Financial literacy and voluntary savings for retirement: novel causal evidence

Andrej Cupák, Gueorgui Kolev, Zuzana Brokešová

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20 Citations (Scopus)
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We utilise recent Household Finance and Consumption Survey microdata to report first causal effects of financial literacy on voluntary private pension schemes participation for a Central and Eastern European (CEE) country, namely Slovakia. Savings for retirement in the supplementary pension schemes are positively associated with financial literacy after controlling for a set of relevant socio-economic variables. One additional correctly answered financial literacy question leads to a 5.6 percentage points increase in the probability of having a voluntary pension savings plan in our ordinary least squares estimates. The causal impact of financial literacy increases to 19.5 percentage points when we address potential endogeneity problems by novel to the literature instrumental variables.
Original languageEnglish
Pages (from-to)1606-1625
Number of pages20
JournalThe European Journal of Finance
Issue number16
Early online date22 Jul 2019
Publication statusPublished - 2019
Externally publishedYes


  • Retirement savings
  • financial literacy
  • endogeneity
  • instrumental variables
  • survey data


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