Romanians prefer bank deposits, show poor appetite for capital market, survey finds

People aged over 65 years prefer time deposits, whereas young people under 25, who have limited financial resources, are not prone to saving, Bogdan Negrea, director of the Currency and Banks Department of the Finance Faculty of the Bucharest University of Economic Studies said on Wednesday, as he presented the results of the survey "Savings and investment behavior among the Romanian population in the European context.""The survey on savings and investments conducted in Romania in a European context produced some interesting results, of which I would mainly refer to two. The first would be that people over 65 prefer time deposits, compared to persons under 60. At the opposite end are young people under 25, the explanation being that they have limited financial resources due to the lack of a job or experience that would bring them a higher income. Another conclusion of the survey is that of the total number of participants, the share of those over 55 with an optional pension increased from 6% in 2011 to 22% in 2024, which is a significant leap," Negrea said.Raiffeisen Bank Romania and the Faculty of Finance, Insurance, Banking and Stock Exchanges of the Bucharest University of Economic Studies presented on Wednesday the results of a research project on the Romanians' saving and investment behavior, with an emphasis on the current nationwide situation, compared to other EU countries.In terms of saving, Romanians prefer bank deposits, but their participation in the capital market is meagre, as Romania has the lowest level of financial literacy in the EU.Bank deposits are the main saving instrument among Romanians, but their level is the lowest compared to that of other countries in the region, such as Bulgaria, the Czech Republic, Poland or Croatia.According to survey data, 20% of the holders of term deposits have higher education.The factors favoring the possession of a bank deposit include: a high level of education and income, and a stable job. Also, urban residents with access to financial services are more likely to hold a time deposit.The number of Romanians who decided to join optional pensions Pillar III has increased steadily in recent years, with the total net assets managed by the 10 optional pension funds in the market exceeding 950 million euros. 740,000 Romanians were registered with Pillar III as of mid-2024, and of this total, those over 55 recorded a significant increase from 6% in 2011 to 22% in 2024. However, in the last 13 years, the participation of young people under the age of 35 in Pillar III has decreased, while the participation of those between the ages of 30 and 44 has remained relatively stable, and the middle age category of 45 to 54 years saw a moderate increase.Compared to Romania, the profile of the participant in a voluntary pension scheme is much better defined in the EU countries in the region (Bulgaria, the Czech Republic, Poland or Croatia), with education and the degree of financial inclusion being extremely relevant.According to the cited source, Romania has the lowest level of financial literacy in the EU, and this is a major cause for the low level of participation in the capital market.Also, Romanian capital market investors display a higher risk aversion compared to their peers in other, more developed countries such as the U.S., but is similar to that observed in other Central and Eastern European countries, such as the Czech Republic, Poland and Croatia.The results obtained through standard econometric techniques and based on machine learning models show that the person interested in investing in the capital market is male, with a high level of financial education, higher education and a solid income. Young people are usually more willing to take risks in the hope of future gains, while older people prefer investments with more predictable returns. People with higher incomes are more inclined to invest in risky financial products, as their financial capacity allows them to face possible losses.The survey "Savings and investment behavior among the Romanian population in the European context" was carried out with the aim of providing a clear perspective on the specifics that shape the Romanians' daily financial decisions.The data collected for this survey include official samples, national and European statistics, as well as studies carried out by renowned financial institutions such as The OeNB Euro Survey, the National Institute of Statistics, the Financial Supervisory Authority and Flash Eurobarometer FL525.