Financial Literacy and the Financial Crisis

Klapper, Leora; Lusardi, Annamaria; Panos, Georgios A.

dc.creator	Klapper, Leora
dc.creator	Lusardi, Annamaria
dc.creator	Panos, Georgios A.
dc.date	2012-03-19T17:29:23Z
dc.date	2012-03-19T17:29:23Z
dc.date	2012-02-01
dc.date.accessioned	2023-02-17T20:50:13Z
dc.date.available	2023-02-17T20:50:13Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120229095430
dc.identifier	http://hdl.handle.net/10986/3266
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/243715
dc.description	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.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 5980
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ABILITY OF CONSUMERS
dc.subject	ACCOUNT CREDITOR
dc.subject	ACCOUNT OWNERSHIP
dc.subject	ACCOUNTING
dc.subject	ADMINISTRATIVE DATA
dc.subject	ANNUAL INTEREST RATE
dc.subject	ASSET MARKETS
dc.subject	AVAILABILITY OF CREDIT
dc.subject	BALANCE SHEET
dc.subject	BANK ACCOUNT
dc.subject	BANK ACCOUNTS
dc.subject	BANK CREDIT
dc.subject	BANK LOANS
dc.subject	BANKING PRODUCTS
dc.subject	BANKING RELATIONSHIPS
dc.subject	BANKING SECTOR
dc.subject	BANKING SERVICES
dc.subject	BANKING SUPERVISIONS
dc.subject	BANKING SYSTEM
dc.subject	BASIC FINANCIAL LITERACY
dc.subject	BORROWER
dc.subject	BORROWER BEHAVIOR
dc.subject	BORROWING
dc.subject	BUSINESS SCHOOL
dc.subject	CALCULATION
dc.subject	CALCULATIONS
dc.subject	CAPITAL FORMATION
dc.subject	CENTRAL BANK
dc.subject	CHECKING ACCOUNT
dc.subject	CHECKS
dc.subject	COGNITIVE FUNCTIONS
dc.subject	CONSUMER
dc.subject	CONSUMER CREDIT
dc.subject	CONSUMER DEBT
dc.subject	CONSUMER FINANCE
dc.subject	CONSUMER LOANS
dc.subject	CONTRIBUTION
dc.subject	CREDIT CARD
dc.subject	CREDIT CARD DEBT
dc.subject	CREDIT INFORMATION
dc.subject	CREDITOR
dc.subject	CURRICULUM
dc.subject	DEBIT CARD
dc.subject	DEBIT CARDS
dc.subject	DEBT CONTRACTS
dc.subject	DEBT LOADS
dc.subject	DEBT MANAGEMENT
dc.subject	DEFINED CONTRIBUTION PENSIONS
dc.subject	DELINQUENCY
dc.subject	DEMOGRAPHIC CHARACTERISTICS
dc.subject	DEMOGRAPHIC GROUPS
dc.subject	DEPOSITS
dc.subject	DEVELOPING FINANCIAL MARKETS
dc.subject	DOMESTIC CREDIT
dc.subject	DUMMY VARIABLE
dc.subject	DUMMY VARIABLES
dc.subject	DURABLE
dc.subject	DURABLE GOODS
dc.subject	EARNINGS
dc.subject	ECONOMIC ACTIVITY
dc.subject	ECONOMIC DECISIONS
dc.subject	ECONOMIC DEVELOPMENT
dc.subject	ECONOMIC GROWTH
dc.subject	EDUCATION LEVEL
dc.subject	EDUCATION LEVELS
dc.subject	EDUCATIONAL ATTAINMENT
dc.subject	EMERGING MARKETS
dc.subject	EMPLOYEE
dc.subject	EMPLOYER
dc.subject	ENTREPRENEUR
dc.subject	ENTREPRENEURS
dc.subject	ETHNIC MINORITIES
dc.subject	FAMILY INCOME
dc.subject	FAMILY MEMBERS
dc.subject	FEDERAL RESERVE
dc.subject	FEDERAL RESERVE BANK
dc.subject	FINANCES
dc.subject	FINANCIAL ASSISTANCE
dc.subject	FINANCIAL BEHAVIOR
dc.subject	FINANCIAL CONSEQUENCES
dc.subject	FINANCIAL CRISES
dc.subject	FINANCIAL CRISIS
dc.subject	FINANCIAL DECISION
dc.subject	FINANCIAL DISTRESS
dc.subject	FINANCIAL EDUCATION
dc.subject	FINANCIAL EDUCATION PROGRAMS
dc.subject	FINANCIAL EXPERIENCES
dc.subject	FINANCIAL FRAGILITY
dc.subject	FINANCIAL ILLITERACY
dc.subject	FINANCIAL INFORMATION
dc.subject	FINANCIAL INSTITUTION
dc.subject	FINANCIAL INSTITUTIONS
dc.subject	FINANCIAL ISSUES
dc.subject	FINANCIAL KNOWLEDGE
dc.subject	FINANCIAL LITERACY
dc.subject	FINANCIAL LITERACY TRAINING
dc.subject	FINANCIAL MANAGEMENT
dc.subject	FINANCIAL MARKETPLACE
dc.subject	FINANCIAL MARKETS
dc.subject	FINANCIAL MATTERS
dc.subject	FINANCIAL OUTCOMES
dc.subject	FINANCIAL PENETRATION
dc.subject	FINANCIAL PRODUCTS
dc.subject	FINANCIAL RESOURCES
dc.subject	FINANCIAL SECTOR
dc.subject	FINANCIAL SERVICES
dc.subject	FINANCIAL SOPHISTICATION
dc.subject	FINANCIAL STABILITY
dc.subject	FORMAL BANK
dc.subject	FORMAL BANKING
dc.subject	FORMAL BANKING SYSTEM
dc.subject	FORMAL CREDIT
dc.subject	FORMAL FINANCIAL INSTITUTION
dc.subject	FORMAL FINANCIAL MARKETS
dc.subject	FRAUD
dc.subject	GENDER
dc.subject	GENERAL POPULATION
dc.subject	HIGH SCHOOL
dc.subject	HIGH SCHOOL FINANCIAL LITERACY
dc.subject	HIGHER EDUCATION
dc.subject	HOUSEHOLD APPLIANCES
dc.subject	HOUSEHOLD DEBT
dc.subject	HOUSEHOLD FINANCE
dc.subject	HOUSEHOLD FINANCIAL MANAGEMENT
dc.subject	HOUSEHOLDS
dc.subject	ID
dc.subject	INCOME
dc.subject	INCOME SHOCKS
dc.subject	INDEBTEDNESS
dc.subject	INFLATION
dc.subject	INFORMAL BORROWING
dc.subject	INFORMAL CREDIT
dc.subject	INFORMATION SHARING
dc.subject	INFORMED CONSUMERS
dc.subject	INFORMED FINANCIAL DECISIONS
dc.subject	INSTALLMENT
dc.subject	INSTRUMENT
dc.subject	INTEREST PAYMENT
dc.subject	INTEREST PAYMENTS
dc.subject	INTEREST RATE
dc.subject	INTEREST RATES
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL STANDARDS
dc.subject	INVESTMENT CLIMATE
dc.subject	LESS FINANCIALLY LITERATE
dc.subject	LEVELS OF LITERACY
dc.subject	LIABILITY
dc.subject	LIABILITY SIDE
dc.subject	LITERACY COURSES
dc.subject	LITERACY DATA
dc.subject	LITERATE INDIVIDUALS
dc.subject	LIVING STANDARD
dc.subject	LIVING STANDARDS
dc.subject	LOAN
dc.subject	LOW EDUCATIONAL ATTAINMENT
dc.subject	LOW FINANCIAL LITERACY
dc.subject	LOW INCOME
dc.subject	LOW LEVELS OF EDUCATION
dc.subject	LOWER INCOME
dc.subject	LOWER INCOMES
dc.subject	MACROECONOMIC STABILITY
dc.subject	MONTHLY INCOME
dc.subject	MONTHLY PAYMENTS
dc.subject	MORTGAGE
dc.subject	MORTGAGES
dc.subject	MUTUAL FUNDS
dc.subject	NEGATIVE INCOME SHOCK
dc.subject	NEW BANK ACCOUNTS
dc.subject	NUMERACY
dc.subject	OCCUPATIONS
dc.subject	OLDER INDIVIDUALS
dc.subject	PENSION
dc.subject	PENSIONER
dc.subject	PERSONAL BANKING
dc.subject	PERSONAL FINANCE
dc.subject	PORTFOLIO
dc.subject	PORTFOLIO CHOICE
dc.subject	PROBABILITY
dc.subject	PUBLIC ECONOMICS
dc.subject	PUBLIC POLICY
dc.subject	PURCHASING POWER
dc.subject	RAPID GROWTH
dc.subject	REPAYMENT
dc.subject	REPAYMENT PERIODS
dc.subject	RESEARCH ASSISTANCE
dc.subject	RESERVE BANK
dc.subject	RETAIL PRICE
dc.subject	RETIREMENT
dc.subject	RETIREMENT PLAN
dc.subject	RETIREMENT PLANNING
dc.subject	RETIREMENT PLANS
dc.subject	RETIREMENT READINESS
dc.subject	RETIREMENT SAVING
dc.subject	RETIREMENT SECURITY
dc.subject	SALARIES
dc.subject	SALARY
dc.subject	SALE
dc.subject	SALES
dc.subject	SAVING BEHAVIOR
dc.subject	SCHOOLING
dc.subject	SECONDARY EDUCATION
dc.subject	SECONDARY SCHOOL
dc.subject	SINGLE PERSON
dc.subject	SOCIAL PROTECTION
dc.subject	SOCIOECONOMIC STATUS
dc.subject	STATE BANKS
dc.subject	STATE UNIVERSITY
dc.subject	STOCK MARKET
dc.subject	STOCKS
dc.subject	TECHNICAL EDUCATION
dc.subject	TRANSPARENCY
dc.subject	UNDERSTANDING PENSIONS
dc.subject	UNEMPLOYED
dc.subject	UNEMPLOYMENT
dc.subject	UNEMPLOYMENT RATE
dc.subject	UNIVERSITIES
dc.subject	VALUABLE
dc.subject	VULNERABLE CONSUMERS
dc.title	Financial Literacy and the Financial Crisis
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	The World Region
dc.coverage	The World Region