Understanding the Role of Financial Literacy in Enhancing Economic Stability and Resilience in Montenegro: A Data-Driven Approach

Abstract

Financial literacy has emerged as a crucial factor in promoting economic stability and resilience, particularly in Montenegro. With the increasing complexity of financial products and the growing need for individuals to make sound financial decisions, the importance of financial literacy cannot be overstated. This study employs a quantitative, survey-based approach to explore the association between financial literacy levels and measures of economic stability, including savings rates, active debt management, and access to financial products. Data were collected through a representative, two-stage stratified sample of 1000 Montenegrin adults aged 18–79, ensuring comprehensive geographic coverage across all Montenegrin municipalities and balanced representation by gender and age. This stratification enables a detailed analysis of financial literacy trends across the population. Correlation analysis reveals that higher levels of financial literacy are associated with better financial practices, such as increased savings and responsible credit use, thereby enhancing economic resilience at the household level. Moreover, improved financial literacy contributes to sustainability by fostering long-term financial stability, reducing inequalities, and promoting inclusive economic growth. The findings suggest that financial literacy can mitigate the impact of economic shocks, emphasizing the need for policies that promote financial education as a tool for sustainable development. This study contributes to the literature on financial literacy in emerging economies and offers actionable insights for policymakers in Montenegro and similar contexts, highlighting financial education as a pathway to individual and national economic resilience.