Abstract

Several studies have documented a negative correlation between financial knowledge and a lack of access to financial markets. Such negative correlations could arise because lack of financial knowledge causes poor financial choices or, alternatively, because individuals invest less and acquire less financial knowledge in situations where, for example, the welfare state is more generous. Disentangling between both hypotheses requires information about the joint distribution of financial knowledge, financial inclusion and attitudes of the adult population. The 2016-2017 Survey of Financial Competences collects that information for a sample that is representative of the adult population in Spain and of each of its Autonomous Communities.

This descriptive study will firstly provide a distribution of knowledge about basic financial notions across groups defined by their year of birth, level of education, gender and place of residence. The survey measures if individuals understand interest rates, their compounding, diversification or the effects of inflation.

In a second step, we show the use of financial products by those same groups of the population (age, education, gender and Autonomous Community). We will describe not only the access to checking and saving accounts, mutual and pension funds, bond and stocks, mortgage and personal loans by different groups of the population, but also the sources of information individuals resort to when acquiring those products. To understand further barriers in access to finance, the study will also describe informal saving and borrowing vehicles, loan applications and rejections, payment arrears as well as problems with financial institutions.

The last step links previous findings by documenting how the use of financial products varies by the degree of financial knowledge of different groups of individuals. To get a tighter characterization of that link, we will describe the expectations about future income, housing prices and labor market risk of the least financially knowledgeable.

NOTE: SUBMITTED FOR AXIS 2, AS FINANCIAL COMPETENCES ARE LINKED TO SAVING AND INVESTMENT DECISIONS THAT SHAPE LONG-RUN PERFORMANCE

Abstract

The relevance of this study is related to the fact that every national financial system in the world has some degree of financially excluded population, and only the proportion of such population varies between countries or regions of a country. The importance of identifying the financially excluded population in Russia and its regions and developing a policy to reduce its proportion is an urgent task that will help develop the financial sector and address the most important social tasks outlined in presidential decrees. The purpose of the study is to develop a working definition of financial exclusion, conduct a study of financial inclusion in Russian regions and, based on its results, develop measures to increase the availability of financial services in constituent entities of the Russian Federation. The subject of this research is the quality of financial system of the Russian Federation. The research method or methodology is based on a comprehensive analysis of the systems for designing indicators of the availability of financial services developed by such international organizations as the World Bank, the International Monetary Fund, the Global Partnership for Financial Inclusion, the Alliance for Financial Inclusion, and their application, while taking into account the specifics and approaches to definition and measurement of the availability of financial services at the national level.

As a result of the work carried out, the international practice of increasing availability of financial services was reviewed, a methodological approach to studying the availability of financial services at the national and federal levels was developed and tested, and recommendations on increasing the availability of financial services in regions of Russia were given.

The scientific novelty of the research lies in the collection and analysis of unique data on the state of financial services availability in the Russian regions. The recommendations produced as a result of the study indicate the need for further improvement of the financial system in terms of its focus on young people, people with a low level of education and socially unprotected segments of the population (need for new products and services), increasing the level of financial literacy of population and ensuring its well-being.

The project was carried out as part of research work by the Laboratory for Structural Research of the RANEPA Institute of Applied Economic Research in 2021