The impact of financial literacy on the quality of self-reported financial information

Carlos Madeira, Paula Margaretic

Research output: Contribution to journalArticlepeer-review

Abstract

Household finance surveys are now common in many countries. However, the validity of the self-reported financial information is still understudied, especially for complex choices. Using a unique matched dataset between the Chilean Household Finance Survey and the banking system's loan records, we find a positive effect of financial literacy on the accuracy of loan reporting. These findings are robust to the use of several proxies for financial literacy, such as the OECD INFE measure, the knowledge of the respondent's personal pension account type, or the use of electronic means of payments. Using a nearest neighbor matching estimator, we confirm that the effect of financial literacy on the accuracy of loan reporting is causal even after controlling for several observable characteristics.

Original languageEnglish
Article number100660
JournalJournal of Behavioral and Experimental Finance
Volume34
DOIs
StatePublished - Jun 2022
Externally publishedYes

Keywords

  • Credit
  • Financial education
  • Financial literacy
  • Household finance surveys
  • Measurement errors
  • Mortgage refinancing
  • Saving behavior

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