Regional Comparative Analysis on the Determinants of the Spaniards' Financial Knowledge

Are there regional differences in the determinants of financial knowledge in the Spanish adult population? To answer this question, we use data from the Spanish Survey of Financial Competences to estimate qualitative response models in which each of the "big three" of financial knowledge (inflation, compound interest, and risk diversification) acts as a dependent variable on a set of explanatory variables concerning the particularities of individuals. We find that, while some factors determine financial knowledge in a generalized way in most regions and in the same direction (e.g., gender, education, self-confidence), others do so in different ways depending on the region analyzed. Among the latter are health status and financial fragility (where, in both, the different degree of social protection between regions may play an important role), as well as birthplace and age, among others. Rurality also stands out as having different implications in Navarra than in the rest of the regions. We conclude by proposing to use both longitudinal and aggregate indicators of financial knowledge in Spanish regions in order to analyze in the future related issues that are beyond the possibilities offered by microdata bases.