The Political Economy of Financial Market Regulation
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The Political Economy of Financial Market Regulation

The Dynamics of Inclusion and Exclusion

Edited by Peter Mooslechner, Helene Schuberth and Beat Weber

This book focuses on recent financial market reforms, and their implications for social, economic and political exclusion. In particular it considers the hitherto under-researched question of whose interests govern the design of regulatory mechanisms and who influences the decision-making process. This process is set out as contested terrain, in which there are winners and losers, and in which there are inevitably circles of exclusion. The authors, comprising financial authority experts and academic specialists, expand the concept of exclusion beyond its typical social dimension to incorporate all actors, be they individuals or institutions not permitted to contribute to financial market regulation as a public good. As they point out, this may take the form of political, economic or indeed cultural exclusion. The book examines the conflicts that arise between various interests and how these are managed within the process of regulation.
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Chapter 6: Financial Education for the Poor in the United States

Martin Schürz


Martin Schürz INTRODUCTION In February 2002, former US Treasury Secretary Paul H. O’Neill argued in his testimony before the Senate Committee on Banking, Housing and Urban Affairs, ‘Financial education can be compared to a road map to the American dream. I believe that we need to teach all Americans the necessary skills to read that map, so that they can reach the dream’. The US Treasury Secretary is quite explicit on the value of programs which enhance financial literacy; it ‘permits people to believe that their ambitions do not have to be limited’ (US Senate Committee on Banking, Housing and Urban Affairs 2002, p. 16). Financial education involves providing financial information and supporting consumers to develop the relevant skills and confidence in order to make informed financial decisions. It makes consumers aware of financial opportunities, choices and consequences, and tries to ensure that consumers acquire the skills to understand financial concepts. It also involves changing behavior and ensuring that consumers feel confident in making decisions. This definition refers to the information, knowledge and behavior of individuals. In particular, financial education comprises the development of skills, the ability to transform knowledge into action, the awareness of choices and the ability to choose self-assuredly among various options. Financially educated consumers should make better decisions for their families, and ‘financially literate consumers enable increasingly complex financial markets to operate efficiently’ (OECD 2004, p. 8). In general, financial consumers are often not well-informed when making decisions about financial products. Research shows that a...

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