How financially literate is CESEE? Insights from the OeNB Euro Survey

Drawing on data from the OeNB Euro Survey, we document financial literacy across ten countries in Central, Eastern and Southeastern Europe (CESEE-10) between 2012 and 2018. We analyze people’s understanding of the “big three” concepts of financial literacy: interest rates, inflation and risk diversification. We show that financial literacy differs across and within countries. On average, just one in five adults can be considered financially literate. Our results show that low financial literacy levels are more common among older and less educated individuals and that self-employment is only weakly related to higher literacy. In line with previous research, females show lower levels of financial literacy than their male counterparts. However, the gender gap observed in the CESEE-10 (countries with a communist legacy) is small compared to the gap in countries that do not have a communist legacy. Individuals who experienced economic turbulence during transition from planned to market economies tend to be more financially literate regarding inflation. While indicators of economic and financial development are correlated with higher financial literacy at the country level, interactions are more complex at the intracountry level.