A study by the Economics Research Centre of the University of Cyprus has revealed significant challenges in financial literacy in Cyprus.

Entitled "Financial literacy for financial resilience: Evidence from Cyprus during the pandemic period," the study unveiled that in 2021, less than 4 out of 10 respondents possessed a good level of financial knowledge proficiency. Additionally, the results showed that more than 1 out of 3 Cypriots are financially fragile and would not have been able to cover an unexpected financial need within a month without borrowing or seeking financial help.

Moreover, about 6 out of 10 did not have a rainy-day fund to cover three months' living expenses in case of losing their main source of income. The proportions were higher for young, unemployed, low-income, and larger households, indicating that these subgroups were the least resilient.

These findings suggest that many Cypriot households were ill-prepared to face the economic consequences of the COVID-19 pandemic, the ERC says.

Most importantly, it adds, the findings indicate that financial knowledge proficiency appears to be a strong antecedent of one’s proclivity for financial resilience. An important policy implication of the study's conclusions is that financial education could help households improve their financial resilience and prepare for future shocks.