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Beverly Chandler

Financial literacy survey from S&P reveals UK women outscore men

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The UK has a relatively high rate of financial literacy, standing at sixth in the world, according to the Standard & Poor’s Ratings Services Global Financial Literacy Survey (S&P Global FinLit Survey). The UK scores higher than countries such as the United States, Switzerland, France and Germany, and the UK is the only country in Western Europe in which women outscored men in terms of financial literacy. 

The survey results come from interviews conducted with more than 150,000 adults in more than 140 countries who were tested on their knowledge of four basic financial concepts: numeracy, interest compounding, inflation, and risk diversification. The data were collected in 2014 by Gallup as part of the Gallup World Poll and analytical support was provided by researchers at the World Bank Development Research Group and the Global Financial Literacy Excellence Centre (GFLEC) at the George Washington University.
 
The study is part of S&P and its parent company McGraw Hill Financial’s ongoing advocacy work to support financial literacy worldwide and has no relevance for S&P’s credit ratings. According to the study, 67 per cent of UK adults are financially literate, compared to 55 per cent of adults across the G7 countries and 53 per cent of adults in high income OECD economies. All four topics probed were answered correctly by a majority of adults in the UK.
 
The S&P Global FinLit Survey shows that in almost every country there is a material gap between men and women, with 35 per cent of men being financially literate compared with 30 per cent of women. For example, the US averaged a 10 per cent gender gap, Germany 12 per cent and Italy 15 per cent. In the UK, however, the opposite was true, with 68 per cent of women surveyed categorised as financially literate compared to 66 per cent of men. The UK is the only country in Western Europe and one of only 13 countries worldwide in which women outscored men in terms of financial literacy.   
 
“We are committed to creating stronger financial markets all over the world,” said Courtney Geduldig, Executive Vice President of Public Affairs at McGraw Hill Financial, parent of S&P. “We believe there are correlations between financial literacy, financial access, and the strength of markets. Addressing financial literacy is a key strategy in building stronger, more accessible and sustainable markets around the globe.”
 
 Other key findings included the fact that in the UK, only 57 per cent of self-employed adults were considered financially literate. This compares with 71 per cent of employed respondents.  Adults who do not formally save via a bank or other financial institution are less likely to be financially literate – 75 per cent of formal savers in the UK are classed as financially literate, compared to 58 per cent of non-savers. 
 
Similarly, 72 per cent of UK adults with formal savings answered the question on compound interest correctly, compared with 63 per cent of adults who did not have formal savings. Globally, wealthier people are more financially literate than poorer people Of adults living in the richest 60 per cent of households in the major emerging economies, 31 per cent are financially literate, against 23 per cent of adults who live in the poorest 40 per cent of households. The size of this income gap is similar in most major advanced economies, with exceptions such as Italy, where 44 per cent of adults who live in the richest 60 per cent of households are financially literate, against 27 per cent of their poorer counterparts. In the UK, however, the income gap is relatively small, with 70 per cent of wealthier adults being financially literate compared with 63 per cent of the poorer adults.
 
“With technology spreading new banking arrangements and payment methods, it’s critical that we understand who knows what all around the world,” says Leora Klapper, lead economist, the World Bank Development Research Group. “My hope is that these data will help policymakers in finding ways to boost financial literacy and consumer protection and help open the door to financial inclusion and economic empowerment.”

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