Determinants of Financial Well-Being: Evidence from Latin America
This paper provides a baseline measurement of financial well-being in Latin America and studies the factors associated with this indicator. The highest scores were found in Chile (66 points on a scale of 0 to 100) and Colombia (63), followed by Bolivia (58), Peru (58), Ecuador (57), Paraguay (56) and Argentina (55). The results show that:
- The financial well-being index provides information not offered by traditional financial measurements.
- Differences in financial well-being are greater for holders of formal savings products than for credit card owners.
- Better financial education is associated with better rates of financial well-being.
- Some variables related to financial behavior such as previous experience with the financial sector, comparison of different financial institutions’ products, and personal participation in household financial decisions are significantly related to financial well-being.
The findings suggest that there are opportunities to improve financial well-being through financial inclusion and education programs.