Does Financial Regulation Unintentionally Ignore Less Privileged Populations? The Investigation of a Regulatory Fintech Advancement, Objective and Subjective Financial Literacy

55 Pages Posted: 9 Mar 2017 Last revised: 5 Sep 2018

See all articles by Maya Haran Rosen

Maya Haran Rosen

Hebrew University and BOI

Orly Sade

Hebrew University of Jerusalem - Department of Finance

Date Written: August 31, 2018

Abstract

Define contribution mechanism combined with a dynamic job market can affect the sum of retirement savings and the choices of plans and products. Hence, it is important for regulators to engage savers to manage the accounts they accumulate over the years. In 2013-2014 the Israeli regulator reached out to the population, recommending the use of a website to help individuals find inactive retirement savings accounts and close them (withdraw the savings or transfer them to active accounts). The government’s efforts did not result in the closure of most of the inactive accounts. Proprietary data indicate that those who closed the inactive accounts live in central locations with a higher socioeconomic index. Survey data indicate that those who lacked financial literacy and confidence in their financial knowledge were less likely to take financial actions. Using a controlled field experiment, we also provide evidence that an intervention with a human touch can promote greater involvement.

Keywords: Retirement savings, objective financial literacy, subjective financial literacy, fintech, field experiment

JEL Classification: D12, D14, D91, G28, G40, J32

Suggested Citation

Haran Rosen, Maya and Sade, Orly, Does Financial Regulation Unintentionally Ignore Less Privileged Populations? The Investigation of a Regulatory Fintech Advancement, Objective and Subjective Financial Literacy (August 31, 2018). Available at SSRN: https://ssrn.com/abstract=2929674 or http://dx.doi.org/10.2139/ssrn.2929674

Maya Haran Rosen

Hebrew University and BOI ( email )

Mount Scopus
Jerusalem, IL Jerusalem 91905
Israel

Orly Sade (Contact Author)

Hebrew University of Jerusalem - Department of Finance ( email )

Mount Scopus
Jerusalem, 91905
Israel
972 2 588 3227 (Phone)

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