GLOBAL FINANCIAL LITERACY

McGraw Hill Financial, the parent company of S&P; Ratings Services, is committed to creating stronger financial markets all over the world. Addressing financial literacy is key to building stronger, more accessible and sustainable markets globally.

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Standard & Poor’s Ratings Services Global Financial Literacy Survey

Financial literacy is a critical barrier to financial and economic participation. Because of a lack of knowledge about finance and financial products, many people – especially the poor and women – are not able to access banking and financial services, and are therefore kept out of financial markets.

What is Financial Literacy?

Financial literacy is the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it, or how that person donates it to help others.

McGraw Hill Financial(MHFI)’s Corporate Responsibility commitment is to contribute to closing the global financial inclusion gap. We believe that increased financial literacy is linked to financial inclusion, economic opportunity, and the development of stronger capital markets all over the world.

That is why MHFI worked with Gallup to create the S&P Ratings Services Global Financial Literacy Survey – one of the most extensive measurements of global financial literacy to date. The survey was based on interviews with more than 150,000 adults across 148 countries. Of the 148 countries targeted for data collection in 2014, 144 countries successfully collected data and met Gallup quality standards.

We believe the survey’s findings will provide important data to regulators, sovereigns, NGOs and policymakers, to help them understand people’s current knowledge of basic financial concepts.

Watch Our Video to Learn About the Survey’s Findings.

One of the Most Extensive Measurements of Global Financial Literacy Research to Date

The Standard & Poor’s Ratings Services Global Financial Literacy Survey (S&P Global FinLit Survey) is one of the most extensive measurements of global financial literacy to date. The survey probes four basic financial concepts: numeracy (debt), risk diversification, inflation, and compound interest (saving). The data was collected in 2014 by Gallup as part of its Gallup World Poll and was analyzed by researchers from the World Bank and The George Washington University (Global Financial Literacy Excellence Center). The survey results come from interviews conducted with more than 150,000 adults in 148 countries. Of the 148 countries targeted for data collection in 2014, 144 countries successfully collected data and met Gallup quality standards.

The goal of the survey is to inform and empower academics, regulators, policymakers, and business associations to analyze, construct, and evaluate policies based on a sound understanding of the knowledge gaps that constrain and characterize individuals’ financial well-being and economic participation.

Our Views About Financial Literacy

Financial literacy is a critical barrier to financial inclusion, or access to financial services, such as a checking account, a savings account or credit. Because of a lack of knowledge about finance and financial products, many people – especially the poor and women – are not able to access banking and financial services, and are therefore kept out of financial markets.

Financial literacy is critical to people’s financial and economic well-being, and to the overall health of a country’s economy. When people are able to make informed financial choices regarding saving, housing, education, budgeting, and their careers, they become more able to realize their full potential.

McGraw Hill Financial (MHFI), the parent company of Standard & Poor’s Ratings Services, is committed to contributing to addressing the barriers that hinder people from accessing the financial services and capital they want and need to create opportunities for themselves and their communities. We believe that increased financial literacy is linked to financial inclusion, economic opportunity, and the development of stronger capital markets all over the world.

That is why we worked with Gallup, the World Bank Development Research Group, and The George Washington University to conduct the Standard & Poor’s Ratings Services Global Financial Literacy Survey (S&P Global FinLit Survey). We believe the survey’s findings will provide important data to regulators, sovereigns, NGOs and policymakers so they can develop more informed policies to counter financial literacy gaps.

Survey Methodology

The five questions of the Standard & Poor’s Ratings Services Global Financial Literacy Survey (S&P Global FinLit Survey) were carefully designed and mapped to probe four basic financial concepts:

Numeracy
Risk diversification
Inflation
Compound interest (saving and debt)

The questions were:

1.

Risk Diversification:

Question: Suppose you have some money. Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments?

2.

Inflation:

Question: Suppose over the next 10 years the prices of the things you buy double. If your income ALSO doubles, will you be able to buy less than you can buy today, the same as you can buy today, OR more than you can buy today?

3.

Numeracy and Comparison (Debt):

Question: Suppose you need to borrow $100. Which is the lower amount to pay back: $105 or $100 plus three percent?

4.

Interest Compounding (Saving):

Question: Suppose you put money in the bank for two years and the bank agrees to add 15 percent per year to your account. Will the bank add MORE money to your account the second year than it did the first year, or will it add the same amount of money both years?

5.

Interest Compounding (Saving and Numeracy):

Question: Suppose you had $100 in a savings account and the bank adds 10 percent per year to the account. How much money would you have in the account after five years if you did not remove any money from the account?

Interview Procedure

Surveys were conducted face-to-face in economies where telephone coverage represents less than 80 percent of the population or is the customary methodology. In most economies the fieldwork was completed in two to four weeks. In economies where face-to-face surveys were conducted, the first stage of sampling was the identification of primary sampling units. These units are stratified by population size, geography, or both, and clustering is achieved through one or more stages of sampling.

Where population information was available, sample selection was based on probabilities proportional to population size; otherwise, simple random sampling was used. Random route procedures were used to select sampled households. Unless an outright refusal occurred, interviewers made up to three attempts to survey the sampled household. To increase the probability of contact and completion, attempts were made at different times of the day and, where possible, on different days.

If an interview could not be obtained at the initial sampled household, a simple substitution method was used. Respondents were randomly selected within the selected households by means of the Kish grid. In economies where cultural restrictions dictate gender matching, respondents were randomly selected through the Kish grid from among all eligible adults of the interviewer’s gender.

In economies where telephone interviewing was employed, random digit dialing or a nationally representative list of phone numbers was used. In most economies where cell phone penetration is high, a dual sampling frame was used. Random selection of respondents was achieved by using either the latest birthday or Kish grid method. At least three attempts were made to reach a person in each household, spread over different days and times of day.

Data Preparation

Data weighting was used to ensure a nationally representative sample for each economy. Final weights consisted of the base sampling weight, which corrects for unequal probability of selection based on household size, and the poststratification weight, which corrects for sampling and nonresponse error. Poststratification weights use economy-level population statistics on gender and age and, where reliable data are available, education or socioeconomic status.

Errors that can affect survey validity included measurement error associated with the questionnaire, such as translation issues, and coverage error, where a part of the target population has a zero probability of being selected for the survey.
The data collection period, number of interviews, approximate design effect, and margin of error, as well as sampling details for each economy, is available here.
Additional information about the methodology used in the McGraw Hill Financial Global FinLit Survey can be found here.
The reference citation for the data is: “McGraw Hill Financial Global FinLit Survey data; https://www.finlit.mhfi.com”

Spokespeople & Researchers

Dr. Annamaria Lusardi, Academic director of the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University

Leora Klapper, Lead Economist at the World Bank Development Research Group, analyzed the survey data.

Key Findings

Data Highlights, INFOGRAPHIC & SHAREABLE GRAPHICS

DATA HIGHLIGHTS GALLERY

Overview