nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2011‒04‒16
two papers chosen by
Koen Schoors
Ghent University

  1. Financial Literacy and Retirement Planning in View of a Growing Youth Demographic: The Russian Case By Leora Klapper; Georgios A. Panos
  2. Market reforms, legal changes and bank risk-taking – evidence from transition economies By Fang , Yiwei; Hasan, Iftekhar; Marton, Katherin

  1. By: Leora Klapper (Development Research Group, the World Bank); Georgios A. Panos (Essex Business School, University of Essex)
    Abstract: Our study contributes to the financial literacy literature by examining its association with retirement planning in an interesting and novel context, i.e. that of a country with a relatively old and rapidly ageing population, large regional disparities and a rapidly emerging financial market. Even though consumer borrowing is increasing very rapidly in Russia, we find that only 36.3% of respondents in our sample know about the working of interest compounding and only half can answer a simple question about inflation. In a country with pervasive public pension provision, we find that financial literacy is significantly and positively related to retirement planning using private pension funds and schemes. Residents in rural areas are much more reliant on the public provision and invest less in private schemes and savings. The results of our study have a clear policy implication; along with encouraging the availability of private retirement plans and financial products, efforts to improve financial literacy can be pivotal to the expansion in the use of such schemes.
    Keywords: Financial literacy; Retirement Planning; Pensions; Russia
    JEL: D91 G11 G23
    Date: 2011–03
  2. By: Fang , Yiwei (Lally School of Management and Technology, New York); Hasan, Iftekhar (Lally School of Management and Technology, New York, and Bank of Finland,); Marton, Katherin (Fordham University, New York)
    Abstract: The policy changes and structural reforms in transition economies over the past two decades have created exogenous variations in institutional development, which offers us an ideal natural experiment to analyse the causal effects of institutions on bank risk-taking behaviour. This paper examines a wide array of institutional reforms in respect of law and legal institutions, banking liberalization, and enterprise restructuring in privatization and corporate governance. Using a difference-in-difference approach, we find that banks’ financial stability has increased substantially subsequent to the institutional reforms. Further analysis suggests that the enhancement of financial stability mostly comes from the reduction of asset risk. Moreover, the effects of institutional reforms on bank risk are more pronounced for domestic banks than foreign banks. From the policy consideration, our study sheds light on the risk implications of different institutional reforms that have been characterizing transition countries.
    Keywords: institutional development; bank risk; transition banking; foreign ownership
    JEL: G21 P30 P34 P52
    Date: 2011–03–23

This nep-cis issue is ©2011 by Koen Schoors. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.