Financial literacy and FinTech market growth around the world

Abstract

Leveraging new data on fintech financing from the Bank of International Settlements, this study establishes a strong, positive association between financial literacy and the growth of the FinTech market across 114 countries from 2013 to 2019. We construct a new education policy-based measure of financial literacy based on the extent to which financial education is planned and subsequently integrated in public education curricula, using data from the World Bank's Global Financial Inclusion and Consumer Protection Survey. Additionally, we use the Standard and Poor's Global Financial Literacy Survey to obtain a market-based measure of financial literacy reflecting individuals' financial knowledge. We identify nonlinear effects within this relationship. This correlation between financial literacy and FinTech market growth remained consistent in varying economic, technological, and institutional contexts, validated through rigorous sensitivity tests and endogeneity analysis. The results imply that higher levels of financial literacy within a population could serve as a catalyst for expanding the FinTech market, underscoring the key role of financial knowledge in fostering the adoption and utilization of FinTech products and services thereby providing useful policy directions.

Keywords Fintech , Financing, Consumer Protection, Global Financial ,