Financial Literacy and Risk Protection During the Covid-19 Pandemic

This study documents that competent access to financial markets can smooth consumption in the face of idiosyncratic income shocks. Using household-level data on financial literacy and financial resilience in Italy during the first phase of the Covid-19 pandemic, we find that financial literacy and financial asset ownership both influenced consumption changes in theoretically sensible ways. The results are robust in specifications controlling for several socio-demographic characteristics, saving choices, public transfers, and to different estimation methods.