Leora Klapper|Annamaria Lusardi|Georgios A. Panos
Financial Literacy and the Financial Crisis
World Bank Group|National Bureau of Economic Research|George Washington University|Adam Smith Institute|University of Glasgow
ability consumers make informed financial decisions improves ability develop sound personal finance paper uses panel dataset russia economy consumer loans grew astounding rate us10 billion 2003 us170 billion 2008 examine importance financial literacy effects behavior survey contains questions financial literacy consumer borrowing formal informal saving spending behavior paper studies financial consequences real consequences financial illiteracy even though consumer borrowing increased rapidly russia authors find 41 respondents demonstrate understanding workings interest compounding 46 answer simple question inflation financial literacy positively related participation financial markets negatively related use informal sources borrowing moreover individuals higher financial literacy significantly likely report greater availability unspent income higher spending capacity relationship financial literacy availability unspent income higher financial crisis suggesting financial literacy may better equip individuals deal macroeconomic shocks