Children and Youth Services Review 127 (2021) 106122

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Children and Youth Services Review

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Saving behavior and financial literacy of Russian high school students: An

application of a copula-based bivariate probit-regression approach
Evgenii Gilenko a, *, Aleksandra Chernova b
a
Graduate School of Management, St. Petersburg State University, 3 Volkhovskiy per., St.Petersburg, 199004, Russia
b
National Agency for Financial Studies (NAFI), 2-aya Brestskaya str. 30, Business Center Brestskaya 30, Moscow 125047, Russia

A R T I C L E I N F O A B S T R A C T

Keywords: Understanding of the determinants of saving behavior of people is important for securing the financial stability of
Economics education both the person, individually, and the country, at large. The commonly accepted viewpoint here is that a higher
Financial literacy level of financial literacy (as brought by the relevant economic education via, in particular, smarter saving) leads
Saving behavior
to increasing of financial well-being. But, as we discuss in this paper by providing an appropriate conceptual
High school students
Copula-based bivariate probit-regression
theoretical framework, this relation has a more complicated nature: in some cases, financial literacy may have an
adverse effect on people’s financial well-being. To secure the positive effect of financial literacy on financial well-
being, specifically, via saving more actively, the appropriate programs should be introduced at the early stages of
education (e.g., at school).
This study aims to appropriately assess the magnitude of influence of the fact of being financially literate on
the fact of making savings. To this end, we use a representative sample (n = 1,243) of Russian high school
students. In order to account for the endogenous nature of the influence of financial literacy on the willingness to
make savings, we employ a copula-based bivariate probit-regression approach to identify the actual magnitude of
this influence. To the best of our knowledge, we are the first to apply a copula-based modeling to this problem. As
a result, for the considered cohort of Russian adolescents, we demonstrate that the studied magnitude is sub­
stantially greater when the endogeneity effect is appropriately controlled for. We also reveal and discuss the
factors that impact the level of financial literacy and saving behavior of a Russian teenager. Relevant recom­
mendations are provided for Russian financial authorities and institutions.

1. Introduction may be of a limited kind. Thus, for an individual to effectively coun­

Saving behavior of people has always been in the focus of attention –
both on the part of scholars and policy-makers. Over the past two cen­
turies, there has been a thorough research on the subject matter. And, as
of now, we know that the propensity to save is influenced by a great deal
of different factors, including such exotic ones as the language that the
person speaks [Chen, 2013].
The ability and incentives to save come in especially important both
for individuals and economic communities in the periods of economic
crises (both global and national), when the incomes of people are falling.
For example, over the past 15 years, the Russian economy survived
several major economic shocks: the Global Financial Crisis of
2008–2009 and the National Currency Crisis of 2014–2015 (see
[Gilenko, 2017]) – let alone the current global COVID-19 crisis.
In the situations like these, government support to the population
teract such financial turmoils, their attitude towards saving should be of
permanent nature, i.e. the saving behavior should be practiced on a
regular basis and be long-term in its nature.
In the literature, the various factors that determine people’s saving
behavior are broadly divided into two principal groups – cognitive and
non-cognitive abilities (skills). The former ones encompass “the ability
to reason, plan, solve problems, think abstractly, comprehend complex
ideas, learn quickly and learn from experience” (see [Gottfredson,
1997]).
After the seminal paper of J. Heckman, Stixrud, and Urzua (2006),
non-cognitive skills (such as personal preferences and personality traits)
have also been recognized as strongly affecting people’s financial deci­
sion making. These skills allow to explain a wide variety of irrational
behaviors of people, e.g., why they may not follow their own attitudes,
even if they consider them correct or necessary. This study helps explain

* Corresponding author.
E-mail address: e.gilenko@gsom.spbu.ru (E. Gilenko).

https://doi.org/10.1016/j.childyouth.2021.106122
Received 20 September 2020; Received in revised form 14 February 2021; Accepted 9 June 2021
Available online 12 June 2021
0190-7409/© 2021 Elsevier Ltd. All rights reserved.
E. Gilenko and A. Chernova
why, considering making savings a good thing to do, a lot of people
actually do not practice it.
In this study, we focus on how people’s saving behavior is influenced
by cognitive abilities. Of particular interest to us is the level of financial
literacy of people which is viewed as an important example of the latter
(see [Lusardi, Mitchell, & Curto, 2014]). We give some modern empir­
ical facts on financial literacy and saving behavior in Section 2.
The principal issue here is that the opinion that a wide introduction
of financial education initiatives for people automatically leads to their
better financial decision making may be misleading. As a result, there
has been a great strand of literature that analyzes the question of
whether high levels of financial literacy actually lead to superior
financial decision making (for an excellent review of the literature, see,
e.g., [Stolper, Walter, 2017]).
Empirically, one of the main impediments here is that, in the absence
of true randomized control experiments, the genuine influence of
financial literacy on the quality of financial decisions of an individual,
and specifically, on their saving behavior, is not that simple to establish.
As Stolper and Walter (2017) put it, “Since most evidence on the impact
of financial literacy stems from non-experimental research, endogeneity
presents a pervasive issue which should be considered carefully when
examining the role of financial literacy for financial outcomes. While
endogeneity does not rule out the possibility that financial literacy im­
proves individuals’ financial decision making per se, it complicates
interpreting the magnitudes of the estimated effects”.
Several recent studies acknowledge the endogeneity of financial lit­
eracy with respect to saving behavior, and how incentives to invest in
financial literacy may affect the relation between literacy and saving
(see [Lusardi, Mitchell, 2008], [Delavande et al., 2009], [Moreno-Her­
rero, Salas-Velasco, & Sanchez-Campillo, 2018]). The empirical impli­
cation of this is that the coefficient before the level of financial literacy
in a saving regression is potentially biased, and that the direction of this
bias is ambiguous (see [Jappelli, Padula, 2013]).
Currently, there are three principal classes of approaches to dealing
with the endogeneity problem (see [Park, Gupta, 2012]). The first class
is the instrumental variables approach which assumes finding a special
regressor (instrumental variable) that is correlated with the endogenous
regressor and uncorrelated with the disturbance term in the regression.
Although the theory of instrumental variables is well developed, in
practice, finding a good instrument is quite difficult. For example, van
Rooij, Lusardi, and Alessie (2011) used (a) the financial condition of the
oldest sibling of the respondent, and (b) the economics education of the
respondent as instruments for financial literacy. Bannier and Schwarz
(2018) also point out at the endogeneity problem when studying the
connection between financial literacy and financial well-being of peo­
ple. The authors emphasize the difficulties of finding instrumental var­
iables for correctly dealing with the problem and construct
heteroscedasticity-generated instruments.
The second class implies correction of the endogeneity problem by
supplementing the analysis with a “supply-side model”, while the third
class comprises so-called “instrument-free” approaches which require
neither feasible instruments, nor specification of a “supply-side model”.
Among others, the examples are the higher moments approach (as pro­
posed by [Lewbel, 1997]) or the copula-based approach. An application
of the former one to the problem of financial literacy endogeneity is
illustrated, for instance, in [Deuflhard, Georgarakos, & Inderst, 2019].
As for the latter one, a copula-based approach is used in this paper.
To the best of our knowledge, it is the first time that this approach is
applied to studying the connection between financial literacy and saving
behavior.
As demonstrated in [Krause, Harbaugh, 1999], in order to develop a
better understanding of the factors influencing saving behavior of
adults, it is worth analyzing the economic behavioral patterns of chil­
dren. For example, adolescents who regularly receive “pocket money” or
have a part-time job are more careful and more inclined toward saving
money than those who do not. Also, those children who are initially
2
Children and Youth Services Review 127 (2021) 106122
accustomed to responsibility (housework, accumulating part of their gift
money in a piggy bank, and planning personal expenses) will later be
more prone to saving behavior (see [Otto, 2013]).
This means that the attributes of financial behavior of a person and
their saving skills formed in the childhood are significant predictors for
their saving behavior in the future. We strongly share this idea, and in
the current research we focus on financial literacy of Russian adoles­
cents in order to better understand its actual influence on their saving
behavior.
Thus, this study distinguishes itself in the following. First, we
construct a conceptual theoretical framework to encompass both the
endogenous nature of financial literacy and its possible negative influ­
ence on people’s saving behavior. Second, we investigate the saving
behavior of Russian adolescents whose financial attitudes, at large, are
not well covered by the scientific research which, if present, is mostly of
qualitative nature. Third, – and this represents the primary purpose of
our research – we employ modern quantitative techniques (copula
modeling) to more accurately measure the magnitude of influence of the
fact of being financially literate on the saving behavior of adolescents.
The rest of the paper is organized as follows. Section 2 gives some
relevant empirical facts on the current situation with financial literacy in
the world, thus providing further motivation for this research. In Section
3 we put together a conceptual framework for financial literacy and
saving behavior relation. In Section 4 the results of calculations are
provided, with Section 5 containing the discussion of these results.
Section 6 concludes.
2. Recent empirical facts on saving behavior and financial
literacy
In this section we will discuss some facts related to financial literacy.
Following Stolper and Walter (2017), in this research, by financial lit­
eracy of individuals we understand people’s knowledge of key financial
concepts as well as their ability to apply this knowledge to make
informed financial decisions.
The problem of financial illiteracy has been becoming more and
more prominent in the modern world. As a result of globalization and
the total digitalization, the number of financial products and services
available to the lay public has dramatically increased. According to the
most recent global study of the World Bank of 2017 (see [Demirguc-
Kunt, Klapper, Singer, Ansar, & Hess, 2018]):
• only about 50% of the world’s adult population indeed save money
regularly, with the developed countries having almost two times
bigger fraction (71%) of such people as compared to the developing
countries (43%);
• 69% of the world’s adult population had a bank account, with the
developed countries having this indicator at the level of 94%, while
for the developing countries it is being 63%;
• 50% of the world’s adult population actively used plastic cards (80%
for the developed countries, and 22% for the developing countries);
• the fraction of the world’s adult population making online financial
transactions increased from 42% in 2014 to 52% in 2017.
Of course, the actual problem is not in the number of modern
financial products and services, and not even in their availability to
people – the problem is in the sophisticated nature of such products and
services which is sometimes difficult to comprehend. This is why,
without knowing key financial concepts, people, further and further,
face serious difficulties making adequate financial decisions, which has
a strong negative impact both on their own well-being, and the well-
being of their countries, and, tentatively, of the whole world.
Let’s consider the example of one of the most common, but still
rather sophisticated financial product – the bank loan.
First of all, to get a better understanding of the consumer lending
environment, let’s compare the values of some economic indicators for
E. Gilenko and A. Chernova Children and Youth Services Review 127 (2021) 106122

several countries – France, Germany, the United Kingdom (advanced Table 2

economies), and Russia, an emerging economy (see Table 1). According Some evidence for the Russian economy during the COVID-19 pandemic.
to the OECD Data, in 2018, the median of the household debt to net # Indicator Growth rate or Time period
disposable income ratio was 118.4% in France, 94.8% – in Germany, and current value
143.4% – in the UK. At the same time, in Russia, it was only 33.7% Loans
([OECD, 2018]). So, the debt burden on a Russian borrower seems to be 1 Number of approved microloans +11.4% October to
lower as compared to the borrowers in the OECD countries. 2 Total number of approved mortgage +58.0% January 2020
However, at the same time, in the European countries, the maximum loan
3 Number of approved mortgage loans 3Q 2020, YoY
bank interest rates on loans to individuals were significantly lower than
+36.0%
with down payment financed via a
in Russia. In addition, in Russia, the average monthly salary was consumer loan
approximately 4 times lower as compared to the European countries – 4 Number of loans nonperforming for +20.0% 10 months
let alone the fact that the debts of Russian households were backed up by more than 3 months (NPL90 + ) 2020, YoY
Interest rates
substantially less amount of financial assets as compared to the Euro­
5 Key interest rate (of the Bank of Russia) 4.25% As of
pean countries. 6 Average mortgage loan interest rate 7.32% 01.12.2020
Finally, people with lower income usually take high-cost loans (the 7 Average microloan interest rate 348.0%
higher costs are due to greater credit risk of such clients for the bank). Other financial sector data
So, these borrowers carry the major debt burden. Therefore, in an 8 Number of personal bankruptcies +65% 10 months
9 Number of new broker accounts at the 2020, YoY
emerging economy, like Russia, each percentage point of the debt
+194%
Moscow Exchange
burden may be several times heavier compared to the developed 10 Number of consumer loan complaints to +41.5%
economies. the Bank of Russia
Second of all, what is important is that major crisis situations, like the Other macroeconomic data
11 Real disposable incomes 3Q 2020, YoY
current COVID-19 one, usually bring more active use of loans and, –4.8%
12 Change in the level of unemployment +1.7 pp October to
actually, other risky financial behaviors of people. Some illustrations are January 2020
as follows (see Table 2 for empirical evidence on the Russian economy).
Sources: Rosstat, Bank of Russia, Moscow Exchange
1. Growth of nonperforming loans and a wider spread of
microloans. Although, in the early stages of a financial turmoil, the
overall growth rate of loan approvals usually decreases (especially, in 3. More mortgage loans with down payment financed via
the developing countries), this trend is accompanied by a significant another loan. Those people who have some money saved and who do
increase in the number of nonperforming loans (see [SPGlobal, 2020] not want to take extra risk in exchange for higher returns in the stock
and row 4 in Table 2). Moreover, poor people tend to take more market, come up with seemingly less adventurous undertakings. One of
microloans1 from microfinance organizations to cover their basic needs. them being taking mortgage loans with financing the down payment via
Such loans are very expensive – the corresponding interest rates can another (consumer) loan to buy apartments for further renting. With the
reach several hundreds of percent (see row 7 in Table 2). But, the people Russian government substantially subsidizing mortgage loans during the
are forced to take such loans disregarding the figures of the interest rates COVID-19 crisis and the resulting level of mortgage loan interest rates
and sometimes not clearly understanding the related risks – thus, later being comparatively low (7.32% in 2020 against 10.55% in the early
having problems paying them back. Correspondingly, the number of 2019; see Table 2, row 6), currently, this is a very popular scheme in
personal bankruptcies increases during crises (Table 2, row 8). Russia. But, as the result, such people turn out to have two loans at once,
2. Riskier investments. The situation may not be better for those which is very risky due to the unstable situation at the labor market
people who have some decent money saved. In order to preserve the during crises (Table 2, row 12). Overall, the total number of approved
purchasing power of their savings (with low deposit interest rates in the mortgage loans is growing very rapidly (Table 2, row 2). Notably, Russia
economy), such people seek for riskier investments with higher returns. is not an exception here – in the late 2020, mortgage approvals in the UK
In a lot of cases, they start participating in the stock exchange market. reached their highest level in 13 years ([The Bank of England, 2020]).
Quite a disturbing figure can be given for the Russian economy: during So, as we can see, in all these situations people face quite serious
2020, the number of broker accounts at the Moscow Exchange virtually financial risks. It comes as no surprise that, as a result, the number of
doubled (see Table 2, row 9). The problem is that with no special complaints to the Bank of Russia (2020) (the current financial mega-
educational courses and no appropriate risk assessment, such people regulator) against credit institutions increased dramatically in 2020
have a very high chance just to lose their money. (see Table 2, row 10). Regular saving would, at least, partly keep people
from such problems.
Of course, the population of a country should have access to a wide
Table 1
Economic indicators of various countries in 2018. range of modern financial products, such as bank loans, credit cards with
cashback and other sophisticated financial instruments, especially, in
HH Bank interest Annual Average Total
critical situations, because sometimes such instruments are needed just
debt/ rates on loans inflation monthly household
NDI* (maximum rate salary, financial to help people survive. But – and this is really important nowadays – the
values) USD (PPP) assets, USD/ population should clearly understand how to safely and effectively use
capita such products. So, this definitely calls for a wider spread of education in
France 118.4% < 7% 1.85% 2 570 109 278 the field of economics and finance (as well as regular practicing of
Germany 94.8% < 15% 1.73% 2 838 105 088 saving behavior).
UK 143.4% < 9% 2.29% 2 488 148 115 And there is indeed room for such spread. To assess the scale of the
Russia 33.7% 30% 4.4% 635 2 091
problem, in 2016, the OECD conducted an international survey of Adult
<

Source: national statistical agencies; national central banks; OECD Financial Literacy Competencies over 30 countries using their own index
*
household debt to net disposable income (NDI) ratio for measuring financial literacy. Higher values of the index indicated
higher level of financial literacy in a country (with the possible
maximum value of 21 points). According to the results of this study,
France and Finland had the highest values of this index (14.9 and 14.8
1
In Russia, microloan is a loan of no more than 30 000 rubles (~ 400 USD)
points, correspondingly). Russia occupied the 25th position (with the
and for no more than 30 days. index value of 12.2) among the thirty participating countries (with the

3
E. Gilenko and A. Chernova
index average of 13.2 points). It is worth noting that even the values of
the leaders (France and Finland) were also quite far from the maximum
of 21 points ([OECD, 2016]).
This information clearly demonstrates that the overall level of
financial literacy of the Russian people is still quite low. Most Russian
households do not appropriately plan their finances and do not make
sufficient savings. Less than 25% of the Russian families keep books on
their regular expenditures and incomes, with<30% of Russians having a
retirement plan ([FLS, 2017]). Almost two-thirds of Russians (63.6%)
have no savings at all, while the savings of those who do have them will
be enough, on average, for two months in case of a sudden loss of the
regular income ([NAFI, 2020]).
In 2017, the Government of the Russian Federation approved the
Financial Literacy Strategy in the Russian Federation in 2017–2023
([FLS, 2017]). Notably, this strategy identifies as particularly vulnerable
the following groups of the Russian population: citizens with low in­
come, elderly people, and students ([FLS, 2017]. Thus, the Russian au­
thorities expressed the need for educational activities on financial
literacy among the population, at large, and among high school stu­
dents, in particular.
So, as mentioned in the introduction, in this study, we intentionally
focus on the saving behavior and financial literacy of high school stu­
dents (aged 14–17) because it is at this age that, on the one hand, people
actually start dealing with personal finances, and, on the other hand,
they have a great potential and curiosity to study new things. Besides,
developing financial literacy at the young age not only makes the ground
for rational financial decision making in the future, but also has a pos­
itive effect today, because children tend to pass their knowledge to their
parents, thus, indirectly helping their parents become more financially
literate ([Bruhn, de Souza Leão, Legovini, Marchetti, & Zia, 2016]).
Overall, financially literate population is itself an important driver of
economic growth of a country. There is a number of studies demon­
strating this effect. For example, Batsaikhan and Demertzis (2018) show
that there is a strong positive correlation between the GDP per capita
and the level of people’s financial literacy. Moreover, financially literate
people tend to be more careful about making risky decisions (including
taking bank loans). The authors also emphasize that this positive cor­
relation is, to a greater extent, found for the developed countries, so they
call financial literacy a “rich-country skill”. Also, inclusion of financial
literacy lessons in schools’ curricula lets high school students improve
their grades on other subjects (such as math, economics, etc.) and in­
crease their level of satisfaction with schooling (see [Batsaikhan,
Demertzis, 2018]).
Yet another positive long-run effect of financial literacy is in early
preparation for the retirement age. If a person now inadequately esti­
mates their savings for providing a decent level of living after retire­
ment, this mistake cannot be corrected later. Such long-run planning,
obviously, requires better understanding of finance, but, after all, brings
a strong positive result in return (see [Hibbert, Lawrence, & Prakash,
2012, Wagner, Walstad, 2019]).
The above-given considerations clearly demonstrate why, on the one
hand, equipping people with financial knowledge should be of crucial
importance for the governments and financial authorities of different
countries. But, on the other hand, as we will see next, unfortunately, it is
not always the case that the higher level of financial literacy leads to the
higher financial well-being. This is why there is a strong call for con­
ducting extended empirical research.
3. Theoretical model
Based on the conducted literature review on the subject of financial
literacy and its connections with economics education and financial
well-being, we have put together a conceptual framework for analyzing
this problem (see Fig. 1). The framework consists of two principal blocks
(“Financial literacy” and “Financial well-being”) and eight arrows. The
green color of an arrow indicates a positive direct effect; the blue color –
4
Children and Youth Services Review 127 (2021) 106122
a positive loop-back effect; the red color – a negative direct effect.
In what follows, we explain the principal relationships in Fig. 1.
Arrow 1
Following Van Rooij, Lusardi, and Alessie (2012), economics edu­
cation at an early stage is expected to positively affect financial literacy,
and, thus, is also likely to determine a household’s (or an individual’s)
current financial well-being.
The “Financial literacy” block
According to the OECD, financial literacy is defined as “a combina­
tion of awareness, knowledge, skill, attitude and behavior necessary to
make sound financial decisions and ultimately achieve individual
financial well-being”. Thus, financial literacy comprises the following
components: financial knowledge, financial attitude, and financial behavior
(see [OECD, 2016]).
Financial knowledge is, definitely, a keystone for financial literacy.
Having this knowledge allows people to adequately understand the at­
tributes of financial products and services. According to the OECD
methodology, this component reflects the aspects related to under­
standing the relation between risk and return, the concepts of diversi­
fication, inflation, cost of a loan.
Still, even if a person has sufficient financial knowledge and is
capable of making adequate financial decisions, their financial attitude
influences whether they will actually do the “right” actions or not. This
is why, according to the OECD, this component should include the
attitude of a person to money, savings, and future planning.
As reflection of financial behavior, specific actions of consumers of
financial products and services, after all, determine their financial well-
being both in the short-, and in the long-run. Such actions, like post­
poned payment of the bills, lack of planning of future expenses, and
some other may substantially worsen the well-being of a person. Thus,
the OECD advises to include in this component such behavioral aspects
as regular budgeting, saving, and setting financial goals.
Arrows 2 and 3
Financial attitude mediates the relationship between financial
knowledge and financial behavior (see [Montano, Kasprzyk, 2015]).
After a person adopts financial knowledge, this knowledge forms their
attitude towards the obtained information and values, which, in turn,
affects their behavior. As an example, consider a school seminar with an
extended discussion on saving behavior, and specifically, on negative
consequences of a lack of financial “safety net” for a person in a period of
crisis. This information is expected to form a positive attitude towards
savings among the students, which is supposed later to be enforced by
regular saving of their own.
Arrow 4
In turn, financial behavior itself may have a positive loop-back effect
on the financial knowledge of a person. According to Hilgert and
Hogarth (2003), most people refer to their personal experience as the
main source of their financial education, which implies this “loop-back”
effect. For example, a person who started using a credit card acquires
knowledge of the concepts of “grace period” and “overdraft”. Moreover,
such negative experience as making interest payments for being out of
the grace period or penalties for over-drafting, forces the person to
obtain extra knowledge and later to correct their financial behavior
appropriately.
Arrow 5
In general, a higher level of financial literacy is expected to positively
influence the financial well-being of an individual. Specifically, regular
budgeting and usage of special software applications, allows to control
day-to-day expenses and not to make impulsive purchases. In turn, the
latter lets save smarter to have protection against undesirable financial
situations; to achieve long-term financial goals (traveling, buying an
apartment); and, ultimately, to obtain higher financial independence.
For example, van Rooij et al. (2011) show that financial sophistication of
a person is indeed associated with their greater wealth, a higher prob­
ability to invest in the stock market, and a higher propensity to plan for
retirement. According to Bhutoria and Vignoles (2018), even a relatively
E. Gilenko and A. Chernova Children and Youth Services Review 127 (2021) 106122

Fig. 1. Conceptual framework for the financial literacy problem.

light financial education program (one day of training) induces smarter Summary on the conceptual scheme
financial decision-making and increase in personal savings. The constructed conceptual scheme (Fig. 1) illustrates our opinion
Arrow 6 that it may be misleading to assume that, by default, financial literacy
Unfortunately, a higher level of financial literacy of a person may has only a positive influence on saving behavior, so, before developing
have a negative impact on their financial well-being. According to Willis and implementing of financial literacy programs, it seems beneficial to
(2011), financial knowledge may be inadequately operationalized by an deeper empirically investigate the actual direction and magnitude of
individual, which often leads to formation of excessive confidence in such influence. To this end, accounting for the above-mentioned
their own knowledge, and in the future may negatively affect their endogenous nature of the studied influence, we use a copula-based
financial well-being. For example, beginning investors, after taking an approach to analyze the problem as described below.
introductory course on financial investments and being too enthusiastic
about higher returns on financial assets2 as compared to bank deposits, 4. Methods and results
may not pay the due attention to the fact that there are greater risks of
investing in such assets as compared to such deposits. Taking account of the above-described peculiarities of the theoretical
The situation looks even worse for the young population, since there approach, in this section we provide a formal description of the
is quite a lot of online games that offer to the gamers an opportunity to formulated research hypotheses and the econometric approach, as well
invest in them with a very high return and a minimum risk. The only as the description of the sample and the results of calculations.
things that the gamers (mostly, teenagers) need to have are money and
an appropriate online account – no age limitations! But such attributes,
4.1. Sample description
actually, imply a kind of “financial pyramid” (a Ponzi scheme) which is
difficult to identify by those who are new to finance (literally, read one
The current study is based on a representative sample of the results of
textbook on finance and heard only once about the concepts of “risk”
a survey on assessment of adolescents’ financial literacy, conducted by
and “return”) and, thus, are easy to succumb to such a financial trick,
the Russian National Agency for Financial Studies (NAFI) in autumn
losing a lot of money after all.
2019. The survey was conducted in the form of personal structured
The “Financial well-being” block
interviewing and covered high school students aged 14–17 and living in
According to the US CFPB (2015), “financial well-being” is deter­
50 different regions of Russia. The size of the sample is more than 1200
mined by the extent to which an individual feels that he or she: 1) has
observations.
control over day-to-day, month-to-month finances; 2) has the capacity to
Construction of the representative sample was based on the official
absorb a financial shock; 3) is on track to meet his or her financial goals;
information on the structure of the Russian population (with the margin
4) has the financial freedom to make the choices that allow him or her to
of error <3.4%). The corresponding survey was conducted in a face-to-
enjoy life.
face manner. As a result, a cluster stratified sample was obtained. The
Arrow 7
primary sample units were administrative territorial units where the
Financial well-being is expected to have a positive “loop-back” in­
respondents were selected according to the assigned quotas.
fluence on the level of economics education of a person. Lusardi and
The questionnaire (available upon an email request) consisted of
Mitchell (2014) show that people with a higher level of financial well-
about 40 questions and included blocks of questions to the respondents
being, and specifically those who actively invest in securities, readily
regarding their:
spend extra money on their education in the field of economics and
finance.
• social attributes;
Arrow 8
• sources of income;
Finally, let’s keep in mind that economics education may have a
• perceived financial literacy;
direct positive effect on the financial well-being of a person. An indi­
• personal budget planning;
vidual with a higher level of economics education has better chances to
• knowledge of financial products and services;
receive a well-paid job, thus improving their financial well-being.
• financial knowledge (financial theory and arithmetic tasks).
Indeed, most people are sure that a higher level of (economics) educa­
tion helps developing a more successful career and reaching their life
The full questionnaire is available upon request. Table 3 summarizes
aims (see, for example, [Xu, 2018]).
the profile of a Russian teenager based on several principal attributes
(out of about 40). For example, as it can be seen from the table, the
values of age and gender are more or less uniformly distributed. The
2
The current situation with Bitcoin is a good illustration to this idea: in distribution of income levels of the respondents’ families tends to have a
January 2021 the price of Bitcoin hit its historical records several times. smaller part of the high-income families (the 4th quartile). About a half

5
E. Gilenko and A. Chernova Children and Youth Services Review 127 (2021) 106122

Table 3 Thus, we had to extract this information from the results of the con­
Sample profile. ducted NAFI survey.
Variable Description Value Frequency In our case, the financial knowledge component (variable FinKnowl­
edge) comprises the answers to five questions from the block on financial
Age Age of the respondent 14 21%
(years) 15 24% knowledge. When answering these questions, the respondent obtained 1
16 25% point for the correct answer, and 0 points otherwise. Thus, the range of
17 30% potential total grades (values of variable FinKnowledge) for this block of
Gender Gender of the respondent Male (=1) 47% questions was from 0 to 5. We, then, converted it to the range [0%,
Female (=0) 53%
Income Level of income of the Group 1 35%
100%]. We needed this conversion because other variables (FinAttitude
respondent’s family Group 2 29% and FinBehavior) had different ranges of values, so, we brought them all
(Group1 is low-income) Group 3 27% to the same range (from 0% to 100%).
Group 4 9% The financial attitude component (variable FinAttitude) included three
MotherEduc The level of education of the Incomplete 3%
questions regarding the respondent’s attitude to finances and savings.
respondent’s mother secondary
education or below The maximum grade for each of these three questions was 4 points. So,
Secondary 11% the potential range of total grades (values of variable FinAttitude) for this
education block of questions was from 0 to 12 points. Again, the obtained grades
Specialized 29% for the answers were then converted to [0%, 100%].
secondary
education
The final block of questions on financial behavior (variable FinBe­
Incomplete higher 7% havior) had five questions on routine actions (like regular budget plan­
education ning) of the respondent with their personal finances. The maximum
Higher education 50% grade for the first two questions was 2 points, while the maximum grade
(one or more)
for questions 3–5 was 4 points. So, the possible range of total grades
PartTimeJob Do you have a part-time job? Yes 35%
No 65% (values of variable FinBehavior) for this block of questions was from 0 to
SchoolPerfom Self-evaluation of the Low 5% 16 points (further also scaled to [0%, 100%]).
respondent’s school Below the average 22% The descriptive statistics of the three variables are given in Table 4.
performance Average 26% The financial literacy index (variable FinLit) was obtained as the first
Above the average 34%
principal component in the principal components analysis (PCA) applied
High 13%
ATMs Do you use ATMs? I have not used and 18% to the three scaled variables (FinKnowledge, FinAttitude, and FinBe­
do not plan
I plan to start using 17%
Used over the past 65% Table 4
six months Descriptive statistics of financial literacy attributes.
MobileBank Do you use a mobile bank? I have not used and 34% Variable Description Statistic Value
do not plan
I plan to start using 26% FinKnowledge Respondent’s sum of points for answers to the Min 0.00
Used over the past 40% five questions from the block on financial Median 3.00
six months knowledge Mean 2.98
OnlineWallet Do you use an online wallet? I have not used and 41% Max 5.00
do not plan FinAttitude Respondent’s sum of points for answers to the Min 0.00
I plan to start using 21% three questions regarding the respondent’s Median 5.00
Used over the past 38% attitude to finances and savings Mean 5.39
six months Max 12.0
PlasticCard Do you use a personal bank I have not used and 27% FinBehavior Respondent’s sum of points for answers to the Min 0.00
(plastic) card? do not plan five questions on the routine actions of the Median 10.0
I plan to start using 30% respondent to their personal finances Mean 9.96
Used over the past 43% Max 16.0
six months
Note: see Section 4.2 for detailed description of the variables.
SchoolCard Do you use a school card? I have not used and 65%
do not plan
I plan to start using 12% havior)3. For further analysis, variable FinLit was then transformed into a
Used over the past 23% binary variable FinLit01 which took the value of 1, if FinLit for a
six months
KnowFraud Do you know cases of Know in details 30%
respondent was above its median value4, and 0 otherwise.
financial fraud? Know just a little 34%
Don’t know 36%
PercFinLit Evaluate your financial Low 2% 3
The OECD approach to the financial literacy index construction is to simply
literacy Below the average 7%
sum up the three scores (financial knowledge, financial attitudes, and financial
Average 30%
behavior) – with further normalizing the result to 100. This implies equal
Above the average 43%
High 18% weights of the three scores in the index, which may not be quite accurate. By
Savings01 Over the past 12 months, did Yes (=1) 52% applying the PCA to these three scores and taking the first principal component
you make any savings? No (=0) 48% (which in our case explained 73.1% of the total variance), we virtually con­
structed a financial literacy index with different and optimized weights (factor
loadings) for the three scores. The values of the factor loadings were, corre­
of the respondents made savings over the past 12 months (variable spondingly, 0.49, 0.52, and 0.69.
Savings01). Other attributes can also be found in the table. 4
We used the median value for the following reasons. First of all, the first
principal component demonstrated several suspected outliers. So, we took the
median as a central tendency measure that was robust to outliers. Second of all,
4.2. Construction of the financial literacy index as the dependent variable we needed a binary one, so, the median value
allowed to cut the sample exactly in two equal halves.
As mentioned in Section 3, according to the OECD (2016), con­
struction of a financial literacy index implies dealing with three com­
ponents: financial knowledge, financial attitude, and financial behavior.

6
E. Gilenko and A. Chernova
Correspondingly, as a result, 50% of the respondents got FinLit01 = 1
(marking them as being “financially literate”5), and the other 50% got
FinLit01 = 0.
4.3. Research hypotheses
Based on the above-given considerations and the conceptual scheme,
in this research we test the influence of financial literacy on saving
behavior in the form of our first research hypothesis:
RH1: For teenagers, the fact of being financially literate has a positive
influence on their willingness to save money.
Moreover, based on previous findings in the literature (see [Stolper,
Walter, 2017, Lusardi, Mitchell, 2014]) that the actual size of the impact
of financial literacy on saving behavior is underestimated when endo­
geneity is not accounted for, our second research hypothesis is:
RH2: When taking account of the endogeneity effect, the magnitude of
influence of the fact of being financially literate on saving behavior is sub­
stantially greater than without accounting for this effect.
4.4. Copula-based bivariate probit-regression modeling
As reflected in RH1, in this research we, primarily, study the influ­
ence of financial literacy of a person (teenager) on their savings
behavior. Considering the way these variables were obtained, we basi­
cally study the influence of being financially literate (FinLit01 = 1) on
the fact that the person makes savings (Savings01 = 1).
As discussed above, in the framework of our research, the level of
financial literacy of people is strongly expected to be endogenous to
their financial well-being, in general, and to their saving behavior, in
particular. Thus, quantifying the influence of such a covariate on
outcome variable may be a challenging task due to the potential pres­
ence of unobserved confounders. For the case of binary dependent and
independent variables, Heckman (1978) introduced the bivariate probit-
model to address the issue.
Chib (2007) and Marra, Radice (2011) extended J. Heckman’s model
by introducing Bayesian and penalized likelihood spline methods to
model flexibly covariate-response relationships, while Winkelmann
(2011) proposed the use of copulas to account for non-Gaussian
dependence between the covariate and the outcome variable. Thus, in
the current research, we adopt a copula-based bivariate probit-
regression approach to address the above-discussed peculiarities of our
research framework.
When there is a need to model the joint distribution of a pair of
variables (Y1 , Y2 ), one may use the copula-based representation of their
bivariate cumulative distribution function (CDF) F12 (y1 , y2 ) = P(Y1 <
2
y1 , Y2 < y2 ) as F12 (y1 , y2 ) = C(F1 (y1 ), F2 (y2 )), where C : [0, 1] →[0, 1]
( ) ( )
designates the copula, and Fj yj = P Yj < yj , j = 1, 2, are the mar­
ginal CDFs of the two response variables (Y1 , Y2 ). As Sklar’s theorem
states, if both Y1 and Y2 are continuous, then the copula is uniquely
determined (see [Sklar, 1959]).
Klein and Kneib (2016) discussed that when the response variables
are not continuous, but binary, the immediate application of the copula
regression specification is not possible (the copula is no longer uniquely
defined), and, to overcome this difficulty, proposed to employ the latent
variable representation for a probit-regression (as the conventional se­
lection model when the outcome variable is binary).
Exploiting the latent variable approach, Marra and Radice (2017)
5
We need a binary financial literacy index to address the primary purpose of
this research mentioned in the introduction – more closely study the change in
the magnitude of influence of the fact of being financially literate on the will­
ingness to make savings when we account (copula-based probit-model) and do
not account (univariate probit-model) for the endogeneity effect between
financial literacy and saving behavior. See Sections 4.2–4.5.
7
Children and Youth Services Review 127 (2021) 106122
introduced and justified a general modeling framework for analyzing
bivariate binary data. According to them, for two binary random vari­
ables Y1 and Y2 , the probability of, for instance, event (Yi1 = 1,Yi2 = 1),
can be defined as p11 = P(Y1 = 1, Y2 = 1) = C(P(Y1 = 1), P(Y2 = 1); θ ),
where C is a two-place copula function and θ is an association parameter
measuring the dependence between the two random variables. This idea
underlies the bivariate probit-model for variables Savings01 and FinLit01
in Section 4.5.
Klein et al. (2019) proposed and incorporated in the GJRM R-pack­
age (with updates) a selection model which allows for Gaussian and non-
Gaussian dependencies, arbitrary parametric link functions, and some
other features, including the endogeneity test for binary bivariate
probit-models (with the null hypothesis of absence of endogeneity (see
[Marra, Radice, & Filippou, 2017]). These models are estimated by the
penalized maximum likelihood routine.
We use the GJRM package to run calculations for the current
research, as the package allows to estimate copula-based bivariate
probit-regressions for the studied variables.
4.5. Calculation results
To test the specified research hypotheses, taking into account the
binary nature of our variables of interest (Savings01 and FinLit01), we
estimated two models. The first one is the traditional univariate probit-
model, for which we took only Eq. (1). For the second one (bivariate
probit-model), based on the Gaussian copula6 (with the CDF of the
standard normal distribution denoted as Φ), we combined (1) and (2)
into a system of equations.
We consider two probit-models – copula-based bivariate (1)+(2) and
univariate (1) – to be able to compare the magnitudes of influence of the
fact of being financially literate on the probability of making savings by
teenagers, when, correspondingly, we do and do not account for the
endogeneity effect.
(1)P(Savings01 = 1) == Φ(Age + Gender + Income + MotherEduc
+ PartTimeJob + SchoolPerform + OnlineWallet
+ PlasticCard + SchoolCard + KnowFraud + FinLit01)
(2)P(FinLit01 = 1) == Φ(Age + Gender + Income + MotherEduc
+ PartTimeJob + SchoolPerform + ATMs + MobileBank
+ OnlineWallet + PlasticCard + SchoolCard
+ KnowFraud + PercFinLit)
As mentioned above, the full list of available features is quite long,
and the feature selection procedure for the models was run with help of
information criteria (Akaike and Schwarz). The results of estimation of
these models are given in Table 5. The endogeneity test supported the
presence of the effect in the bivariate probit-model.
Let’s describe some of the obtained results. For the studied cohort of
teenagers (aged 14–17), age tends to have a negative effect on the fact of
making savings in the both models (in the univariate probit-model this
effect is significant at the 10% level), with gender and the income level of
the respondent’s family having no statistically significant influence in all
three regressions.
The higher is the mother’s level of education, the bigger is the chance
6
Besides the Gaussian, we considered several other relevant copulas: Frank,
Gumbel0, Gumbel180, Clayton0, and Clayton180. The Gaussian copula was
finally selected for further analysis because it demonstrated the lowest value of
the Akaike (AIC) and the Schwarz Bayesian (BIC) information criteria (see also
Table 5). It is also worth mentioning that (1) as shown by Song (2000), the
Gaussian copula is a general and robust copula for most applications; (2) the
endogeneity test proposed by Klein et al. (2019) was developed specifically for
the Gaussian copula.
E. Gilenko and A. Chernova Children and Youth Services Review 127 (2021) 106122

Table 5 the opposite effect. This may stem from the difference in the purposes of
Estimation results of probit-models. use of the money: while the money on the school card can be spent only
Variable Univariate probit-model Bivariate copula-based probit-model on the teenager’s needs at school and, thus, is not supposed to be saved,
– Eq. (1) the money on the plastic card is of more general purpose and, thus, a
Eq. (1) Eq. (2)
Dep.Var. = Savings01
Dep.Var. = Dep.Var. = part of it may be reasonably saved.
Savings01 FinLit01 In a sense, not surprisingly, perceived financial literacy is positively
Age ¡0.062 (0.094) − 0.056 (0.125) − 0.022 (0.532)
correlated with actual financial literacy.
Gender − 0.147 (0.133) − 0.135 (0.115) 0.022 (0.786) Most importantly, the fact of being financially literate has a strong
Income − 0.005 (0.878) − 0.016 (0.624) 0.037 (0.256) positive and statistically significant impact on the fact of making savings
MotherEduc − 0.025 (0.480) − 0.047 (0.178) 0.088 (0.006) in both (univariate and bivariate) probit-models. This supports RH1.
PartTimeJob 0.507 (0.001) 0.346 (0.005) 0.496 (0.001)
This finding is in accordance with previous research – see, for example,
SchoolPerfom 0.023 (0.564) − 0.008 (0.841) 0.092 (0.015)
ATMs X x 0.176 (0.003) Moreno-Herrero et al. (2018) who also discover a positive influence of
MobileBank X x 0.085 (0.124) financial literacy of teenagers on their understanding of the value of
OnlineWallet 0.086 (0.098) 0.041 (0.452) 0.137 (0.005) savings.
PlasticCard 0.170 (0.003) 0.120 (0.052) 0.060 (0.332) Moreover, the magnitude of this effect (1.967) in our bivariate
SchoolCard ¡0.102 (0.043) − 0.059 (0.275) ¡0.167 (0.000)
KnowFraud 0.271 (0.003) 0.173 (0.017) 0.303 (0.000)
probit-model (1)+(2) is indeed almost 1.5 times greater than the one
PercFinLit X x 0.257 (0.001) (1.323) in the univariate probit-model (1). This supports RH2. This fact
FinLit01 1.323 (0.000) 1.967 (0.000) x is also in line with previous studies. For example, Lusardi and Mitchell
Sample size 1243 1243 (2014) point out that “…estimates of financial literacy underestimate
AIC 1232.44 2693.83
the true effect” if there is no correction for endogeneity.
BIC 1293.94 2832.21

Note: the p-values of the corresponding z-test on individual statistical signifi­
cance of coefficients are given in parentheses; the coefficients that are statisti­
cally significant at least at the 10% significance level are given in bold.
for the child to be financially literate (with this factor having no sta­
tistically significant effect on making savings in the both models). This
result may seem to be a little at odds with some previous findings in the
literature. For example, Friedline, Elliott, and Nam (2012) in their
analysis show the presence of a direct positive influence of higher levels
of education of parents on the probability of having savings of their
children.
But, in our opinion, there is no radical contradiction. As captured by
our copula-based bivariate probit-model, in our case, the mechanism of
influence of mother’s level of education is just a little more complicated:
mother’s level of education positively and statistically significantly in­
fluences the chance for a teenager to be financially literate, which, in
turn, positively and statistically significantly affects the chance for a
teenager to make savings.
The fact of having a part-time job is statistically significant in all of the
three equations which supports the idea that teenagers with such jobs
(or job experience) may value money differently, and tend to be more
financially literate and to save more actively. Such finding may also
stem from the fact that these teenagers have to work on their own
because the level of income of their families is not that high, so, financial
support from their parents may be limited – thus, the teenagers have to
earn and save money on their own. Notably, this finding is in line with a
similar recent finding of Lopus, Amidjono, and Grimes (2019).
Interestingly enough (although, reasonable), better performance at
school does not have a significant influence on the fact of making savings
(both in the univariate, and the bivariate probit-model), but is signifi­
cantly and positively related to the level of financial literacy. This may
mean that better learning skills allow adolescents to adsorb financial
knowledge better, but this does not mean that they will actually make
savings.
Such factors as usage of ATMs, having an online wallet, knowing
about financial frauds, and access to a mobile bank are positively related
to the fact of being financially literate. Similar results were demon­
strated by Sohn, Joo, Grable, Lee, and Kim (2012), who found a positive
influence of regularly getting pocket money and owning a bank account
on financial literacy for South Korean adolescents; as well as by Moreno-
Herrero et al. (2018) who showed the presence of a positive effect of
financial inclusiveness, specifically, possession of a bank account, on
financial literacy of teenagers.
While having a bank’s plastic card makes the respondents save
money, having a school card (with money for school breakfasts, etc.) has
4.6. Robustness check
In order to check stability of our finding that the univariate model
(with no account for endogeneity) underestimates the size of influence
of financial literacy on making savings, i.e. to support the fact that the
ratio of coefficients before FinLit01 in the bivariate and the univariate
probit-models correspondingly is strongly higher than 1, we ran a boot-
strapping procedure (10 000 iterations) for this ratio. The major aim was
to understand whether the value of 1 is outside of the conventional
confidence intervals.
The histogram of the obtained values of the ratio is given in Fig. 2.
The vertical dashed line in the graph represents the mean value of 1.456.
Based on these results, the constructed 99% confidence interval (CI)
for the ratio is [1.059, 1.753]. As we can see, the value of 1 (one) is
beyond the CI which means that, indeed, the influence of financial lit­
eracy on making savings when controlling for endogeneity is greater
than without such control.
5. Discussion and recommendations
As shown above, our findings indicate the presence of a strong pos­
itive influence of higher financial literacy on the willingness to save
money of Russian teenagers (when controlling for the endogeneity ef­
fect). It means that indeed it would be beneficial for Russian teenagers to
increase their level of financial literacy – especially taking into account
their need for earlier financial independence.
A recent representative survey, conducted by Sberbank (2020) (one
of the biggest, state-owned commercial banks in Russia) in May 2020,
demonstrated that Russian people reach their financial independence,
on average, only by 26 years. For comparison, in Austria this indicator is
19 years, in China and Sweden it is 21 years, in Finland – 22 years; in
Fig. 2. Results of the coefficient ratio boot-strapping.

8
E. Gilenko and A. Chernova
Germany, Japan, and the United States – 24 years ([Lai, 2011]).
To actually achieve financial independence, experts recommend
composing personal financial plans, making regular savings, consider
riskless investments, and some other ([Russians achieve financial inde­
pendence, 2020]). But this requires a significant expansion of the gen­
eral understanding of adolescents about the complexities and risks of
using modern financial products.
There are several, well-established ways widely discussed in the
literature. One of the most important being expansion of high school
programs by the inclusion of extra classes on economics and finance. It is
worth noting that Lührmann, Serra-Garcia, and Winter (2015) demon­
strate that even short-term educational school programs are capable of
changing the financial behavior of high school students, for instance,
help to reduce the number of impulsive purchases.
According to Kaiser and Menkhoff (2018), on average, 5 h of training
create a modest effect (about 15% of a standard deviation) on financial
knowledge; courses of 20–40 h have higher impact (about 20–25% of a
standard deviation); and interventions of more than 80 h do not bring
additional value.
Unfortunately, as of now, in Russia, financial literacy classes
mandatorily take only 5 academic hours per academic year ([Bogolu­
bov, Lazebnikova & Gorodetskaya, 2020]). This brings us to our first
recommendation to the Ministry of Education of the Russian Federation.
Recommendation 1: In Russia, financial literacy classes for high school
students should become mandatory and regularly, and should take at least 30
academic hours per year.
As shown in our study, this, in turn, will have a strong positive effect
on the saving behavior of Russian adolescents, ultimately, resulting in
their earlier financial independence.
But having regular extra classes on financial literacy is not enough.
Recent studies emphasize the important role of parents in making ado­
lescents more financially literate. For instance, Friedline et al. (2012)
discuss the role of parents as the primary facilitators of adolescents’
savings, because very often it is the parents that help adolescents
consistently use a bank account to save their money. Zhu (2019)
demonstrate that adolescents who take part in financial education more
closely obey parental expectations, with the knowledge gained from the
courses helping to clarify the reasoning behind parental financial norms.
Also, the results of Moreno-Herrero et al. (2018) show that students
who have the chance to talk to their parents about money also tend to get
higher scores in financial literacy. This is important, because, in Russia,
according to a recent survey of NAFI ([NAFI, 2016]), only 12% of
teenagers said that their parents regularly discuss financial questions
with them. At the same time, 56% of US parents are having regular
money conversations with their kids [CNBC, 2018]; in Italy, this fraction
is 68% ([Statista, 2016]); and in the United Kingdom as many as 90% of
children and young people said they felt absolutely comfortable going to
their parents if they wanted advice about money ([MAS, 2018]).
One of the ways to solve this problem is the creation of digital
gamified educational platforms (web-portals) in the “bring-the-whole-
family-together” format, on the one hand, to help teenagers study
modern financial topics in the “learn-by-playing” manner, and, on the
other hand, to create for them room to discuss these topics with their
parents, thus, in some cases, making appear of the reverse financial
socialization effect – the situation in which the teenager acts as a
conductor of financial knowledge for their parents (see also [Kim, Gut­
ter, & Spangler, 2017]).
An illustrative example here is the UK Financial Capability web-
portal (https://www.fincap.org.uk/) built on the “life-event”
approach. On this website, young people can find useful information on
how to become financially independent, get their first loan, etc. At the
same time, adults can visit the section dedicated to their life circum­
stances, for example, how to save for retirement. Or, the US “Virtual
PiggyBank” project portal (http://virtualpiggybank.com/) which was
created “to help parents and children see better futures by more effi­
ciently utilizing (monetary) gifts”.
9
Children and Youth Services Review 127 (2021) 106122
In Russia, the two official educational web-portals on financial lit­
eracy – the “Financial Culture” portal (www.fincult.info) supported by
the Bank of Russia, and the “Your Finance” portal (www.vashifinancy.ru)
supported by the Russian Ministry of Finance – provide access to a wide
range of useful materials and allow people to get advice on financial
issues. But, as of now, they do not create a solid ground for child-parent
interaction and financial topics discussion. So, our next recommenda­
tion is for Russian financial authorities.
Recommendation 2: Transform the official web-portals on financial lit­
eracy to include navigation according to the life-event approach, as well as
introduce gamification on the portals that will let parents and children play
and learn finance together.
This is related to the next principal problem – the financial inclu­
siveness of adolescents. With a growing appreciation of the importance
of financial education, there is a need for ensuring that children and
young people not only obtain meaningful financial knowledge, but also
gain financial experience in the early stages, allowing them to manage
money well and make good financial decisions later in life. So, besides
studying the theoretical materials on finance management, it is also
beneficial for adolescents to gain some real-life financial experience
([MAS, 2018]).
As we demonstrated both with our own calculations, and in the
provided review of the literature (see, for example, [Hilgert & Hogarth,
2003]), financial inclusiveness of adolescents, specifically, experience in
using modern financial products and services (ATMs, online wallets,
plastic cards, mobile banks, etc.), has a positive influence on the level of
their financial literacy. At this point, financial institutions (first of all,
commercial banks) are expected to play an important role in the pro­
vision of such products and services for adolescents (of course, with
some appropriate limitations7).
For example, the Chinese commercial bank ICBC offers “Baby
Growth Card” family debit cards (within the China UnionPay payment
system), which allow non-cash payments, money transfers, and savings.
The “Baby Growth Card” is issued as a supplement to the parent’s plastic
card. The child receives rewards for making savings as well as high
grades at school.
The “School Bank” project of the British bank HSBC teaches children
financial literacy and personal finance management skills. The bank’s
mini-branches can be opened directly inside of schools after consulta­
tions with the school teachers and parents. School Bank “employs” pu­
pils aged 7 and older in the positions of cashier, sales consultant,
administrator, etc. To be accepted, candidates must undergo an inter­
view with the HSBC staff. Under their guidance, new child recruits learn
the ins and outs of banking operations, a knowledge they can later use to
teach their peers about the bank’s products (see [NAFI, 2016]).
As of now, in Russia, the number of private initiatives to provide
financial inclusiveness for children is quite limited. Among some other
initiatives for adolescents, we can only mention the “Palms” service of
Sberbank, which is based on a biometric technology that allows high
school students just to pay for school lunches with their palms.
But, a financial institution focused on growing its customer base will
invest in acquisition campaigns and activities in order to attract new
customers. According to a joint study of Child and Youth Finance In­
ternational (CYFI) and MasterCard Incorporated International, the teen
segment provides the highest return on such investment (ROI). From a
financial perspective, by starting with children and young adults,
financial institutions have the opportunity to build customers for life
(see [CYFI, MasterCard, 2014]).
So, our final recommendation to Russian financial institutions (retail
banks) is as follows.
Recommendation 3: Russian retail banks should actively develop targeted
7
E.g., no access to taking loans or making risky investments; parental control
over the type and size of financial transactions; limits on the size of financial
transactions (per day/week/month) and cash withdrawals; etc.
E. Gilenko and A. Chernova
financial services for children and teenagers to help them learn from their own
financial experience.
The development of such financial services for adolescents will both
be beneficial for commercial banks, and will help the society to get
economically active members.
6. Conclusion
In the current study, the importance of being financially literate for
people in the modern world was considered in relation to their saving
behavior. Based on the proposed conceptual framework, we have dis­
cussed that the influence of the level of financial literacy on people’s
saving behavior has an ambiguous nature. Moreover, the habit to save
takes quite some time to occur, meaning that it is better to start doing it
from a young age. This is why the research hypotheses set in the paper
were tested on a representative sample of Russian high school students.
The results of our calculations supported the fact that the fact of
being financially literate has a positive impact on the readiness of ado­
lescents to save, with the size of this influence, actually, being greater
when accounting for the peculiarities of the studied dependence (the
endogeneity effect of financial literacy).
Relevant recommendations have been provided both for Russian
financial and education authorities, and commercial banks.
Declaration of Competing Interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Acknowledgements
The authors are grateful to three anonymous reviewers for their
fruitful comments on the paper.
Funding
Research for this paper was supported by a grant from the Russian
Foundation for Basic Research, Project No. 20-010-00960.
References
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Federation for 2017- 2023 (FLS). Act of the Government of the Russian Federation,
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Bank of Russia. (2020). Consumer Report on Financial Products and Services. Bank of
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