Determinants Of Financial Literacy Research Articles

Dealing with “Do Not Know” Responses in the Assessment of Financial Literacy: The Use of a Sample Selection Model

Financial literacy assessments typically rely on sample surveys containing sets of questions designed to gauge respondents’ comprehension of fundamental financial concepts necessary for making informed decisions. The answers to such questions, either categorical or continuous in nature, generally include a “Do not know” option. If those who choose the “Do not know” option are not a random sample of the population but exhibit peculiar characteristics, treating these observations as either incorrect responses or as missing data may distort the results regarding the determinants of financial literacy. A noteworthy case lies in the observation from survey studies that women tend to choose the “Do not know” option more frequently than men. In similar cases, treating the “Do not know” responses as incorrect answers increases the gender gap in financial literacy while treating them as missing values reduces the gap. We propose using a model with sample selection, which enables us to disentangle the inclination to answer “Do not know” from actual responses. By applying this model to a representative sample of the UK population, we do not find any systematic gender gap in financial knowledge. The study’s novel treatment of “Do not know” responses contributes valuable insights to the broader discourse on the determinants of financial literacy and the related gender-based differences.

Determinants of Financial Literacy and Investment Behavior: Evidence from University Students

The research explores Financial Literacy (FL) among undergraduate students. The study aims to evaluate the FL of a specific group of undergraduate students. It investigates how different demographic and socioeconomic factors influence these students' FL and analyzes various demographic and socioeconomic factors to determine if they are better predictors of FL among students. The demographic and socioeconomic factors analysis shows that FL among university students is generally low. Male students studying business and coming from higher-income families have improved FL, while students in their early twenties typically have lower levels of FL. Educators should help low-income parents and women with FL, promoting financial inclusion. Helping women improve their financial understanding brings numerous benefits and positively influences the financial attitudes of their children, encouraging them to foster strong financial skills and knowledge from an early ages.

Determinants of financial literacy among university students: Insight into background and exposure characteristics

This article examined the level of financial literacy among university students in Ghana (N = 3932), and investigated which factors are linked with the different financial literacy components. This article is motivated by the increased drive toward financial inclusion and the critical role of financial knowledge in an increasingly sophisticated financial world. The framework used, assesses students’ knowledge in money management, savings and borrowing, investments, and insurance. The research findings show moderate knowledge in savings and borrowing but low level of knowledge in other finance issues among university students. Notably, the findings reveal that gender, work experience, subject of study, and mother’s level of education are all important determinants of financial knowledge among the students. The findings further show that students with relatively high financial knowledge are more likely to have sound judgment on financial issues; make the right financial decisions and have sound personal financial management practices. Based on the findings of the study, a national policy on financial literacy and educational programs are urgently needed as intervention to improve the level of financial knowledge of university students.

The Determinants of Financial Literacy in the Southeast of Vietnam

The Determinants of Financial Literacy in the Southeast of Vietnam

Financial literacy and its determinants among the schedule tribes: evidences from India

PurposeDespite a lot of developments in the financial markets, financial illiteracy is a main concern across the world and is directly associated with faulty financial decisions making. The situation is very alarming among a socially or economically marginalized section of society as they cannot afford to pay finance professionals for their wealth management. The objective of the study is to understand the level of financial literacy as well as its determinants among the marginalized section of society living in hilly areas.Design/methodology/approachThe study is descriptive as well as empirical in design and based on primary data collected from the 300 scheduled tribe households of Himachal Pradesh a hilly state of India.FindingsThe study observed that financial literacy is very low among the scheduled tribes living, and their level of education, income, family system and Internet accessibility have a significant impact on their financial scores.Practical implicationsThe outcome of the paper may be useful to design customized awareness programs, and financial products focusing on scheduled tribes living in far-flung areas so that they can get the benefits of market-driven financial products.Social implicationsFinancial awareness can help scheduled tribes in their financial inclusion thereby reducing poverty and inequality through informed financial decisions. Thus, the outcome if implemented can help in achieving the objective of inclusive growth.Originality/valueNo specific work has been done to explore the level as well as the determinants of financial literacy among the scheduled tribe households living in hill areas. This paper will fill this gap and contributes to the existing work on financial literacy and inclusion.Peer reviewThe peer-review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2023-0008

Is there a link between financial literacy and financial behaviour?

In this paper, we are motivated by the growing complexity of financial service products amidst an unending wave of Ponzi schemes as well as the low levels of financial literacy reported by prior studies. Particularly, while the extant literature has focused on various determinants of financial literacy, limited insights exist on the implications of financial literacy on financial behaviour. Consequently, we focus our empirical test on identifying the link between financial literacy and financial behaviour. We formulated our hypotheses from the family resource management theory which postulates that individual behaviour is a function of their knowledge. Thus, relative to financial literacy and financial behaviour, we argue that financially literate individuals are more likely to exhibit sound financial behaviour than those who are financially illiterate. We tested our hypothesis by using the logistic regression technique on a cross-sectional sample of 3,932 students pursuing various undergraduate and postgraduate programs in Ghanaian public and private universities. Notably, we selected our respondents from six (6) public and six (6) private universities. Consistent with our theoretical predictions, our results show that financially literate students are more likely to exhibit sound financial behaviour. Specifically, the results demonstrate that financial literacy is a major input for financial behaviour. Additionally, we observe that variables such as family characteristics particularly the father’s educational background, and discussion of financial matters at home are significant predictors of sound financial behaviour. Generally, our results have implications for various stakeholders including governments, academic institutions, and families.

Farmer's financial literacy and its determinants: evidence from South Asia

PurposeThe objective of this study is to ascertain the financial literacy (FL) of the farmers in three South Asian economies (India, Bangladesh and Pakistan). Further, an effort was made to explore various demographic and socioeconomic antecedents of FL of the farmers.Design/methodology/approachThe study used secondary data of 11,025, 782 and 657 farmers from India, Bangladesh and Pakistan respectively from Financial Inclusion Insights (2017) database. “Big five” FL questions were used to measure the FL of the farmers. Appropriate statistical techniques and censored Tobit regression were used to identify the determinants of such FL.FindingsBangladeshi farmers (48.75%: Moderate) were found to exhibit greater FL as compared to Pakistani (38.96%: Poor) and Indian (32.61%: Poor) farmers. The outcome of the study revealed that the farm ownership and educational attainment of the farmers significantly determined FL of the farmers in all three Asian countries. Financial confidence and gender were observed to exacerbate a positive influence on the level of FL of farmers belonging to India and Pakistan. Age, marital status, financial inclusion and economic status were found to be the major determinants of FL of Indian farmers.Originality/valueThere is a dearth of studies in the scholarship examining the FL of farmers in both developed and developing economies. The present study makes an original contribution to the literature by unearthing FL amongst farmers and its determinants in three South Asian economies using a large sample of 12,464 farmers for the first time.Peer reviewThe peer-review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2022-0776

Association between Financial Knowledge, Financial Attitude and Financial Behaviour among Young Population in India

The research aims to explore the associations between the determinants of financial literacy among the young population of Haryana, India. The research methodology included collecting data from 117 respondents through a well-structured questionnaire and investigating the associations using Chi-square criteria. The results of this research show a strong association between the determinants of financial literacy (financial knowledge, financial attitude, and financial behaviour). Among the research limitations are the relatively small sample size and inclusion of only the rural population of Haryana. This research will help researchers, policymakers and governments to focus on financial knowledge, financial attitude and financial behaviour as determinants for strengthening financial literacy.

Financial Behavior in the Digital Economy Era: Financial Literacy and Digital Literacy

Disruptive technology in Industry 4.0 (I4.0) continues to occur, now the world is entering a new chapter in the digital economy era, and it is even underway. Every individual, community, company or region with a different identity, is in his arms. Limited access to resources in the world's economy reveals the importance of financial literacy (FL) and its behavior in managing finances, as well as the adequacy of digital literacy (DL) to achieve success and get out of the trap of paradigm and necessity in this era. This study presents relevant literature on the concept and determinants and determinants of FL and DL. It also presents literature showing the relevance of FL and DL to financial behavior (FB) and financial decisions in the digital economy era. To fulfill this aim, systematic literature reviews were conducted. The findings, that from various perspectives, intersections and different views regarding the concepts of FL and DL, the determinants and determinants of the three, but the core concepts are basically the same according to context, interpretation and practice.

Determinants of Financial literacy and its influence on Financial Wellbeing — a study of the Young Population in Haryana, india

The purpose of this study — is to determine how financial knowledge, attitudes and behaviours (determinants of financial literacy) influence an individual’s overall financial well-being.The methodological basis of the study was a survey of 115 respondents, for which a well-structured questionnaire was developed. Smart PLS version 3 software was used to conduct the PLS analysis. The authors applied a multivariate methodology called Structural Equation Modelling (SEM) to integrate characteristics that cannot be seen directly.It is concluded that both financial attitudes and financial behaviour affect financial well-being, with financial behaviour having a greater impact on financial well-being, while financial knowledge does not. The ultimate goal of financial literacy is to increase financial well-being among the population. The results of this study can be used by policy makers, government and educational institutions who should pay more attention to improving the very determinants of financial literacy that affect financial well-being.

Financial Literacy Among Affirmative University Students

The research aims at measuring the students’ financial literacy who received affirmation of Higher Education Scholarships which coming from remote areas. The measurement is important toward how financially literate the students are in making financial decisions and what the determinants of financial literacy. Further, the measurement will provide information on how to increase the financial literacy of the students given that, after completing their studies, they are expected to significantly improve the financial literacy in their hometown as policymakers and leaders. Based on the findings, it can be concluded that the students have a low level of financial literacy. This problem can be addressed by reaching out to all the students in Indonesia, especially those in remote areas to help them understand the concept of financial literacy and enable to make a good decision as consumers and investors. Also, need to help the students understand the importance of financial literacy and convince that having this skill improve their welfare in the future. Moreover, lecturer should be aware of the different learning styles of individuals. For example, for students who come from remote areas, the topic should be delivered in a fun and easy way by using relatively simple language.

Financial literacy and its antecedents amongst the farmers: evidence from India

PurposeThe article makes a modest attempt to explore the level of financial literacy (FL) amongst the farmers in India. An effort was also made to unearth the factors affecting such FL.Design/methodology/approachThe study used secondary data on 11,030 farmers across various regions of India from the Financial Inclusion Insight Survey, 2017. Standard and Poor Global FL questions were used to measure the level of FL amongst the respondents. In addition to the appropriate statistical tools and techniques, the censored tobit regression model and generalized structural equation model were applied to explore the determinants of FL of the Indian farmers.FindingsThe outcome of the study indicated that the majority of Indian farmers are financially illiterate. The average FL score obtained by the sample farmers was found to be only 33%. The results of the study signaled significant regional variation in FL amongst the farmers across India. Apart from the regional variation in FL, farmer type, state-specific agricultural productivity, gender, marital status, age, educational attainment and financial inclusion were found to be the major determinants of the FL amongst the farmers.Originality/valueEvaluation of FL amongst farmers is scanty in the literature in developed nations and especially in the context of emerging economies, like India. The authors tried to fill this gap by exploring FL and its determinants amongst Indian farmers. In addition to this, the study for the first time used a comprehensive and rich dataset of 11,030 Indian farmers while exploring the level of FL and its determinants.

Determinants of Financial Literacy in the MIMAROPA Region

Financial literacy is a way to maintainability and has an utmost vital part in guaranteeing the financial supportability of people, families, ventures, and national economies. The level of these financial pointers, such as obligation, investment funds, and budgetary administration, all interpret into success or bankruptcy and insolvency and result mostly from financial literacy. The higher the level of financial literacy, particularly of youthful individuals, the more positive the level of the financial market will be deciphered into the economy and feasible advancements. This research paper audits what we have accumulated with respect to financial literacy and its relationship to financial decision-making within the Philippines. In this study, researchers aim to determine the effects of being able to provide financial literacy to rural areas, specifically from the MIMAROPA region. In addition, through this study, researchers would be able to identify whether or not people in rural areas are financially literate to be able to determine if they are able to handle their money effectively. Utilizing the main research problem, we comprehensively studied the state of financial literacy within the region of MIMAROPA and decided whether they have the elemental information of economics and funds required to operate as successful decision-makers. We discover that levels of financial literacy are at stake within the confines of the region and counting those with well-developed financial markets. Additionally, the financial-related absence of education is especially intense for a few statistical groups, particularly women and the less-educated sector. These discoveries are critical since financial literacy is connected to borrowing, sparing, and investing system frameworks. The design utilized is a quantitative research method that endeavours to gather quantifiable data for factual examination of the population sample. It is an affluent market research instrument that permits us to cumulate and portray the statistical segment's nature. Based on the results of the online survey, findings showed that average income and average savings have little bearing on financial literacy, whereas educational attainment and marital status do.

Financial Literacy and its determinants: A Case of professionals’ in Sri Lanka

The main focus of this study is to identify the level of financial literacy and its determinants among professionals engaged in the fields of Medicine (Doctors), Engineering (Engineers), Management (Managers), Law (Lawyers) and other fields such as Aviation and Navigation (Captains and Pilots) as they can be considered as strategic decision makers of different fields in the country. Further they are assumed to be having accumulated wealth or excess funds for buying investment products. So, it is important to know whether they have the knowledge in effective utilization of their wealth. Study employed a descriptive survey design. A sample of 300 respondents from Colombo district was selected as it has the highest level of service sector employability. For the purpose of collecting data, a well-designed questionnaire was distributed under stratified random sampling technique based on a way that all 13 divisional secretariats in Colombo district were represented. The analysis (One-way ANOVA test results) revealed that, basic financial literacy (knowledge on time value of money, inflation, interest rates and real values) as well as the advanced financial literacy (knowledge on stocks, bonds, mutual funds, stock market, and portfolio diversification) among the respondents are at medium level, except doctors, lawyers, captains and pilots. Therefore, results concluded that all educated people are not financially literate. Linear regression results indicated that economic and financial education, self-analytical skills, monthly income level and the field of employment are as significant determinants of financial literacy. Those who are in the professions where there is lack of touch in economic and financial education are possessed with low financial knowledge. Therefore, it is important to implement a national strategy of improving economic and financial educational programmes especially for those who are not engaged in the fields of management.
 Keywords: Financial literacy, Financial and Economic education, Self-analytical skills

How to Improve Adult Financial Education Based on the Determinants of Financial Literacy

본 연구는 부산지역 성인들의 금융이해력 수준을 측정한 결과를 근거로 금융이해력 수준을 결정하는 인구사회학적 결정요인을 분석하고, 이를 토대로 효과적인 성인 금융교육의 방향을 모색하는 것을 목적으로 하였다. 주요 연구결과는 첫째, 금융이해력 구성요소 간의 상관분석 결과, 금융지식과 금융행위, 그리고 금융지식과 금융태도 간에는 상관관계가 없거나 약하였다. 이는 금융지식 교육에 금융행위와 금융태도를 개선할 수 있는 내용이 강화되어야 할 뿐 아니라, 금융행위와 태도를 동시에 개선할 수 있는 통합적 교육과정이 마련되어야 할 것으로 판단된다. 둘째, 금융이해력의 구성요소 중 금융행위는 가장 낮은 평균치(4.15)와 가장 높은 표준편차값(1.85)을 보였다. 이는 금융교육에서 금융행위를 개선할 수 있는 교육내용이 강화되어야 할 뿐만 아니라 이해력 편차를 줄이기 위해 금융행위 취약자 중심의 교육이 필요함을 시사한다. 마지막으로, 금융행위에서는 미혼자, 저학력자, 사전 금융교육 경험이 없는 성인일수록, 금융태도에서는 여성이 금융이해력 수준에 부(-)의 영향을 미치는 것으로 나타났다. 금융피해 경험자는 여전히 역량 개선이 없어 금융행위와 금융이해력 종합수준에 부정적 영향을 미치는 것으로 나타났다. 따라서 금융교육의 사각지대에 있는 금융피해 경험자, 저학력자, 미혼자, 교육 무경험자, 그리고 비합리적인 금융태도를 가진 여성을 대상으로 한 맞춤식 교육이 교육 효과를 높일 것으로 판단된다.

Determinants of financial literacy: Empirical evidence from micro and small enterprises in India

The purpose of this paper is to investigate the determinants of general financial literacy, specific financial literacy and overall financial literacy among the Micro and Small Enterprises (MSEs) entrepreneurs. The data has been collected from 309 respondents from three districts in the Punjab state of India. Using ordered logit model, the results depict that the age of the entrepreneur has positive and significant effect on different types of financial literacy for the MSEs in Punjab. The findings also show that the micro and small-service enterprises have significantly higher level of financial literacy than its other manufacturing counterparts. The study also found that entrepreneurs with higher level of education have significantly higher level of all types of financial literacy. The most influencing determinant that affects the financial literacy of the entrepreneurs is found to be the level of gross profit ratio of the enterprise. Higher the gross profit ratio of the firm, significantly higher will be the level of all three types of financial literacy of the entrepreneurs. For policy perspectives, the present study recommends that firms should keep some portion of their profits to educate their employees that enhance the financial literacy. Government should help the MSEs to educate the firms to improve their level of financial literacy.

Determinants of Financial Literacy Among Working Local Professionalsin The Region of Mecca, Saudi Arabia

Due to the new economic reforms in Saudi Arabia and the introduction of the value-added tax, there is an increased need to enhance the public workers’ financial literacy. Based on previous studies, financial literacy among the Saudis is generally poor. The objective of this study is to examine the degree of financial literacy among the civil servants in the Meccan region of Saudi Arabia, identifying the determinants of financial literacy among them. This study used descriptive analysis, ANOVA, and multiple linear regression analysis to analyse the primary data collected from 162 public sector workers. The study results reveal above-average financial literacy among public sector workers. ANOVA test indicates that there is a difference between the monthly income of public sector workers and level of education groups. Nevertheless, the multiple regression analysis shows that financial behaviour and financial attitude are positively affecting financial literacy among public sector workers. This study also recommends some possible ways to enhance, improve, and increase awareness, importance, and the need for financial literacy among public sector workers.

Determinants of Financial Literacy Among German Students – An Empirical Analysis

Summary: Financial literacy is very important for social participation. This paper presents an empirical evaluation of the determinants of financial literacy among students at a German university. An additional goal is the identification of gender differences in respect to financial literacy. The evaluation is based on the definition and surveys of financial literacy developed by the OECD, (A. Lusardi & Mitchell, 2014) and (Chen & Volpe, 1998) and the analysis of the “Big Three” questions. The results suggest a rather low level of financial literacy among female students. Additional factors such as a very good mathematics grade and logical thinking have a significantly positive impact on financial literacy. Students in economics are more likely to answer the “Big Three” questions correctly. This finding supports the hypothesis that education in economics helps to acquire knowledge of financial instruments and financial application. Zusammenfassung: Finanzkompetenzen haben für die gesellschaftliche Teilhabe eine hohe Bedeutung. Dieser Beitrag führt eine empirische Evaluation der Determinanten der Finanzkompetenz von Studierenden an einer deutschen Hochschule durch. Ein weiteres Ziel ist auch die Identifizierung der geschlechtsspezifischen Unterschiede bei der Finanzkompetenz. Die Evaluierung basiert auf der Definition und den Erhebungen zur Finanzkompetenz, die von der OECD entwickelt wurden, (A. Lusardi & Mitchell, 2014) und (Chen & Volpe, 1998) sowie auf der Analyse der ”Big Three”-Fragen. Die Ergebnisse deuten auf ein eher geringeres Niveau der Finanzkompetenz unter Studentinnen hin. Weitere Faktoren wie eine gute Mathematiknote und logisches Denken haben signifikant positive Auswirkungen auf die Finanzkompetenz. Studierende der Wirtschaftswissenschaften beantworten die ”Big Three”-Fragen mit höherer Wahrscheinlichkeit richtig. Dieses Ergebnis unterstützt die Hypothese, dass die wirtschaftswissenschaftliche Bildung dazu beiträgt, Kenntnisse über Finanzinstrumente und deren Anwendung zu erwerben.

Relationship Between Various Determinants and Dimensions of Financial Literacy Among Working Class

The purpose of this empirical research work was to identify the relationship between various determinants of Financial Literacy among the working class of National Capital Region of India. It was a descriptive study based on the survey of 596 working class respondents. The data has been analyzed by factor analysis, correlation and regressions analysis. Based on the factor analysis, three factors have been found of financial knowledge, three factors of financial behaviour and in a similar manner four factors of financial attitude have been extracted. Further, based on the multiple regression models the contribution of financial attitude has been found highest in explaining the financial literacy and it has been followed by financial behaviour and financial knowledge. It means that both financial attitude and financial behaviour are better estimators of financial literacy in comparison to the financial knowledge. Therefore, the policy makers, financial system regulators and governments should do more efforts to improve the level of financial attitude and financial behaviour in comparison to the financial knowledge to improve the level of financial literacy because significant difference has been found in the level of financial attitude and financial behaviour across some of the demographic factors. The increased financial literacy would be helpful in improving the saving and investment behaviour of the public. This improved level of financial literacy of public will save the required level of capital for the capital formation for the targeted economic growth. Consequently, more employment opportunities will increase the social security in the society. Like every study, this study also have certain limitations like the universe of the study was limited to a particular geographical region i.e. National Capital Region of India, along with time and money constraints. In future similar study can be conducted by changing the target population and geographical area with a bigger sample.

Finanzkompetenz von Privathaushalten Ein Überblick zum aktuellen Stand der Forschung

Financial Literacy is the ability to be independent in investment and retirement planning. The general level of financial literacy has an obvious influence on the need for banks’ advisory services and could justify regulatory state intervention for illiterate people in need for protection. Therefore, insights on the status of financial literacy are highly relevant for all capital market participants. This review provides a comprehensive analysis of literature on measurements and determinants of financial literacy with a focus on western nations over the last decade. The evidence of 51 reviewed publications suggests a still alarmingly low level of financial literacy and a high heterogeneity across demographics.