Financial literacy for sustainable finance engagement: evidence among households, entrepreneurs and school students in Italy

The relationship between financial literacy and sustainable finance is a field of study which has been particularly emerging and fertile in the last few years, still with less evidence compared with other studied relationships in the financial industry and in the financial literacy research. This relationship can be investigated in several ways: analysing whether financial literacy affects directly sustainable finance decision, or whether financial literacy affects the knowledge about sustainable finance products, or also whether financial literacy affect the interest or the individual propensity in taking sustainable finance decision, or analysing different targets such as individuals, adults and young people, or entrepreneurs. The spread of sustainable finance decisions among retail investors represents a relevant challenge for society, in the lights also of global policies such as the 2030 Agenda for Sustainable Development adopted by the United Nations Member States, which sets out 17 Sustainable Development Goals (SDGs), and the 2021 National Recovery and Resilience Plans adopted by European countries after the Covid-19 emergency. In this context, financial literacy can be an important driver in developing knowledge, awareness and interest towards sustainable financial products. In this thesis we analyse this relationship between financial literacy and sustainability among three different targets in Italy, finding in each case positive relationships. We first provide a study about this relationship among a sample of households, then among micro, small and medium entrepreneurs and finally among young students in pre-adolescent age. More specifically, for households we study whether the individual level of financial literacy affects first the literacy on sustainable finance topic, and then whether this latter literacy affects sustainable investments decisions. For entrepreneurs we analyse whether the individual level of financial literacy of micro, small and micro entrepreneurs affect their awareness towards sustainable finance decisions and impact investments in the context of their business. Finally for young students, we first provide an impact assessment of a school financial education intervention in middle schools, and then we verify whether the learning in financial education is related to learning of sustainability topics. Of course, we can still not talk about sustainable finance decisions among middle school students, but we provide an analysis about the relationship of learning in these two fields, financial literacy and sustainability. For these works we used different public and private datasets. Specifically for the study on household we used the dataset provided by the Italian National Financial Education Committee on the 2022 survey on financial competences of the Italian households. For the study on entrepreneurs, 5 we used a dataset provided by Bank of Italy on the 2021 survey on financial literacy and digitalization skills among micro, small and medium enterprises. Finally, for the study on young students, we use a dataset developed by our own by preparing and distributing a questionnaire among students. In addition, in this work we employ different measurements of financial literacy built using the evidence present in the dataset. We use the financial literacy questions contained in the Italian Financial Education Committee for the study on households, while for entrepreneurs we use the measurement proposed by OECD and Bank of Italy which assesses financial literacy as a combination of financial knowledge behaviour and attitudes. Finally, for the work on students we used the score of the correct answers on financial literacy questions contained in our questionnaire. As highlighted, the thesis provides different research perspectives and exploit various research methodologies and techniques. For analysing the relationships described above, we treat public survey data employing OLS regressions, logit regressions, controls for endogeneity concerns using instrumental variables and other kinds of robustness tests, and experimental techniques with difference in difference model delivering a survey by our own. The main contribution of this research effort consists of emphasizing the role of literacy and the important role of retail investors in supporting the sustainable development of the society. The spread of an adequate level of financial culture among the population in fact seems to be relevant for the sustainable development of the society. We aim also to contribute to the literature about this relationship, which is quite conflictive and unconclusive at the moment, as it emerges in the following chapters. Moreover, this research could offer useful indications on the professional sphere. The thesis, in fact, by studying the spread of these financial products and sustainability orientations among certain categories of the population, investigates specific characteristics of the demand for these products, and the results obtained can offer useful insights for policy makers, supervisory authorities and players in the financial industry, as they provide useful indications about the actual and potential owners of these products. The thesis proceeds as follows: chapter 1 provide the study of this relationship among households, chapter 2 among entrepreneurs and chapter 3 among young students. The study ends with some points of discussion and conclusion about the evidence found and about some future research perspectives.