Financial capability surveys around the World : why financial capability is important and how surveys can help

Abstract

Financial capability is increasingly becoming a priority for policymakers in both high income and emerging economies, as it is recognized as contributing to financial stability, financial inclusion, and to the effective functioning of financial markets. Improving financial capability has thus emerged as a strategic policy objective that complements governments' financial inclusion and consumer protection agendas. To this end, policymakers are increasingly using surveys as diagnostic tools to identify key problem areas and inform the design of national strategies. In general, surveys of financial capability seek to achieve the following objectives: create a baseline assessment of weak areas of capability and identify target populations; identify potential channels for delivering information and financial education; understand the relationship between financial knowledge or literacy and behavior; and understand individual behavior with respect to personal or household finances. By identifying and analyzing existing surveys, this note outlines and compares key approaches to measuring financial capability and the external factors that may affect it, offering policy makers a broad range of options to consider when developing their research and policy objectives.

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