Taiwanese are more financially resilient today than they were two years ago, but the gap between those who can easily withstand unexpected events influencing their finances and those who cannot is growing, a survey commissioned by the Taiwan Academy of Banking and Finance found.
With economic effects of the COVID-19 pandemic easing, Taiwanese are about as financially resilient as Britons, Americans and people in other major economies in terms of keeping savings, meeting living expenses and having access to financial services, academy president Hank Huang (黃崇哲) said.
People’s ability to withstand unexpected financial risks was also slightly higher than in 2020, with 7 percent more people having at least six months of income in savings, he said.
Photo: CNA
However, the gap between high and low-income earners increased, Huang added.
The aggregate ratio between those with six months of income in savings and those with less was about 60 percent, with the resilience of middle-income earners especially hit by the pandemic, he said.
Overall, the number of people who reported being easily able to meet living expenses had more than doubled, from 12.2 percent to 27.3 percent, he said.
However, there were still almost 20 percent who said they would be unable to deal with a financial emergency, with only a small drop in this category from 19.5 percent in 2020 to 18.8 percent this year, Huang said.
Digital banking platforms have allowed uninterrupted access to financial services throughout the pandemic, with more people investing money, especially through fractional share trading, than two years ago, Huang said.
Overall borrowing capacity has improved, with 5 percent fewer people fearing they might be unable to borrow money in case of an emergency, and 40 percent of respondents saying they could obtain a mortgage or a loan from a financial institution, he said.
Low-income families were most severely affected by the pandemic, accounting for the majority of those reporting that they have trouble saving money or staying within their budget, Huang said, adding that this group was also the most vulnerable to financial fraud and exploitation due to weak financial literacy and insufficient financial confidence.
In terms of age, those aged 20 to 29 were the only group reporting a decline in financial resilience, he said.
“The decline in financial literacy, and poor savings and fundraising ability, in this age category demonstrates an urgent need for financial education for young people,” Huang said.
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