Sustainable Finance Literacy and the Determinants of Sustainable Investing

48 Pages Posted: 1 Jan 2022 Last revised: 5 Jan 2022

See all articles by Massimo Filippini

Massimo Filippini

ETH Zürich; University of Lugano - Faculty of Economics

Markus Leippold

University of Zurich; Swiss Finance Institute

Tobias Wekhof

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Date Written: December 30, 2021

Abstract

This paper introduces the concept of sustainable finance literacy, which refers to retail investors' knowledge of regulations, norms, and standards for financial products with sustainable characteristics. We survey a large sample of Swiss households and measure different literacy concepts using two complementary approaches. First, we use traditional multiple-choice questions, and second, a novel approach based on open-ended questions that ask respondents to write a text response. We find that Swiss households, which typically show high financial literacy by international standards, exhibit a low level of sustainable finance literacy. Interestingly, multiple-choice questions lead to a gender gap, with women performing worse than men. However, this difference disappears when open-ended questions are used. Moreover, despite its low level, sustainable finance literacy is a highly significant factor for sustainable product ownership. Therefore, our results reveal an urgent need to establish transparent regulatory standards and strengthen information campaigns on sustainable financial products.

Keywords: Sustainable finance literacy, sustainable finance products, ESG, household finance, open-ended questions, gender gap

JEL Classification: G02, G11, G18, C83

Suggested Citation

Filippini, Massimo and Leippold, Markus and Wekhof, Tobias, Sustainable Finance Literacy and the Determinants of Sustainable Investing (December 30, 2021). Swiss Finance Institute Research Paper No. 22-02, Available at SSRN: https://ssrn.com/abstract=3997285 or http://dx.doi.org/10.2139/ssrn.3997285

Massimo Filippini

ETH Zürich ( email )

ETH-Zentrum
CH-8092 Zurich
Switzerland

University of Lugano - Faculty of Economics ( email )

Via Giuseppe Buffi 13
CH-6900 Lugano, CH-6904
Switzerland

Markus Leippold (Contact Author)

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Tobias Wekhof

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 633 80 78 (Phone)

HOME PAGE: http://sites.google.com/view/tobiaswekhof

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