DOI: 10.32609/j.ruje.12.167840

Authors: Artem Y. Abduramanov, Olga E. Kuzina, Daria V. Moiseeva

Abstract: This paper assesses the relationship between financial literacy and over-indebtedness of Russian households using panel data from the Survey of Consumer Finances collected in Russia during 2018–2024. Russia is an interesting case: a relatively young consumer-finance market in which a lack of financial literacy may increase the likelihood of household over-indebtedness. To test this hypothesis, we use a household fixed-effects panel regression model to control for all unobservable time-invariant household characteristics, together with an instrumental-variable (IV) approach with clustered standard errors based on a two-stage least squares (2SLS) procedure to correct for potential simultaneity between financial literacy and over-indebtedness. The instrument is the number of universities per region. Our main finding is that both the fixed-effects panel regression and the 2SLS estimates indicate no relationship between financial literacy and household over-indebtedness in Russia in 2018–2024; this result is robust to alternative specifications of variables and models.

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DOI: 10.32609/j.ruje.12.158069

Authors: Karen A. Tumanyants, Fyodor B. Kuleshov, Henry I. Penikas, Vasily E. Zuev

Abstract: Many studies have found that inflation expectations vary systematically across population groups. This heterogeneity is driven among other factors by the level of financial literacy — a pattern documented for Russia as well. Earlier Russian evidence, however, rested on a single survey wave; we confirm the finding using data spanning three years: respondents with higher financial literacy tend to have lower inflation expectations. For this study, we rely on the pseudo-panel method to combine the results of two regular household surveys focused on inflation expectations and consumer finance. Our findings are based on responses to both quantitative and qualitative questions, controlling for key socio-demographic characteristics. We show that inflation expectations are linked to the level of financial literacy, but this relationship is nonlinear. Our conclusion holds for short- (one month ahead), medium- (one year ahead) and long-term (three years ahead) expectations. The nonlinearity of the relationship is evident: despite similar differences in the level of financial literacy, the gap in inflation expectations is larger in the least competent group of respondents in comparison with financially literate participants. We find that estimates of future inflation are linked to financial literacy through the perception of observed inflation, as more financially literate respondents cite lower rates of price growth, and their opinions about future inflation are tied to their estimates of observed price movements. Financially literate respondents’ estimates of current inflation are closer to the Rosstat-calculated measure of price growth than are the estimates of other respondents.

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DOI: 10.32609/j.ruje.11.145314

Authors: Andrey A. Sinyakov, Tatyana I. Shelovanova

Abstract: The booming retail trade and the above-target consumer prices inflation in 2023–2024 in Russia, amid tightening monetary policy stance, raise an issue of the strength of the monetary policy interest rate channel. The focus of our paper is the interest rate elasticity (given inflation expectations) of a household’s loan request probability. We argue that a household, rather than an individual consumer, is the appropriate unit of study. We use unique data on households’ loan applications obtained from the AllRussian survey of consumer finances, which contains information on more than 6,000 households in Russia. Actual loan applications cover the period of 2020–2022, and the survey also includes information on households’ borrowing intentions as of late spring–summer 2022. The interest rate channel of monetary policy, with regard to unsecured loans, although statistically significant and working in the right direction, does not appear to be economically significant from a microeconomic perspective. This suggests that the Bank of Russia, in relying on this channel for this type of credit, might have to increase the key rate significantly to cool down consumer demand and bring retail inflation to the target. We find that higher households’ inflation expectations positively correlate with the loan demand, thus, households’ inflation expectations do have real effect. Thus, anchoring inflation expectations is important for achieving macroeconomic stability. We empirically identify a set of Russian households’ characteristics that are key drivers of households’ requests for credit. Demographics is an important factor of the demand.

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DOI: 10.32609/j.ruje.5.35485

Authors: Leonid M. Grigoryev, Victoria A. Pavlyushina

Abstract: The study of economic growth and social inequality goes back to the works of S. Kuznets, A. Atkinson, P. Krugman, J. Stiglitz, T. Piketti, and B. Milanovic. Statistical analysis of social inequalities for a large set of countries, divided into seven clusters, was conducted for the period 2000–2016. The share of incomes of the 10th decile was used as a measure of inequality. The hypothesis of the positive impact of economic growth on the reduction of social inequality was tested. Stylized facts on an array of 106 countries for the period under review indicate a high degree of stability of the level of inequality in most groups, especially in the most developed countries, and in particular in the Anglo-Saxon ones. The distribution of key socioeconomic and even political indicators for clusters shows their strong relationship with the structure of cluster inequality. This makes it possible to significantly deepen the analysis, in particular the one concerning the stages of world development.

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DOI: 10.1016/j.ruje.2016.04.004

Authors: Yaroslav Murashov, Tatiana Ratnikova

Abstract: In the proposed paper, an attempt is made to estimate the proportion of unstated income for Russian households based on micro data. An overview of microeconomic approaches to estimating the scale of under-reported income is provided. These approaches are weakly represented in the national literature, so their strengths and weaknesses are also analyzed. A theoretical model of household consumer behavior is described that allows the size of under-reported income to be estimated. The structure of household incomes and expenditures is studied based on an RLMS sample for 2012. The model is estimated using household subsamples based on the type of household and household income. The estimation technique utilizes regression variables and random effects. The resulting subsample estimates were applied to the general population and compared with those obtained by other researchers using alternative methods and other data. A comparison is made to estimates of under-reported income developed for British households.

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DOI: 10.1016/j.ruje.2015.12.001

Authors: Alexander Abramov, Alexander Radygin, Maria Chernova

Abstract: This article analyzes the impact of the increase of an investment horizon on the comparative advantages of the basic asset classes and on the principles of constructing the investment strategy. It demonstrates that the traditional approach of portfolio management theory, which states that investments in stocks are preferable over bonds in terms of their long-run risk–return trade-offs, is by no means always consistent with empirical evidence. This article proves the opposite, i.e., that for long-term investors, investments in corporate bonds are more profitable in terms of the risk–return ratio than investments in stocks, arguing in favor of strategies pursued by pension funds and other institutional investors focused primarily on investments in fixed-income instruments, including infrastructural bonds. Emphasis is placed on the need for regular adjustments to long-term investors’ portfolios. As portfolios get older, those investors see a reduction in the returns’ dispersion, while differences in risk between various portfolios increase. This means that to maintain a fixed risk–return ratio for a portfolio as the horizon increases, an investor needs to increase the share of lower-risk financial assets during asset allocation process. This thesis becomes especially relevant in the context of retirement savings management.

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