Study of factors influencing financial literacy in Mexico using the ENIF 2021: comparing formal vs. informal workers.

Abstract

This paper aims to analyze factors that may influence the probability of an individual possessing basic financial knowledge. To this end, questions from the 2021 National Survey on Financial Inclusion (enif) were used. Logit econometric models were employed to estimate the probability of correctly answering questions related to empirical knowledge in three key areas: simple interest, compound interest, and understanding of inflation. The models included socioeconomic explanatory variables to account for knowledge or lack thereof regarding these topics. In particular, emphasis is placed on the employment condition of being a formal versus an informal worker. The results indicate that statistically speaking, there is no significant difference in the odds of understanding simple or compound interest between individuals employed in the formal and informal sectors. However, regarding compound interest specifically, informal workers are less likely to provide correct answers. Overall, educational attainment appears to be the variable that most strongly explains the probability of correctly answering the proposed topics.