The Banking Executive - Decemebr 2021, Issue 156

ISSUE 156 DECEMBER 2021 the BANKING EXECUTIVE 1 Editorial FINANCIAL KNOWLEDGE AND INCLUSION… VITAL FOR FINANCIAL STABILITY Financial knowledge/literacy is a key factor in financial solidity. This has been especially learned from the last decade’s problems such as the Covid-19 pandemic and the financial crisis. Financial literacy is an important channel through which financial instabilities can arise. Financial literacy is a specific trait, connected to the ability of individuals to handle financial concepts, to take sound financial decisions, and to balance the risks and returns of their decisions. Risk taking based on inaccurate data or by unacquainted investors may lead to unnecessary risk. In this sense, lack of financial literacy is an important factor behind financial instability. On a similar note, financial inclusion is another essential part for financial stability, it’s a main pillar for the inclusive growth process. A high degree of financial inclusion will allow for the various segments of the economy, regardless of income levels, economic activity and regions to have access to financial services. Not only physical access to the financial institutions represent a barrier for financial inclusion other aspects as the high costs of the services and conditions deter the access that result in disengagement in using financial services. As we live in an environment that is vibrant and fast evolving, we are seeing the proliferation of financial products and services and the emergence of electronic finance. The development of financial education programs is vital to enhance financial capability for consumers to participate effectively in the financial system. As it is the answer for all three aspects that erodes financial stability if not addressed, financial literacy, consumer protection and financial inclusion. A well-designed financial education program could promote financial knowledge that is relevant for day-to-day decision making to improve teaching financial stability such programs ought to be integrated into curricula of schools and universities. Dr. Joseph Torbey, Chairman - World Union of Arab Bankers