Romania is recording the lowest level of financial literacy in the region in 2022. The countries facing the same problem are only Rwanda, Nigeria, Venezuela, Panama and Moldova.
According to the study ‘Financial well-being and financial literacy in Romania‘, commissioned by the Institute of World Economy (IEM) show that nine out of ten Romanians are unable to calculate interest, cannot tell the difference between nominal and real values, and do not comprehend the concept of risk diversification.
According to the report, 38% of Romanians experience everyday financial challenges, and 13% have serious economic issues. In addition, 27% of those who have saved in the past three years have chosen to keep their money at home, and 53% of respondents have not saved at all. 39% of respondents claimed they had little interest in learning free information on financial concepts.
Given the major role of financial literacy in increasing individual well-being and financial inclusion and ensuring the proper functioning of financial markets and the economy, the development and multiplication of financial education projects are required. The study made recommendations on public and educational policy to strengthen the administrative and operational capacity of the leading public institutions with responsibilities in financial education. In addition, the study makes several recommendations for private sector entities wishing to develop projects in this area.Mihai Nitoi, scientific researcher from IEM
The study highlights that the lack of financial education in Romania is the main reason for this result.
Romania has an 8 % financial literacy rate. The differences between developed nations, such as Germany (53%), the Netherlands (45%), Austria (33%), the USA (30%), France (31%), and Italy (25%), are significant. Romania has a low level of financial literacy, even when compared to those in the region’s developing nations, such as Albania (10%), Bosnia and Herzegovina (10%), Serbia (17%), Bulgaria (18%), Hungary (26%) and Croatia (28%)
The results on financial well-being show that its level is influenced by age, income, and educational attainment. According to the research, financially literate people tend to have higher financial well-being indices than average.
A percentage of 13 of the population faces major financial problems, and 38% encounter financial difficulties daily. For 35% of the people, the financial situation is mainly stable, while 15% of the population has a secure financial position. The most critical barriers in the decision to save and/or invest are related to the lack of financial resources and the lack of knowledge, and information;
Romania’s low degree of economic well-being reflects deficiencies in income distribution between different socio-economic groups.
The results revealed the following regarding Romanians’ behaviour and financial attitudes:
- 26% of people have a detailed budget that details all of their income and expenses;
- 53 % of respondents said they hadn’t saved anything in the previous three years;
- 27% of respondents said they would instead save money but keep it at home;
- The primary financial vehicle in which Romanians invest their savings is a bank deposit, with shares and bonds having lower weights;
- The primary sources of information utilized to support financial decisions are one’s own experience and knowledge, specialist websites and mobile applications, advice from friends and acquaintances, and the media;
- 39% of respondents said they are not interested in receiving free financial information;