A Look at Individuals’ Financial Resilience in Albania Before COVID-19

In this article we explore financial resilience of individuals in Albania based on novel data from financial literacy survey of Bank of Albania. Also we analyze the impact that financial literacy has on individual financial resilience. Financial resilience is defined as the ability of individual to cope with an unexpected expenditure shock, liquidity constraint and higher indebtedness. In general the data display a low level of financial resilience of Albanians, where 64 % of individuals declare that they cannot come up with an unexpected expenditure shock and 69 % of individuals have financial cushion less than 3 months and only 15 % of individuals are concerned about their level of debt. The data show high level of heterogeneity of financial resilience based on socio-demographic characteristics of individuals. Empirical results based on binary regressions show that financial literacy increase the prevalence of financial resilience of individual in Albania. Thus promoting financial literacy would be a key elements policies for increasing financial resilience of individuals in short and long- term but also their financial well-being.