Solutions to Improve Financial Literacy

投稿者: | 2020-04-25
The statue of William Smith Clark Sapporo in Hokkaido prefecture

Abstract of my study is follow.

The Financial Literacy Survey conducted in 2016 (Central Financial Information Agency Central Committee) points out that Japanese financial literacy tends to be lower than that of other countries.



Financial literacy consists of financial knowledge and financial judgment concerning money. The Financial Services Agency formulated a Financial Literacy Map as a measure of financial literacy that people should learn at a minimum, and encourages its use at educational sites, among others.

This study aims to explore methods for improving individual financial literacy by analyzing the financial literacy survey in more detail. In particular, the study attempts to clarify the roles of bank and insurance company financial advisors through the analysis of a survey of 223 financial advisors. An analysis of the two sides, general consumer financial literacy and financial advisor perceptions, may suggest future tasks for improving financial literacy.

This paper consists of five chapters. Chapter one introduces previous research and research questions based on the study’s purpose.
Chapter two summarizes the outline of the Financial Literacy Survey. In particular, the comparison with the major countries in Europe and the United States confirms the low level financial literacy among the Japanese people.
Next, chapter three describes the results of the Financial Literacy Survey assessment in terms of attributes such as sex and generation. The results indicate the following:

(1) Low financial literacy among younger generations.
Among those in younger generations, the financial literacy is low. Notably, individuals in their 30s do not understand inflation or the interest rate enough. In general, this age group faces various important life events such as marriage and childbirth along with home purchasing. Taking this situation into account, the lack of such understanding will create difficulties for this group.

(2) Problems when people purchase life insurance
Even though many Japanese respond in the survey that they do not understand life insurance, they still tend to purchase it extensively. This likely has something to do with the low financial literacy among the Japanese people. The analysis of the Financial Literacy Survey by prefecture clarifies the importance of considering alternative options when people purchase life insurance.

(3) Loss aversion by gender
The financial Literacy Survey indicates that loss aversion among women is higher than among men. However, when this same question was asked to measure loss aversion among financial advisors, the results did not show any difference between women and men. The difference in the financial literacy degree by gender was thus explored from a different view point.

(4) The importance of joint household management by husband and wife
Considering the result of the analysis by gender, the importance of joint household management by husband and wife comes to light. Countries with a high rate of couples managing households jointly also tend to have a higher rate of monitoring financial affairs. Regarding monitoring financial affairs, this rate in Japan is relatively low. Thus, the increase in couples managing households jointly may lead to increasing consumer attention on money.
Chapter four focuses on financial advisor perceptions based on the results of the survey. On the whole, financial advisors understand the degree and features of the Japanese financial literacy situation. Depending on future activities, financial advisors can play important roles in developing Japanese financial literacy. In order to achieve this, the study suggests the necessity of creating a “Financial Advice Map for the Financial Literacy Map.” This advice map will enable financial advisors to pinpoint the most fruitful financial services for customers.
Finally, chapter five emphasizes the necessity to develop financial literacy and reconsiders the roles of financial advisors in a household economic environment where virtual currency and FinTech (Finance and Technology) are becoming more complicated.
At present, the low birthrate, aging in society, and the accompanying increase in social security expenses are regarded as big problems facing the Japanese society. It can be said that the lack of financial literacy has a negative influence on these social problems. This study also confirms that, on average, the Japanese people are conservative in asset management, purchase life insurance as recommended, and have a strong anxiety regarding their old age. Because this anxiety concerns not only old age but also the future in general, some young people are highly negative towards marriage and children, which may lead to a vicious circle of a low birthrate and an aging society. In addition, knowledge and judgment about money are considered to be factors influencing child poverty, the increase in the number of livelihood protection recipients, and bank transfer fraud.
Many of the previous studies on financial literacy focus on reforming school education and a few explore the roles of financial advisors in developing individual financial literacy.
This study can contribute to a program of activities for financial advisors that can serve customers in appropriate ways through their high-level skills, thereby gradually developing Japanese financial literacy. These trends will become clues to solving various social problems over the long term.

Solutions to Improve Financial Literacy and Roles of Financial Advisors in Japan

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