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Does Financial Regulation Unintentionally Ignore Less Privileged Populations?
By Maya Haran Rosen & Orly Sade (Hebrew University)
In 2014, the Israeli insurance and long term savings regulator reached out to the Israeli population to help individuals find inactive retirement plans and withdraw inactive funds. We find that the government’s effort did not result in withdrawals of the majority of the accounts, and did not reach all subpopulations equally. Provident fund records indicate that those who took financial action and withdrew funds following the campaigns live in localities in the center of the country that have higher socioeconomic characteristics, and they are relatively older. Using survey data we found evidence that those with low financial literacy and confidence in their knowledge of retirement planning and the unemployed were less likely to have been aware of the financial regulatory campaigns. The survey further shows the importance to financial action of confidence in retirement knowledge, gender, age, education and immigration. We conclude that less privileged populations were less likely to have been aware of the campaign, less likely to understand the information, and less likely to have taken action based on the information.
Full Content: SSRN
