Relevance of financial literacy on poverty reduction in Peru
DOI:
https://doi.org/10.15381/gtm.v26i52.26040Keywords:
Financial literacy, poverty, social welfare programsAbstract
In Peru, according to the definition of the National Institute of Statistics and Data Processing (INEI, 2023), an individual in considered to be living in poverty if their monthly income is below PEN 415. Poverty decreased considerably from 2011 to 2019. However, after the COVID-19 pandemic, it has significantly increased, to the detriment of all progress made in the previous decade. Even though social welfare programs are a good option to fight poverty, it is necessary for these programs to complement their strategy with financial literacy to improve their effectiveness. This paper evaluates the current situation and the importance of financial literacy for the reduction of poverty in Peru. This research is descriptive, non-experimental and cross-sectional. The results of several studies conducted in various countries revealed that financial literacy is significantly effective to reduce poverty. It can be concluded that, in Peru, it is necessary to conduct more finance training programs in the Ayacucho, Cajamarca, Huánuco and Pasco regions, where the incidence of poverty is above 40%. It is also advisable to evaluate the effectiveness of financial literacy training through O'Connell's five-tier approach (2009).
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