Financial Literacy and Income Inequality in the European Emerging Countries
Financial Literacy and Income Inequality in the European Emerging Countries

Author(s): Simona Gabriela Masca
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Summary/Abstract: This study highlights the distributional impact of financial literacy by using annual cross-country panel data from a sample of Central, Eastern, and Southeastern European countries observed during the period 2012-2017. Particular attention is dedicated to financial competencies regarding various aspects of interest rates, inflation, and risk diversification issues. Our empirical approach, based on the estimated generalized least square method, allows us to identify those groups of individuals who benefit in terms of relative incomes based on different financial skills. The findings reveal a strong positive correlation between risk diversification knowledge and overall and top-bottom income inequality. Important policy implications are drawn in the case of the emerging European countries.

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