The Effect of Social Media on Financial Literacy

Abstract

What makes the issue of financial literacy relevant to various social groups and the State as a whole today is the dynamic development of the market for financial services, the rapid and extensive digitalization of such services, and changes in the structure of the market caused by the emergence of new segments and new actors. A financially literate consumer will make wellinformed, responsible decisions in relation to services provided by financial institutions. Financial literacy has a direct effect both on the wellbeing of a particular individual and on wellbeing across society and the State as a whole. It tends to take on particular significance at a time of certain crisis situations. The recent COVID-19 pandemic situation has brought into clear view both the significance of requirements for the establishment of effective forms of disclosure of information in the market for financial services and the need to expand the information instrumentarium intended to improve the financial literacy of the population. Many countries have in place comprehensive legislation on protecting the rights of financial consumers, as well as relevant case law. However, that alone does not resolve most of the quite specific objectives for enhancing financial literacy – and, consequently, does not protect the population from various risks and unjustified financial losses. The authors argue that it is the use of social media – as the more sought-after and mass way to spread information in today’s world – that will help expand the audience of recipients of financial education. The paper analyzes a set of factors that influence the process of boosting the role of social media channels inimproving the financial literacy of the population and examines a set of relevant resources and tools employed in various countries to build an infrastructure for financial education. The authors also discuss the need to devote attention to the arrangement of educational activities for financially isolated and undereducated strata of the population and, in this context, focus on the right choice of media channels and means of financial education to ensure equal access to financial products and services.