Effects of Compulsory Upper-Secondary Education on Financial Inclusion

Abstract To enable sustainable financial inclusion, various policies are enforced internationally; however, there are diverse opinions on their effectiveness. Previous research has shown that education is necessary for individuals to understand financial products and services. Therefore, financial initiatives including financial education are considered crucial. This study aimed to analyze the effects of compulsory education on financial inclusion, from a variety of sociodemographic characteristics. We analyzed global data collected per country by the World Bank, the United Nations Development Programme, and the International Monetary Fund. It used an instrumental variable model that modelled the expected years of schooling and the human rights index as instruments. The results demonstrated that compulsory upper-secondary education had a positive effect on financial inclusion at all socioeconomic levels, except for people aged 60 years or older. For women, compulsory upper-secondary education had the greatest effect on financial inclusion. Contrastingly, we found that the completion of lower-secondary education was sufficient to promote financial inclusion in the high-income class, while other groups needed to complete their upper-secondary education at least. This study provides valuable insights to help establish feasible policies and strategies for the financial inclusion of the socially marginalized groups we are interested in.