At times in the distant past it has been higher still: the average payout ratio to Bank of Scotland shareholders over the period 1800 to 1995 was around 70%. 10    Second, there is little evidence of payout ratios being higher for financial than for non-financial companies. Such high payouts are themselves something of a puzzle because, at least in theory, the payout ratio ought not to affect the value of a firm. 11 This may be a collective action problem, with firms fearful of sending an adverse market signal through lower payouts.   Third, for both financials and non-financial firms, the flow of dividend income is much less volatile than firms’ stream of profits. In other words, there is evidence of firms systematically smoothing dividend payouts to shareholders. 12 This may also reflect a problem of collective action.   Fourth, the profits stream of the financial sector is significantly more volatile than for non-financial companies. That appears largely to be the result of large-scale, one-off losses by banks. This is as we would expect, given their greater leverage.   Fifth, as a result, the dividend payout ratio for banks is more volatile than for nonbanks. This behaviour is unlikely to support banking stability. It risks profits being distributed as dividends when they are most needed to augment capital ratios and boost confidence. In 1996, the Chief Executive of a famous company observed: “We are an old-fashioned business, not a quoted plc, and we don’t pay dividends to shareholders”.

Financial awareness supports a more rational decision-making process for individuals by improving their literacy against financial risks. Increasing financial literacy will contribute to the more efficient functioning of financial markets, enhancement of financial stability and consequently the social welfare by increasing productivity in the overall economy. Therefore, financial education assumes importance not only for individuals but also for giving depth to the financial system and improving market efficiency. Parallel to increased financial literacy, the volume and variety of information sought by individuals from financial institutions will also increase. This will, in turn, lead to more transparency in financial markets. Besides, consumers’ demands for products and services that meet their needs will enable the development of creative, innovative and competitive financial products and services in financial markets. Moreover, financial education will lead to an increase in the individuals’ propensity to save and create a more efficient social security system. Higher rates of savings will have favorable effects on investment and growth and contribute to economic development and financial stability. I would like to especially underline that financial education is not an abstract concept. As a matter of fact, we clearly witnessed the close relationship between financial education and financial stability in the recent global crisis. I believe that the awareness created by this crisis can be interpreted as an opportunity, as highlighting financial education will be beneficial for policy-makers, individuals and financial markets. In Turkey, many institutions carry out projects with regard to financial education as a part of their responsibilities.