IDEAS home Printed from https://ideas.repec.org/a/spr/italej/v11y2025i2d10.1007_s40797-025-00334-5.html
   My bibliography  Save this article

The Role of Financial Education for the Prevention of Financial Fragility and Over-Indebtedness

Author

Listed:
  • Dieter Korczak

    (GP-Forschungsgruppe)

Abstract

This paper deals with the influence of financial literacy on the prevention of financial fragility and over-indebtedness. Financial literacy is differentiated from financial education, financial fragility, financial resilience and financial capabilities. Over-indebtedness is regarded as a multifaceted phenomenon. It is mainly caused by ongoing low income, financial shocks and irresponsible lending practices by the financial industry. Financial illiteracy plays only a minor role for getting into over-indebtedness. Financial literacy is regarded as a prerequisite for financial inclusion and achieving financial well-being. It functions as a kind of primary/ universal prevention. 50 per cent of the EU population is in financial fragility. There is a great need to change the disadvantageous circumstances of their life and to have a deeper look what causes financial fragility. The analysis of conversion factors is important for financial capabilities and could be helpful. There is no scientific proof yet that an effective behavior change for the prevention of over-indebtedness can be reached by financial education. On the other hand, there is evidence that over-indebted people develop a high level of everyday competence to get by with little money. Therefore literacy initiatives (as primary prevention) should go hand in hand withimproving people's income levels, good consumer protection, better regulation and financial supervision.

Suggested Citation

  • Dieter Korczak, 2025. "The Role of Financial Education for the Prevention of Financial Fragility and Over-Indebtedness," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 11(2), pages 815-829, July.
  • Handle: RePEc:spr:italej:v:11:y:2025:i:2:d:10.1007_s40797-025-00334-5
    DOI: 10.1007/s40797-025-00334-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40797-025-00334-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s40797-025-00334-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Financial literacy; Financial education; Financial fragility; Financial resilience; Over-indebtedness; Debt advice;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:italej:v:11:y:2025:i:2:d:10.1007_s40797-025-00334-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.