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Appears in Collections:Economics Journal Articles
Peer Review Status: Refereed
Title: Financial literacy and its consequences: Evidence from Russia during the financial crisis
Authors: Klapper, Leora
Lusardi, Annamaria
Panos, Georgios
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Keywords: Financial literacy
Financial crisis
Financial inclusion
Issue Date: Oct-2013
Publisher: Elsevier
Citation: Klapper L, Lusardi A & Panos G (2013) Financial literacy and its consequences: Evidence from Russia during the financial crisis, Journal of Banking and Finance, 37 (10), pp. 3904-3923.
Abstract: The ability of consumers to make informed financial decisions improves their ability to develop sound personal finance. This paper uses a panel data set from Russia, an economy in which household debt has grown at an astounding rate, to examine the importance of financial literacy and its effects on behavior. The paper studies both the financial and real consequences of financial illiteracy. Even though consumer borrowing increased very rapidly in Russia, only 41% of respondents demonstrate an understanding of interest compounding and only 46% can 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. Moreover, individuals with higher financial literacy are significantly less likely to report experiencing a negative income shock during 2009 and have greater availability of unspent income and higher spending capacity. The relationship between financial literacy and availability of unspent income is higher in 2009, suggesting that financial literacy may better equip individuals to deal with macroeconomic shocks.
Type: Journal Article
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Rights: The publisher does not allow this work to be made publicly available in this Repository. Please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study.
Affiliation: The World Bank
George Washington University

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