Estimation of influence of the level of financial literacy on the investment attractiveness of the territory

The article presents a regression model that reflects rational financial behavior of households and allowing to reveal regions with low/high level of financial literacy, which is one of the indicators of financial sector development. Model construction is based on a regression of financial literacy surveys data and a statistical panel data concerning socio-economic situation of 38 Volgograd region’s municipalities during three-year period. The author shows that the level of financial literacy (which used as an indicator of the situation in the financial sector of a particular municipality) is not unpredictable. This level depends on objective factors: the level of demographic and social burden on the state and municipalities, the income growth of municipal budgets, the number of financial institutions, material wealth of the population, its business activity, readiness to self-help housing and interest in increasing their knowledge. Therefore, the level of financial literacy can be predicted and even adjusted by the authorities and business representatives using credit, finance, social policy, etc. Financial literacy level is useful for investment attractiveness assessment. In the given paper a ranking of territories’ attractiveness is constructed on the basis of regression model. It is created to help in developing of effective management decisions by business (opening of new branches, launching new financial products and services, etc.) and by regional/municipal authorities (whose aim is to improve the quality of life and the level of financial welfare).