Financial literacy and over-indebtedness: Is there a relationship?

Russian Journal of Economics. 2026. Vol. 12. No. 2. P. 251–273.

Abduramanov A., Kuzina O. E., Daria V. Moiseeva

This paper assesses the relationship between financial literacy and over-indebtedness of Russian households using panel data from the Survey of Consumer Finances collected in Russia during 2018–2024. Russia is an interesting case: a relatively young consumer-finance market in which a lack of financial literacy may increase the likelihood of household over-indebtedness. To test this hypothesis, we use a household fixed-effects panel regression model to control for all unobservable time-invariant household characteristics, together with an instrumental-variable (IV) approach with clustered standard errors based on a two-stage least squares (2SLS) procedure to correct for potential simultaneity between financial literacy and over-indebtedness. The instrument is the number of universities per region. Our main finding is that both the fixed-effects panel regression and the 2SLS estimates indicate no relationship between financial literacy and household over-indebtedness in Russia in 2018–2024; this result is robust to alternative specifications of variables and models.

Keywords: финансовая грамотность, перекредитованность, financial literacy, Household finance, over-indebtedness, финансы домохозяйств

Publication based on the results of: Dynamics of Consumer, Financial and Labor Behavior in Russians under the New Geopolitical Conditions (2025)