2021 Hillcrest Best Paper Award in Behavioral Finance

Financial Literacy Externalities

Michael Haliassos (Goethe University of Frankfurt, IMFS, NETSPAR, and CEPR)

Thomas Jansson (Sveriges Riksbank)

       Yigitcan Karabulut (Frankfurt School of Finance and Management and CEPR)

We use unique administrative data and a quasi-field experiment of exogenous allocation in Sweden to estimate medium- and longer-run effects of peoples’ exposure to financially literate neighbors on their financial behavior. We contribute evidence of (1) a casual impact of exposure and of a social multiplier of financial knowledge and (2) unfavorable distributional aspects of externalities. Exposure promotes saving in private retirement accounts and stockholding, especially when neighbors have economics or business education, but only for educated households and for substantial interaction possibilities. Findings point to a transfer of knowledge rather than mere imitation or effects through labor, education, or mobility channels.


             Michael Halliassos                                Yigitcan Karabulut


This paper is located on The Review of Financial Studies journal page.