The Need for Innovation in Financial Education: a Study of Household Indebtedness in Peru

Abstract

Purpose: The main objective of the text is to explore and determine the impact of financial education on the indebtedness of Peruvian households. Theoretical framework: As for the theoretical framework, reference is made to several previous theories and studies, such as Kahneman and Tversky's prospect theory, Modigliani and Brumberg's life-cycle theory, and Friedman's permanent income hypothesis, among others, to support the importance of financial literacy and financial decision-making under conditions of uncertainty and expectations of future income. Design/Methodology/Approach: To address this objective, a quantitative, applied, and non-experimental methodology was used, with a cross-sectional design and a descriptive-correlational approach, surveying 300 Peruvian households. Results: The results revealed that 68% of the participants have a regular level of financial knowledge and 60% have a regular level of household indebtedness. In addition, a significant positive correlation of 0.891 was found between financial literacy and household indebtedness. Practical and social implications: The practical and social implications of the study are notable, highlighting the need to improve financial education, given the prevalence of fair and low financial knowledge and skills among participants. The implementation of financial education programs from an early age and in communities especially vulnerable to financial instability is proposed. In addition, the creation of a certification program for financial educators and the continuous training of financial sector professionals is suggested. Originality/value: In terms of originality and value, the proposals address various areas, such as academic, professional, social, political, economic, and strategic. The idea of seeding financial education from the early years of education and exploring the effectiveness of various financial education strategies is proposed. In addition, the creation of funds for financial innovation and the promotion of fintech companies is proposed, as well as the strategic implementation of partnerships with international organizations, NGOs, and the private sector. It is also suggested to use technology and digital platforms to expand the reach of financial education programs.