In-depth expert interviews (March 2008)

Representatives from Central Bank, Federal Financial Market Service, Deposit Insurance Agency, major

commercial banks, insurance companies, investment funds, payment systems, business associations and the

non-government noncommercial organizations - 37 experts in total

All-Russian surveys 18+ World Bank (June 2008), Higher School of Economics and WCIOM (November 2009), NAFS (December 2009, February 2010, August 2010))

1600 respondents were interviewed in each wave at 140 sampling points in 42 regions of Russia, cross-sections,

similar samplings

From a simple test on financial knowledge to a broader

definition which takes into account behavior, attitudes and

skills.

From ‘financial literacy’ to ‘financial capability’

To operationalize this concept by measuring knowledge and skills the lack of which may prevent consumers from taking effective decisions

For example:

•consumers may not read the text of the contract before signing it. As a result when taking a credit they do not know if the interest rate is fixed or floating, what the size of effective interest rate compared to the declared one is, what the penalties are if they delay their monthly payment, etc.

•If consumers do not compare offers from different banks and costs of different products before making the decision, they may not know that costs of using revolving credit cards are higher than costs of using consumer credits, that they pay more when they take consumer credit in shopping malls compared to banks, etc.

•Subjective versus objective indicators of FL – if subjective grades are much higher than the objective ones it indicates that people overestimate their abilities to control their finances.

To operationalize this concept by measuring knowledge and skills the lack of which may prevent consumers from taking effective decisions

For example:

•consumers may not read the text of the contract before signing it. As a result when taking a credit they do not know if the interest rate is fixed or floating, what the size of effective interest rate compared to the declared one is, what the penalties are if they delay their monthly payment, etc.

•If consumers do not compare offers from different banks and costs of different products before making the decision, they may not know that costs of using revolving credit cards are higher than costs of using consumer credits, that they pay more when they take consumer credit in shopping malls compared to banks, etc.

•Subjective versus objective indicators of FL – if subjective grades are much higher than the objective ones it indicates that people overestimate their abilities to control their finances.

Managing money keeping records of income and expenditures reading the text of the contract before signing it

Making choices comparing offers from different banks and costs of different products before making the decision knowing about the state deposit insurance

Getting help being aware about the ways to protect consumer rights

Managing money keeping records of income and expenditures reading the text of the contract before signing it

Making choices comparing offers from different banks and costs of different products before making the decision knowing about the state deposit insurance

Getting help being aware about the ways to protect consumer rights

%

What consumer rights protection laws are available and what one needs to do when one’s consumer rights are

violated

31

How does the pension scheme work and what methods are available to secure one’s old age income

26

I am not interested in any of such topics 25 What to do not to get up to one’s neck in debt when

using credits 22

How to plan purchases of durables (car, apartment, dacha) and evaluate one’s abilities to implement them

19

What information should a user pay attention to when signing a contract with a bank or another financial

company

18

%

government authorities regulating these markets

34

independent financial consultants 29

non-government organizations or public organizations involved in consumer rights protection

23

higher education institutions of economic and financial profile

23

21

Be cautious when the program is launched in the name of the state and better not aim it at increasing the use of financial servicesThe state should focus on the consumer rights protection and the advancement of financial markets – transparent and just rules of play. Better not to impose the patterned models of ‘proper’ behaviour through social marketingDo not make people feel overconfident about the level of their financial literacy

Be cautious when the program is launched in the name of the state and better not aim it at increasing the use of financial servicesThe state should focus on the consumer rights protection and the advancement of financial markets – transparent and just rules of play. Better not to impose the patterned models of ‘proper’ behaviour through social marketingDo not make people feel overconfident about the level of their financial literacy