Financial Literacy and the Financial Crisis
By L. Klapper, Anna Lusardi, Georgios A. Panos. 2012
175 citations recorded by the source corpus.
The ability of consumers to make informed financial decisions improves their chances of having sound personal finance. This paper uses a panel dataset from Russia, where consumer loans grew at an astounding rate -- from about US$10 billion in 2003 to over US$170 billion in 2008 -- to examine the importance of financial literacy and its relationship with behavior. The survey asked questions on financial literacy, consumer borrowing (formal and informal), and spending behavior. The paper studies the consequences of greater financial literacy on the use of financial products and financial planning. Even though consumer borrowing rose rapidly in Russia, only 41 percent of the survey respondents understood how interest compounding worked and only 46 percent could answer a simple question about inflation. Financial literacy is positively related to participation in financial markets and negatively related to the use of informal sources of borrowing. Individuals with higher rates of financial literacy are significantly more likely to report having more unspent income at the end of the month and higher spending capacity. The relationship between financial literacy and the availability of unspent income is more evident during the financial crisis, suggesting that better financial literacy may better equip individuals to deal with macroeconomic shocks.
Subfields: Accounting, Demography, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/96800cdfcf96b668eeb494c0dfdccedf02298ca0
Citations in the corpus
- Financial literacy among youth (2018, unknown): “, 2016), actively save (Atkinson and Messy, 2012; Klapper et al., 2012; Agarwalla et al., 2013), make timely payment of bills (Atkinson and Messy, 2012; Agarwalla et al.”
- The Economic Importance of Financial Literacy: Theory and Evidence (2014, unknown): “Following this lead, Klapper, Lusardi and Panos (2012) used the number of public and private universities in the Russian regions and the total number of newspapers in circulation as instruments for financial literacy.”
- Financial literacy and its consequences: Evidence from Russia during the financial crisis (2013, unknown): “The latter is constructed using principal components analysis (PCA); the procedure used to construct the index is described in detail in a previous working paper version of this study (Klapper et al., 2012).”