The Impact of Financial Literacy on Non-Performing Loans: Evidence from Russian Regions

In this paper, we study the effect of the financial literacy on the percentage of non-performing loans for individuals in Russian banks. The problem of non-performing loans in banks has always been a priority and there are many models and methods for monitoring this indicator. Moreover, it is important to note, that the problem of improving the level of financial literacy is quite serious all over the world and for some time various strategies and educational programs have been developed for both the adult population and schoolchildren. For this study, we used data from the survey on financial literacy in Russia for 2009, 2011 and 2012 years, as well as the data about the performance of the banks and the economic indicators of Russian regions. For the analysis the method of ordinary least squares for panel data is used. The results represent that financial literacy has an influence on the non-performing loans ratio for individuals in the Russian regions and this issue needs further, deeper research.