The Eﬀect of Financial Literacy on Granting Third-Party Guarantees
Ein Vortrag von Christa Hainz (ifo Center for International Institutional Comparisons and Migration Research) im Rahmen der Seminarreihe des AB Ökonomie am IOS.
Datum: 23. Februar 2021
Zeit: 13.30 Uhr
Ort: Online via Zoom, Anmeldung
Granting a third-party guarantee for a loan does not involve an initial ﬁnancial transaction. Therefore, guarantors might not understand that they are taking on a liability, albeit contingent. We introduce knowledge about guarantees as a novel and distinct concept of ﬁnancial literacy. For ten Eastern European countries, we ﬁnd that 45 percent of individuals lack this form of ﬁnancial literacy. Instrumenting guarantee literacy with regional cohort-speciﬁc ﬁnancial literacy, we show that guarantee literacy signiﬁcantly reduces an individual’s propensity to act as a guarantor. Our results are robust to a placebo analysis and several sensitivity checks.