The Determinants of Formal Savings in Mexico: The Role of Financial Capabilities
In this paper, the basic financial capabilities were defined as the ability to planning, budgeting and anticipate for emergencies. The applied financial capabilities as the knowledge about financial products, ergo people who know the costs of using savings accounts or who knows that savings are protected by a federal deposit insurance.
We found a strong relation between the basic and applied financial capabilities and the increase in the probability of using the savings accounts even controlling for education or income variables. We also found that applied financial capabilities have a positive effect on the probability of having an investment account. We found no significant effect of basic financial capabilities on the probability of having an investment account, but we conclude that there is an indirect effect of encouraging savings.