Financial knowledge and Literacy or Demographics: What determines the use of Financial Services in Pakistan?

Kashif-Ur-Rehman Kashif-Ur-Rehman,Muhammad Arif,Zubair Khan

doi:10.17485/ijst/2019/v12i4/140213

Kashif-Ur-Rehman Kashif-Ur-Rehman, Muhammad Arif + Show 1 more

Open Access

https://doi.org/10.17485/ijst/2019/v12i4/140213

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Abstract

Objective: This study was aimed at evaluating the impact of knowledge related and demographic variables on the use of financial services in Pakistan. Methods/Statistical Analysis: The researchers interviewed 150 heads of households with the help of a structured interview schedule, from different parts of the country. The respondents were selected by using the stratified purposive sampling method. The data was analyzed with the help logistic regression and with help of Nvivo-10. Findings: The financial knowledge and information, income level and trust level have positive impact on the decision of using financial services and products in the country. On the contrary, general education level and numeric financial literacy, general level of education, although have an insignificant impact on the decision of using financial services and products. Results of the study highlight the importance of knowledge and information about financial services and products in the decision regarding the usage of financial services and products. Previous studies have focused on numeric and mathematical literacy, which, according to findings of this study is of lesser importance in promoting financial inclusion. Application/Improvements: Results from the study can be utilized by policy makers for devising effective programs for promoting financial literacy and for promotion of financial inclusion in the country. Keywords: Education, Financial, Income, Knowledge, Literacy

Highlights

The study of factors affecting the usage of financial services and products or participation in financial markets by households has recently received paramount attention, which comes into the ambit of personal finance
Finance is vital for inclusive growth and the financial market is the mother of all markets; it is critical to attain increased financial inclusion in an economy[5]
It can be safely concluded that the role of numeric financial literacy in determining the level of financial inclusion was very low

Summary

Introduction

The study of factors affecting the usage of financial services and products or participation in financial markets by households has recently received paramount attention, which comes into the ambit of personal finance. Personal finance is the field of finance that studies the way individualmakes use of “financial instruments” to achieve their objectives[1]. Households are supposed to decide on a number of economic and financial matters which are not the subject matter of corporate finance[2]. The use of financial services and products is highly acknowledged as a factor that contributes to a country’s overall economic wellbeing[3]. Personal finance studies the financial activities of households carried out by them to achieve their varying objectives[1]

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Results

Conclusion