Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119580
Authors: 
Disney, Richard
Gathergood, John
Weber, Jörg
Year of Publication: 
2014
Series/Report no.: 
IFS Working Papers W14/32
Abstract: 
Is financial literacy a substitute or complement for financial advice? In this paper we analyze the decision by consumers to seek financial advice in the form of credit counseling concerning their credit and debt. Credit counseling is an important component of the consumer credit sector for consumers facing debt problems.We combine instrumental variable approaches to account for the endogeneity of an individual's financial situation to financial literacy, and the endogeneity of financial literacy to exposure to credit counseling. Our results show credit counseling substitutes for financial literacy. Individuals with better financial literacy are 60% less likely to use credit counseling. These results suggest credit counseling provides a safety net for poor financial literacy.
Subjects: 
Credit Counseling
Financial Advice
Financial Literacy
Household Finance
JEL: 
D10
D12
I22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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