Effect of demographic features on financial literacy: A study of women self-help groups

Abstract

Self-help groups (SHGs) are self-governed, informal groups formed with objectives of mobilizing small savings of its members, enabling them to avail loan for productive purposes, acquiring a collective wisdom in organizing and managing their own finance, and thereby enhancing their financial security. Financial literacy of members of SHGs is important for proper working of SHGs. The concept of financial literacy, is acquiring the knowledge and skills of good money management. OECD has developed a model of measuring financial literacy which includes three elements-financial behavior, financial knowledge, and financial attitude. This research is based on OECD's model of measuring financial literacy. In this research work an attempt has been made to measure the financial literacy of members of women SHGs, study demographic features of participants under study and try to understand how the demographic features have affected the level of financial literacy of participants under study. The study is based on data collected from 104 members of 35 women SHGs from Pune city. Research under study shows that demographic features do affect directly or indirectly the level of financial literacy of the women participants under study. The SHGs under study have been successfully mobilizing the savings of the members, but at the same time there are very few women under study who have actually availed loan through SHGs for any commercial purpose. Apart from this, the research shows that out of total participants two third women are financially illiterate. This shows that the SHGs under study have achieved the purpose of enhancing the financial literacy of their members to a limited extent. The observations and conclusions of this study are representative in nature and will help the policy makers to undertake the necessary measures in order to improve the financial literacy and financial well-being of the under privileged women.