2020 (17), №1

Individual Financial Behavior and Determinants



For citation: 

Litvinova, V. V. (2020). Individual Financial Behavior and Determinants. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 17 (1), 230-237


The sphere of personal or household finances has been the subject of numerous theoretical and empirical studies in recent years. Some researchers focuse on the adoption of financial decisions at the individual level (most often the financial behavior of investors in the stock market or pension savings market is studied), while others take a couple or a household as a unit of analysis. Regardless of the study perspective, it is interesting to study the financial behavior and the factors that determine it. The selection of these factors will contribute to the customization of financial products, that is, their individual adjustment to each client. The understanding the factors of financial behavior is the first step to forecasting it.
The purpose of this article is to identify the main factors of individual financial behavior. The research method is a critical review of domestic and foreign studies, which determines the factors influencing the individual financial behavior. It showes that there are internal factors (intellectual, psychological and socio-demographic characteristics), as well as external factors, which include territorial, cultural features, economic and infrastructural opportunities, political factors.
The most important determinants of financial behavior are financial literacy and psychological factors. The financial literacy level has greater influence on making savings strategies and credit decisions than the size of personal income, traditionally regarded as the key determinant of the financial behavior. There is also a significant influence of psychological factors on the individual’s decision-making. Regression analysis shows that psychological factors have a greater influence on financial behavior than economic ones.

Veronika Vladlenovna Litvinova — Junior Research Associate, Research Financial Institute of Russian Finance Ministry (Moscow, Russian Federation; e-mail: fa-fm-1@yandex.ru).