Financial behavior of households and its determinants

Abstract

The economic meaning of the term «financial behavior» has been researched. In this study, financial behavior is considered as a special type of economic behavior that is related to the actions of the population in the financial services market, which involves the mobilization, redistribution and investment of the population’s monetary resources. The classification of financial behavior of the population is considered. It should be classified on the basis of such features as the activity in the financial services market, the type of the result of financial behavior, the source of financial resources, the form of implementation, the instruments used in the financial services markets, the degree of risk, the propensity to innovate, the type of property of financial resources. The factors influencing financial behavior of households are analyzed, and the following types are distinguished: political, demographic, cultural, social, psychological, economic. The features of financial behavior of the population in Ukraine in comparison with other countries are determined. It has been established that the level of penetration of financial services is significantly lower than the world standards: on average, one Ukrainian has only one bank card and one current account in the bank, and the intentions of the population to save and invest are passive in nature. It is established that the greatest determinant of financial behavior, inclusiveness and literacy in Ukraine is the age and property status of financial services consumers. The problems, the solution of which will facilitate the increase of financial behavior of domestic households and their involvement in the financial market of Ukraine, are outlined. The main issues are as follows: 1) The absence of financial traditions and positive practices in financial activity in Ukraine, which is due to past historical development of the state; 2) Insufficient development of the financial market in terms of working with a private investor and limited supply of financial services to such clients; 3) Absence of the Institute of financial advisers; 4) The scope of application of compensatory mechanisms in the financial market; 5) Lack of effective tax incentives for citizen investments; 6) Low level of public confidence in financial intermediaries; 7) Disadvantages of providing market participants with the necessary financial information; 8) Low level of financial literacy of the population.