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Financial Literacy and Risk Protection During the Covid-19 Pandemic

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Abstract

Financial markets cannot protect from aggregate shocks but can help smooth their idiosyncratic implications across individuals. In reality, of course, markets are incomplete and may not be accessible or be used appropriately. Thus, aggregate shocks that impact individual incomes differently can be associated with idiosyncratic welfare effects through poor diversification or random mistakes. Empirical analysis of data from Italy during the first phase of the Covid-19 pandemic documents that, across households, the relationship between income and consumption shocks indeed depended in theoretically sensible ways on financial asset ownership, financial literacy, and saving choices as well as on public transfers.

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  • Giuseppe Bertola & Anna Lo Prete,, 2023. "Financial Literacy and Risk Protection During the Covid-19 Pandemic," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202325, University of Turin.
    • Handle: RePEc:uto:dipeco:202325
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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