An investigation of the demographic factors affecting financial literacy and its components among urban Indians

Abstract

The purpose of this paper is to investigate the impact of socio-demographic factors on financial literacy and its components, namely, financial behaviour, financial attitude and financial numeracy skills. Also, the relationships between the components of financial literacy and the influence of financial numeracy skill on investment pattern are examined. The data showed that financial literacy in terms of familiarity with financial instruments and participation in formal financial system is quite reasonable at 65% among the participants. Socio-demographic variables like gender, age, education, income, and reliability of income are found to have significant influence on financial literacy. Further, all the components of financial literacy are found to impact each other positively. The findings also suggest that financial numeracy skill may improve overall financial literacy and secondary market participation in India. However, the use of financial websites or social media sites for investment decisions is meagre.