Validating the Financial Literacy Construct - Impressions and Reflections

Abstract

Financial literacy (FL) literature has gained momentum in the last one and half decades in the Indian context with the government’s active role. FL encompasses knowledge of financial instruments and practices in its scope. The current study aims to measure FL by collecting primary data from the students, salaried class, traders and businessmen of two towns of Tripura, a North Eastern Indian state. For executing the study, it prefers a cross-sectional research design. Data from 160 respondents were collected using a self-administered interview-schedule applying disproportionate stratified random sampling technique. A pre-test with randomly chosen 30 respondents affirms its wording, content validity and ordering. The tool’s reliability and validity further support applying inferential statistics. Significant cross tabulation results affirm impacts of demographics on the levels of FL. For assessing the perceptional differences in FL basics between the two groups of respondents, that is, students-salaried class and traders-businessmen, it applies WPG analysis indicating significant perceptional differences about basic FL, and FL awareness levels. For evaluating whether the four types of sample respondents classified based on their occupations have any significantly differential influences on FL awareness, the Pearson Correlation Coefficient results affirm the same. Policy implications, limitations and scope of further research also indicated.