Private Sector Development Specialist What Does the Financial Capability Survey Tell Us About Financial Consumer Protection in Bulgaria and Romania? Evgeni Evgeniev Private Sector Development Specialist The World Bank December 14, 2011

OVERVIEW Improving the Global Financial Consumer Protection System Survey Results on Financial Capability of the Consumer in Romania and Bulgaria Key Challenges

Improving the Global FCP System The Global Finance Crisis and the link to: Financial Education Financial Capability Regulation & Supervision Consumer Protection Stability of the Financial System

Financial Capability Consumer Survey in Romania and Bulgaria: Methodology Survey implementation: May-June 2010 Comparable survey questionnaire National representative survey: random, two-staged, stratified, 1,500 respondents in Bulgaria (95% response rate) and 2,500 respondents in Romania (response rate 82%) Additional Booster (16-17 year-olds): Bulgaria (186 interviews) and Romania (148 interviews) Socio-demographics of the survey: Occupational status Education Ethnicity Age Per capital monthly household income Respondent’s monthly Income

Pillar #1:LEVEL OF CONFIDENCE IN THE FINANCIAL SECTOR

Trust in the Private Financial System Needs to Improve Romania Bulgaria

Quality of of Financial Services Needs to Increase Romania Bulgaria

Pillar #2: LEVEL OF INFORMATION

Bulgarian consumers prefer to receive information on financial products and services from info materials, internet, and friends and relatives

Romania consumers prefer to obtain information about financial services/products from newspapers, magazines, friends and relatives First choice Second choice

Capital Market Indices are among the Least followed Tendencies By Consumers In Romania and Bulgaria

Over 75% of Bulgarian and Romanian consumers talk once a month/less or never about financial institutions and services when they meet friends, family, and colleagues?

Pillar #3: FINANCIAL LITERACY

52% of Consumers in Romania and 46% of Consumers in Bulgaria indicated unsatisfactory and no knowledge when they were asked about their financial literacy level

Pillar #4: HOUSEHOLD FINANCIAL MANAGEMENT

Large majority of the Consumers in Romania and Bulgaria have a family financial plan for the month

67% in Romania and 37% in Bulgaria do not keep records but have a general understanding what is their income/expenditures Romania Bulgaria

79% of consumers in Bulgaria will cut down expenses and save if tomorrow their household income is suddenly reduced by a quarter for a period of 3 months or more

97% оf consumers in Romania will do nothing special if tomorrow their household income is suddenly reduced by a quarter for a period of 3 months or more

Government Action Plan Key Challenges Government Action Plan Educating the Consumer Engaging Financial Institutions

Private Sector Development Specialist Thank you! Evgeni Evgeniev Private Sector Development Specialist The World Bank eevgeniev@worldbank.org