Abstract
The recent global financial turmoil and its ongoing implications have highlighted the importance of personal financial capability. This article outlines the critical role of financial capability in today's world. The findings of the first study of financial capability in Ireland are presented. The article then compares some important aspects of financial capability in Ireland and the UK and assesses what lessons can be learnt from such a comparison and the policy implications which arise. Differences include pension coverage and current account holdings, while similarities are evident in the area of keeping up with bills and commitments.
Acknowledgements
The authors acknowledge use of the Irish Financial Capability Survey data, commissioned by the Financial Regulator. Access to the UK FSA data is also acknowledged. CBFSAI colleagues John Flynn and Kieran McQuinn provided many helpful comments. The views expressed in this article are the authors' own, and do not necessarily reflect the views of the Central Bank and Financial Services Authority of Ireland or the European System of Central Banks. Any remaining errors/omissions are the authors' own.
Notes
* The principal component factor method was used. The factor scores were rescaled to lie between 0 and 100 for ease of interpretation. The UK results are taken from Atkinson et al. (Citation2006). The Irish results are from the authors' own analyses.
* The Eurobarometer survey, for example, shows that 41% of Irish individuals lacked a transaction banking account in 2003 compared with 15% in the UK. This figure for Ireland is much higher than other such figures including that from the survey under consideration here (see European Commission, Citation2008).
** The Bank Recapitalization Scheme introduced after the financial crisis of 2008 requires the recapitalized banks to provide basic bank accounts but, two years later, little progress has been made.