The distribution of financial knowledge, financial access and attitudes across the population: evidence from the Spanish Survey of Financial Competences.

Several studies have documented a negative correlation between financial knowledge and a lack of access to financial markets. Such negative correlations could arise because lack of financial knowledge causes poor financial choices or, alternatively, because individuals invest less and acquire less financial knowledge in situations where, for example, the welfare state is more generous. Disentangling between both hypotheses requires information about the joint distribution of financial knowledge, financial inclusion and attitudes of the adult population. The 2016-2017 Survey of Financial Competences collects that information for a sample that is representative of the adult population in Spain and of each of its Autonomous Communities. This descriptive study will firstly provide a distribution of knowledge about basic financial notions across groups defined by their year of birth, level of education, gender and place of residence. The survey measures if individuals understand interest rates, their compounding, diversification or the effects of inflation. In a second step, we show the use of financial products by those same groups of the population (age, education, gender and Autonomous Community). We will describe not only the access to checking and saving accounts, mutual and pension funds, bond and stocks, mortgage and personal loans by different groups of the population, but also the sources of information individuals resort to when acquiring those products. To understand further barriers in access to finance, the study will also describe informal saving and borrowing vehicles, loan applications and rejections, payment arrears as well as problems with financial institutions. The last step links previous findings by documenting how the use of financial products varies by the degree of financial knowledge of different groups of individuals. To get a tighter characterization of that link, we will describe the expectations about future income, housing prices and labor market risk of the least financially knowledgeable. NOTE: SUBMITTED FOR AXIS 2, AS FINANCIAL COMPETENCES ARE LINKED TO SAVING AND INVESTMENT DECISIONS THAT SHAPE LONG-RUN PERFORMANC