Financial literacy and savings account returns

Deuflhard, F., Georgarakos, D. and Inderst, R. (2019) Financial literacy and savings account returns. Journal of the European Economic Association, 17(1), pp. 131-164. (doi: 10.1093/jeea/jvy003)

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Savings accounts are owned by most households, but little is known about the performance of households’ investments. We create a unique dataset by matching information on individual savings accounts from the DNB Household Survey with market data on account-specific interest rates and characteristics. We document heterogeneity in returns across households, which can be partly explained by financial sophistication. A one-standard deviation increase in financial literacy is associated with a 12% increase compared to the median interest rate. We isolate the usage of modern technology (online accounts) as one channel through which financial literacy has a positive association with returns.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Georgarakos, Professor Dimitris
Authors: Deuflhard, F., Georgarakos, D., and Inderst, R.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of the European Economic Association
Publisher:Oxford University Press
ISSN (Online):1542-4774
Published Online:23 April 2018

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