By Staff writer
S&P survey says UAE citizens have weak understanding of compound interest given high credit card use
Women in the UAE are more financially literate than men, according to a new survey which said it one of just a few countries in the world where this is true.
The Standard & Poor’s Ratings Services Global Financial Literacy Survey showed that in almost every country apart from the UAE, there is a material gap between men and women.
Worldwide, there is a five-point gender gap, with 35 percent of men being financially literate compared with 30 percent of women.
However, in the UAE, women’s financial literacy averages 4 percentage points higher than men’s while in China and South Africa, there was no gender gap.
The survey said that 38 percent of people living in the Gulf region are financially literate, much higher than the global average.
The survey found that two-thirds of adults worldwide are not financially literate and there is a wide gap between men and women’s literacy, including in highly developed countries.
In the GCC region, the results were not as disparate, with 40 percent of men being financially literate compared to 36 percent of women.
The survey found that citizens, in the UAE specifically, with less education and lower incomes are more financially literate than their counterparts in most other emerging economies.
However the survey results also showed that UAE adults have a relatively weak understanding of compound interest given the high credit card use in the region.
All ages interviewed in the region scored similarly on their respective financial literacy rates with all age ranges achieving an average of 38 percent literacy.
More specifically, 44 percent of adults in Kuwait were found to be financially literate, compared to 40 percent in Bahrain and 31 percent in Saudi Arabia.
Leora Klapper, lead economist, the World Bank Development Research Group said: “With technology spreading the design of innovative banking services and payment methods, it’s critical that we understand who knows what around the world.
"My hope is that this data will help policymakers in finding ways to boost financial literacy and consumer protection and help open the door to greater financial inclusion and economic empowerment.”
The survey results came 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.
Within the G7 group (Canada, France, Germany, Great Britain, Italy, Japan, and the United States) of countries, financial literacy varied enormously, from a low of 37 percent in Italy to a high of 68 percent in Canada.
The survey also showed that 61 percent of adults in China do not save for old age. About 72 percent of those non-savers have low financial literacy.
About 47 percent of adults in India – 415 million adults – lack a bank account. Roughly 80 percent of those without bank accounts have weak financial literacy, the survey added.finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.