Financial literacy and savings account returns

Arbeitspapier

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 considerable 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 13% 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IMFS Working Paper Series ; No. 88

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Macroeconomics: Consumption; Saving; Wealth ; Portfolio Choice; Investment Decisions ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: financial literacy ; savings accounts ; interest rates ; household finance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Deuflhard, Florian ; Georgarakos, Dimitris ; Inderst, Roman
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)
• (where): Frankfurt a. M.
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/109513
• URN: urn:nbn:de:hebis:30:3-374802
• Last update: 10.03.2025, 11:44 AM CET