Does the availability of financial services affect the level of population well-being in the Russian Federation?

Abstract

The development of financial markets is a prerequisite for the stable growth of the country’s economy. The availability of financial services, provided that markets work effectively, can lead to a noticeable reduction in inequality in society and a reduction in the level of poverty in the economy. An increase in inequality is not necessarily accompanied by an increase in the overall level of poverty. The reasons for the deteriorating financial situation of individual citizens may be the lack of financial literacy and investment in human capital, which often in practice leads to irrational financial decisions. In our study, we tried to empirically assess how the indicator of the level of poverty and the availability of individual financial services for Russian citizens are related in the aggregate sample, focusing on the theoretical explanation of the indirect influence of the factor of availability of financial services on the overall level of poverty in the Russian Federation at the micro level. We used the HSE RMEZ data from 2010–2021 as a statistical database for more than 103 thousand household households. We determined the status of a household based on a comparison of the actual income level and the subsistence minimum established in a particular region. The resulting binary variable eventually acted as a dependent. The regressors were the following indicators: education, age, family status, the presence of children, the period of maternity leave, the health of individuals, as well as factors of availability of financial services. Based on the application of the binary choice model, we came to the conclusion that large families, women on maternity leave, the unemployed, individuals without higher education, as well as those living in rural areas have a high probability of being among poor households. Based on empirical data, we also determined that in the regions of the Russian Federation in the period under review, the availability of bank cards or a deposit can reduce the likelihood of a household becoming poor by an average of 3–5 %.