Financial Literacy and Financial Education on Downstream Financial Behaviors. Management Science 60 (8): 1861–1883. Grohmann, A. 2018. “Financial Literacy and Financial Behavior: Evidence from the Emerging Asian Middle Class.” Pacific-Basin Finance Journal 48: 129–43. Grohmann, A., Klühs, T. and Menkhoff, L. 2016. “Does Financial Literacy Improve Financial Inclusion? Cross Country Evidence.” DEW Berlin Discussion Paper No. 1682. Group of Twenty (G20). 2012. G20 Leaders Declaration. Los Cabos, Mexico, June 19. Available at: http://www.g20.utoronto.ca/2012/2012-0619-loscabos.html. Hilgert, M., J. Hogarth and S. Beverly, 2003. Household Financial Management: The Connection between Knowledge and Behavior. Federal Reserve Bulletin 89 (7): 309–22. Investopedia. 2018. “Fintech.” Available at: https://www.investopedia.com/terms/f/ fintech.asp. Jack, W., Ray, A. and Suri, T. 2013. “Transaction Networks: Evidence from Mobile Money in Kenya.” American Economic Review 103 (3): 356–61. Lao Statistics Bureau (LSB). 2017. Statistical Yearbook 2017. Available at https://www.lsb.gov.la/wp-content/uploads/2018/10/Yearbook-2017.pdf. Lusardi, A. and O. Mitchell. 2006. “Financial Literacy and Planning: Implications for Retirement Wellbeing.” Working Paper, Pension Research Council. Philadelphia, PA: University of Pennsylvania. ADBI Working Paper 933 Morgan and Trinh 18 _____. 2011. “Financial Literacy and Planning: Implications for Retirement Well-Being.” In Financial Literacy: Implications for Retirement Security and the Financial Marketplace, edited by Olivia S. Mitchell and Annamaria Lusardi, 17–39. Oxford and New York: Oxford University Press. _____. 2014. “The Economic Importance of Financial Literacy: Theory and Evidence.” Journal of Economic Literature 52 (1): 5–44. Available at: http://dx.doi.org/ 10.1257/jel.52.1.5. Mahdzan, N.S. and S. Tabiani. 2013. “The Impact of Financial Literacy on Individual Saving, An Exploratory Study in the Malaysian Context.” Transformations in Business and Economics Vol 12 (1 (28): 41–55. Mandell L. 2009. “The Financial Literacy of Young American Adults: Results of the 2008 National Jump$tart Coalition Survey of High School Seniors and College Students.” Washington, DC: Jump$tart Coalition. Moore, D. 2003. “Survey of Financial Literacy in Washington State: Knowledge, Behavior, Attitudes, and Experiences.” Washington State University Social and Economic Sciences Research Center Technical Report 03-39. Morgan, P.J. and Trinh, L.Q. 2017. “Determinants and impacts of financial literacy in Cambodia and Viet Nam.” ADBI Working Paper Series No. 754. Tokyo: ADBI. Murendo, C. and Mutsonziwa, K. 2017. “Financial Literacy and Savings Decisions by Adult Financial Consumers in Zimbabwe.” International Journal of Consumer Studies 41 (1): 95–103. OECD/INFE. 2015a. Guide to Creating Financial Literacy Scores and Financial Inclusion Indicators Using Data from the OECD/INFE 2015 Financial Literacy Survey. Paris: OECD. ____. 2015b. Policy Handbook on National Strategies for Financial Education. Paris: OECD. Available at: http://www.oecd.org/g20/topics/employment-andsocial-policy/National-Strategies-Financial-Education-Policy-Handbook.pdf. ____. 2015c. 2015 OECD/INFE Toolkit for Measuring Financial Literacy and Financial Inclusion. Paris: OECD. ____. 2016. OECD/INFE International Survey of Adult Financial Literacy Competencies. Paris: OECD. ____. 2017. G20/OECD INFE Report on Adult Financial Literacy in G20 Countries. Paris: OECD. Available at: http://www.oecd.org/daf/fin/financial-education/ G20-OECD-INFE-report-adult-financial-literacy-in-G20-countries.pdf. ____. 2018a. Financial Inclusion and Consumer Empowerment in Southeast Asia. Paris: OECD. Available at: http://www.oecd.org/finance/Financial-inclusion-andconsumer-empowerment-in-Southeast-Asia.pdf. Stango, V., and J. Zinman. 2009. “Exponential Growth Bias and Household Finance.” Journal of Finance 64 (6): 2807–49. Suri, T. 2017. “Mobile money.” Annual Review of Economics 9: 497–520. van Rooij, M., A. Lusardi, and R. Alessie. 2011. “Financial Literacy and Stock Market Participation.” Journal of Financial Economics 101 (2): 449–72. ADBI Working Paper 933 Morgan and Trinh 19 APPENDIX 1: SAMPLE DISTRIBUTION Province Population Sample % Male % Female % Age under 30 % Age 30–60 % Age over 60 Vientiane Capital 55,018 60 31.7% 68.3% 25.0% 70.0% 5.0% Oudomxay 146,250 180 50.0% 50.0% 29.4% 56.7% 13.9% Laungpabang 220,665 120 40.8% 59.2% 39.2% 52.5% 8.3% Bolikhamxai 154,770 110 49.1% 50.9% 19.1% 69.1% 11.8% Khammuan 219,264 130 33.1% 66.9% 29.2% 55.4% 15.4% Savanaket 566,675 200 50.5% 49.5% 24.0% 56.5% 19.5% Sekong 45,095 60 40.0% 60.0% 36.7% 61.7% 1.7% Champasak 384,295 140 45.7% 54.3% 19.3% 68.6% 12.1% Total 2,287,194 1,000 44.4% 55.6% 27.1% 60.1% 12.8%