A study on financial literacy of students

Abstract

One of the causes of financial crises is identified as lack of financial literacy. India, a developing country, is entering the second phase of financial sector reforms. The integration of the economy with the world economy will increase further, with the risk of a world crisis impacting the Indian economy. In India, there is a large unorganized sector, and the government is withdrawing from pension schemes even in the organized sector. In the absence of any social security scheme, the Indian economy will be in a state of major instability after the demographic dividend starts decreasing after 20 or 25 years. Thus, the improvement of financial literacy in the country is imperative for the financial well-being of individuals and for the economy. The significance of financial literacy as a transformation agent on the financial inclusion agenda of the nation is undisputed in academic and practitioner circles. This paper provides a review of the definitional and measurement aspects of financial literacy, and an attempt is made to identify the various aspects involved in defining and measuring financial literacy in India. The researcher examined the level of financial literacy of collegegoing students and analyzed their financial behavior using mean score analysis. The research found that the borrowing behaviors of the students are high, and their interest in learning the life skill of financial management is also high.