Are there urban-rural gaps in Spaniards financial knowledge?

Abstract

Our objective is to analyze whether there are urban-rural gaps in financial knowledge of Spanish people. For this purpose, we use data from the Survey of Financial Competences conducted by the Bank of Spain and the Spanish National Securities Market Commission on a representative sample of the Spanish population aged between 18 and 79 during the last quarter of 2016 and the first half of 2017. From this microdata base, we estimate qualitative response models in which each of the dimensions of financial knowledge (inflation, compound interest and risk diversification) acts as dependent variable on a set of explanatory variables. Among the latter is one that measures whether the respondent lives in an urban or rural area. Our results reveal that there are urban-rural gaps in the financial knowledge of Spaniards over 39 years old. We also find conclusive results about the effect of other socioeconomic factors on the financial knowledge of Spaniards. Thus, the probability of being financially illiterate is higher for those who are women and have low income and low educational attainment. Meanwhile, being born in another country, self-confidence, and contracting financial products are all of them factors that have positive implications for financial knowledge of Spanish population.