Results of the Financial Literacy Survey in Japan March 4, 2013 Ryoko Okazaki, Bank of Japan, and the Central Council for Financial Services Information 1 Purpose: To know the level of financial literacy of Japanese individuals of 18 years old and above. To improve the efficiency of our activities of financial education.

(1) Framework of the FL Survey （ Japan ） a. Methods of the Survey i) Interviews for 8,000 core samples and postal mails and internet for 2,000 over samples. ii) 3,531 samples were used for analysis. iii) Conducted from 11 th November, 2011 till 8 th December, 2011 by the Central Council for Financial Services Information and published on 21nd September b. Challenges for conducting the Survey 2

(1) Framework of the FL Survey （ Japan ） c. Contents of the Questionnaire: i) Financial preparations for the future ii) Self assessment of the financial knowledge and the ability of making an appropriate judgments iii) Fundamental knowledge on financial issues such as interest rates, inflation etc. iv) Basis for the decision-making on the financial products and financial transactions v) The way to obtain financial information 3

(2) Major Findings of the FL Survey(Japan) a. Way of Thinking and Behaviors on Money i) Long-term oriented, sound, and cautious ii) Tend not to shop around to make a financial product choice iii) Tend not to be well prepared for the future 4

(2) Major Findings of the FL Survey(Japan) b. Knowledge on Financial and Economic Issues --- Vary widely across questions. i) Close to 80% answered correctly on simple interest rate, but only 30% answered correctly on compound interest rate. ii) More than 50% answered correctly on the definition of inflation and the relation between return and risk, but many answered ‘Don’t Know’. iii) Less than 50% answered correctly on the upper limit of the lending rate. 5

(2) Major Findings of the FL Survey(Japan) c. Findings about senior Japanese i) Tend to be confident about their own financial knowledge and competencies ii) Relatively prepared for their own financial needs iii) Relatively week in financially knowledge iv) Less interested in obtaining financial information 6

(2) Major Findings of the FL Survey(Japan) d. Findings about Japanese youths i) Relatively unprepared for their own financial needs ii) Tend not to keep close watch on personal financial affairs e. Findings about Japanese women i) More long-term oriented than men ii) More risk averse about investment than men iii) Less knowledgeable about financial matters 7

(2) Major Findings of the FL Survey(Japan) f. Cross-question analysis i) Relations between attitude towards information and financial literacy : positive ii) Relations between long term orientation and financial literacy : positive 8

(3) Conclusions i) Further efforts are needed in financial education to maintain good tendencies such as long term orientation etc. ii) Vulnerability of some of the groups should be taken into consideration iii) Gender difference should also be taken into account 9

Thank you! 10