Conference Paper
Financial Literacy, Conflict Dynamics, and Household Economic Resilience: Evidence from Palestine
No.
ERF32AC_140
Publisher
ERF
Date
May, 2026
Topic
P. Economic Systems
G. Financial Economics
This study investigates the interaction between financial literacy and conflict intensity to determine household financial behavior in Palestine, offering one of the first quantitative estimates of financial resilience in a classical conflict environment. Using individual-level survey and conflict data, we examine formal and informal borrowing, routine saving, and emergency fund accumulation using regression analysis, propensity score matching, and heterogeneity tests across the regions, geography, and gender. Our findings show that higher financial literacy is associated with a higher likelihood of formal borrowing (OR=1.018) and less likely informal borrowing (OR=0.982), is correlated to both routine saving (OR=1.012) and having larger emergency funds ( 0.008 ). The intensity of conflicts also has a strong positive impact on precautionary savings (OR=1.177) but has a negative impact (OR=0.759) on informal borrowing. There are critical conditions of boundaries that suggest that financial literacy interventions cannot be universally applicable. In Gaza, where banking facilities have been destroyed by blockade, there is no impact of financial literacy on formal access to credit. Likewise, financial literacy does not forecast formal borrowing in rural locations because of geographic remoteness and among women because of patriarchal frameworks, even though it is effective in improving savings behaviors in such groups. These results indicate that the effectiveness of financial literacy depends on the functionality of the institution, its geographic accessibility, and the lack of structural discrimination. The policy implications also focus on the fact that the significant enhancement of financial resilience of households cannot be achieved without improvements in financial capacity as well as structural changes, institutionalization, and political remedies that focus on the root causes of economic instability. This research develops the knowledge on financial inclusion in conflict-affected environments by showing how individual knowledge can become ineffective due to structural constraints.
Research Fellows
Rabeh Morrar
Director of Research, Palestine Institute for Economic...
Authors
Yousuf Daas
PhD Candidate in Economics, Kobe University
Authors
Sameh Hallaq
Associate Professor of Economics at the Al-Quds...