Determinants of Financial Literacy
Authors: Castro-Valencia Alberto-Merced , Perez Cesar Omar Mora , Martinez-Orozco Edgardo 
Published: April 2024

The objective of this article was to analyze the factors that determine the level of financial literacy in Mexican adults, the method used for the analysis was an Ordinary Least Squares (OLS) model. The results reveal that age, marital status, education, number of dependents and income level in the central and southern regions were positively associated with the financial literacy index; while men and having a job were negatively associated. One of the limitations of the study lies in the number of observations regarding some variables considered. The originality of the work consists in the fact that evidence is provided considering the characteristics at the individual level for Mexico. The findings obtained can be useful for the design of public policies as well as serve as a basis for subsequent studies.

Objective: The objective of conducting an investigation into the literality of financing may be to fully understand the specific provisions and clauses of financial contracts. This may include analyzing the terms and conditions set forth in loan agreements, lines of credit or other forms of financing to fully understand the obligations and responsibilities of the parties involved.

Theoretical Framework: Various proposals have been developed to measure financial literacy/inclusion (BANAMEX, 2018; Dabla-Norris et al., 2015; OECD, 2018) however, in this work the methodology developed by OECD (2018) is used, said methodology can be adapted to the situation of each country. The ENIF 2018 incorporates questions that cover aspects of financial knowledge, behaviors and attitudes in adults from 18 to 70 years of age, where the maximum score obtained is seven, nine and five points for each aspect respectively, which gives a total of 21 points. The index is built from the sum of the points obtained in each aspect.

Method: This sum is normalized to 100 to facilitate its interpretation (CNBV, 2019); a higher value implies greater financial literacy and a lower value the opposite. Context of financial education in Mexico The CNBV (2019) indicates that the financial literacy index for Mexico was located at a rating of 58.2 points; when broken down by components, it indicates that "financial knowledge" was located at 65.8 and

Results and conclusion: Current Level of Financial Literacy: The level of financial literacy in Mexico has been determined to be relatively low, with a large proportion of the population lacking basic knowledge of financial issues. Impact on Financial Well-being: It has been shown that there is a direct correlation between the level of financial literacy and the economic well-being of individuals, highlighting the importance of improving education in this area to boost financial development and reduce economic insecurity. Demographic Gaps: Certain demographic groups, such as low-income people, youth and women, have been identified as facing greater challenges in terms of financial literacy, underscoring the need to adopt inclusive and targeted approaches to address these disparities. Importance of Financial Education: The relevance of promoting financial education programs from the early stages of life has been highlighted, both in the educational system and through community initiatives, to equip people with the necessary skills to make responsible financial decisions. and prepare them to face future economic challenges.

Resarch implications: Awareness of the Importance of the Topic: Conducting research on financial literacy involves recognizing the critical relevance of this topic in today's society. This means understanding how a lack of financial literacy can negatively impact the lives of individuals and communities in terms of economic well-being, access to opportunities, and the ability to make informed decisions. Understanding the Causes and Consequences: The researcher must delve into the underlying causes of the lack of financial literacy, as well as the possible short- and long-term consequences for individuals and society as a whole. This involves analyzing factors such as access to financial education, the quality of the education received, socioeconomic and cultural barriers, among others. Identification of Areas of Improvement: Research can reveal specific areas where improvements are needed in terms of public policies, educational programs, financial services, and business practices. This may include recommendations to develop stronger school curricula, implement financial awareness campaigns, improve the accessibility of financial services, and promote transparency and accountability in the financial industry. Developing Innovative Solutions: By understanding the needs and challenges related to financial literacy, researchers can contribute to the development of innovative and effective solutions. This could involve creating interactive educational tools, designing training programs tailored to different demographic groups, or implementing financial technologies (fintech) that facilitate access to financial services and making informed decisions. Fostering Dialogue and Collaboration: Research can serve as a basis to foster dialogue between different actors, including government institutions, nonprofit organizations, private companies, academics, and civil society. This can lead to strategic collaborations and coordinated actions to address financial literacy challenges more effectively and sustainably.

Originality/vulue: Awareness of the Importance of the Topic: Conducting research on financial literacy involves recognizing the critical relevance of this topic in today's society. This means understanding how a lack of financial literacy can negatively impact the lives of individuals and communities in terms of economic well-being, access to opportunities, and the ability to make informed decisions. Understanding the Causes and Consequences: The researcher must delve into the underlying causes of the lack of financial literacy, as well as the possible short- and long-term consequences for individuals and society as a whole. This involves analyzing factors such as access to financial education, the quality of the education received, socioeconomic and cultural barriers, among others. Identification of Areas of Improvement: Research can reveal specific areas where improvements are needed in terms of public policies, educational programs, financial services, and business practices. This may include recommendations to develop stronger school curricula, implement financial awareness campaigns, improve the accessibility of financial services, and promote transparency and accountability in the financial industry. Developing Innovative Solutions: By understanding the needs and challenges related to financial literacy, researchers can contribute to the development of innovative and effective solutions. This could involve creating interactive educational tools, designing training programs tailored to different demographic groups, or implementing financial technologies (fintech) that facilitate access to financial services and making informed decisions. Fostering Dialogue and Collaboration: Research can serve as a basis to foster dialogue between different actors, including government institutions, nonprofit organizations, private companies, academics, and civil society. This can lead to strategic collaborations and coordinated actions to address financial literacy challenges more effectively and sustainably.