78
FINANCIAL INCLUSION FOR INDIVIDUALS
GLOBAL FINANCIAL DEVELOPMENT REPORT 2014
FIGURE 2.5 Borrowing for Food and Other Essentials, by Level of Education
100
Share of all respondents, %
80
38
41
65
72
69
30
22
27
78
63
76
79
72
67
77
65
65
68
37
50
42
61
33
32
28
55
44
53
29
72
76
24
21
4
3
60 29 36
40
20 33
23
21 5
6
4
1
11
20
20
4
2
24 4
21 6
2
3
3
3
8
6
4
10
Pr im ar y Se co nd ar y Te rti ar y Pr im ar y Se co nd ar y Te rti ar y Pr im ar y Se co nd ar y Te rti ar y Pr im ar y Se co nd ar y Te rti ar y Pr im ar y Se co nd ar y Te rti ar y Pr im ar y Se co nd ar y Te rti ar y Pr im ar y Se co nd ar y Te rti ar y
0
26
25
Armenia
Colombia
Lebanon Regularly
Mexico
Nigeria
Sometimes
Turkey
Uruguay
No
Sources: Based on data of the World Bank Survey of Financial Capability 2012; World Bank 2013a. Note: Primary, secondary, and tertiary refer to the respondent’s highest education. The chart shows responses to the following question: “Do you ever use credit or borrow money to buy food or essentials?”
had sometimes been forced to borrow to make ends meet. There was a remarkable degree of consensus in the focus groups across the countries. Quite consistently, the focus group responses suggested that good financial behavior is not necessarily driven by financial knowledge: individuals can have financial knowledge but still make irrational financial decisions. Financial capability is also not necessarily linked to income (even though low income can be critical in preventing people from planning for the future). It is thus important to capture attitudes and motivations as well as experiences. A major goal of the research was to measure financial capability in middle-income countries in a way that works both across countries and across different subpopulations within the countries. A factor analysis of the data generated by the country surveys was used to construct measures of components of financial capability that were aligned with the key concepts identified through the focus groups. These components included
budgeting, living within means, monitoring expenses, not overspending, using information, covering unexpected expenses, saving, attitudes toward the future, not being impulsive, and achievement orientation. The results of the financial capability surveys show that, while most respondents say they are relatively capable of day-to-day money management (as indicated by the relatively high scores on “not overspending” and “living within means” in figure 2.6), they lag in terms of self-discipline in making a budget and then monitoring expenses and regularly saving. The survey also confirms that older people are more likely than younger people to live within their means and not overspend. Higher household income is associated with higher scores in most areas, but it does not seem to matter for budgeting or impulsiveness. Overall, the survey highlights the importance of the psychological traits and motivations associated with financial capability, including one’s attitude toward the future,