Financial Illiteracy Research Articles

Assessing Financial Literacy of Female Entrepreneurs in Informal Economy: Empirical Evidence from Micro Business in Malaysia

Financial management in business ensures that the goals of an organization are achieved. It has become a priority for every business to have good financial resources to ensure sustainability. However, many entrepreneurs are found to need help managing their finances well and are used to supporting a lavish lifestyle. As an outcome, they had to take a personal loan from a financial institution, and this personal loan is a big commitment because they must pay it back with a high loan rate. This situation puts an additional burden on entrepreneurs, which eventually becomes the cause of business failure. Employing a mixed method, this study's objectives are to evaluate the financial literacy of female entrepreneurs of micro-businesses in Malaysia and to determine the causes of financial illiteracy. This study involved 100 female entrepreneurs in the survey study and 20 female entrepreneurs of micro business in the interview study. The survey data were examined using descriptive and inferential statistics, and interview data were analyzed using thematic analysis. The survey findings have revealed that most female entrepreneurs have a low level of financial literacy, and financial literacy significantly influences business success. Interview data revealed that most informants still need to adopt the systematic accounting system, are unable to organize financial and personal accounts, do not have proper financial savings, and cannot calculate product costing and selling price. Therefore, this study will help female entrepreneurs manage their future financial practices.

The Rise of Fintech and How it Made India a Cashless Economy

This paper examines the rise of fintech and its impact on transforming India into a cashless economy. It highlights key drivers, such as the 2016 demonetization, that accelerated the adoption of digital payments, mobile wallets, and UPI. The study explores how fintech has improved financial inclusion in both urban and rural areas, focusing on Paytm as a case study. Despite fintech's success, challenges like financial illiteracy, data security risks, and fraud persist. The paper offers recommendations for enhancing financial literacy, improving data security, and expanding fintech adoption to sustain its growth and further boost India's digital economy.

Software architecture for implementing a personal budget manager with artificial intelligence

The rapid adoption of artificial intelligence (AI) in consumer markets has led to the need for extensive research into its impact on consumer behavior, particularly in how it exploits cognitive biases. This raises ethical questions and highlights the need to balance such influences with AI systems that help consumers, not manipulate them. The development and implementation of an intelligent financial management system, which not only automates financial processes, but also integrates AI-driven tools to support better financial decision-making, contributes to solving these problems. The work contains a description of the development of the architecture of an intelligent financial management system, which is aimed at solving problems related to financial illiteracy, the complexity of financial markets, and the impact of cognitive biases on financial decision-making. The system provides for the use of modern technologies of artificial intelligence and machine learning to automate financial processes and provide users with personalized recommendations. The development of a system based on microservice architecture requires the use of certain architectural patterns that ensure efficiency, reliability and scalability, so the work was based on a critical analysis of modern architectural paradigms, such as microservice architecture and Event-Driven Architecture. The implementation of AI supports ethical guidelines that prioritize transparency, fairness and consumer autonomy, i.e. ensure that the AI ​​system is free from bias, actions can be easily interpreted by users. The methodology of this research is based on an interdisciplinary approach that combines the analysis of architectural solutions, methods of machine learning and artificial intelligence with methods of ensuring the reliability and scalability of software systems.

Buy Now, Pay Later Loans, Social Norms, and Consumer Indebtedness

The terms associated with new financial products, such as buy now, pay later (BNPL) loans, are often cloudy. Policymakers are concerned because these products are marketed to naïve consumers who may be in financial peril. While financial illiteracy has received attention, it is also important to recognize that consumers are impacted by perceptions of the choices of those in their social network. We elicit empirical and normative expectations in an incentivized experiment to measure what young people think others will do and their beliefs of the beliefs of others. Our experimental participants are more likely to purchase an item with a BNPL loan, as compared to a credit card loan, and the majority believes others see this as a good choice. We conclude that consumers are likely to increase indebtedness when offered a payment scheme that is supported by a social norm.

Barriers to digital financial inclusion and digital financial services (DFS) in Pakistan: a phenomenological approach

Purpose Financial inclusion plays an essential role in today’s modern era. There has been a growing recognition that financial inclusion is an important enabler in poverty reduction. It is an essential tool in enabling inclusive growth and reducing poverty. This study aims to identify the barriers that limit customers to use digital financial services (DFS) in Pakistan. Second, this study aims to spread awareness of DFS and benefits of digital financial inclusion and services to retain customers in Pakistan. Third, the study purposes to retain old customers toward DFS in Pakistan. Design/methodology/approach This study is qualitative phenomenology study. The data were collected through interviews (i.e., online or face-to-face, depending on participants convenience). The sample comprised respondents with different age and different nature of work. Before conducting actual interviews, the interview questions were validated by three experts working in the State Bank of Pakistan in the relevant field. The interviews took from those individuals who were have digital financial account, but not using it due to some reasons. Data analysis carried out by using the NVivo software to deliver the themes after analyzing the data by querying, visualizing and coding. Findings The study categorized s6 themes as second order themes including dependency, illiteracy, lack of trust, cost, lack of access to financial services and financial instability by emerging 16 subject themes as 1st order themes. It including financial illiteracy, digital illiteracy, lack of knowledge, depend on spouse, depend on parents/children, depend on siblings, fear, security issues, privacy issues, lack of internet access, lack of account access, unemployment, low income, high expenses, other cost and transaction cost. These barriers limit DFS adoption and its use. This study found that 90% respondents were financial illiterate and 80% respondents do not have the knowledge of new recent e-payment system. Originality/value However, this study contributes to reducing these barriers and spreading knowledge about financial inclusion and DFS. From a managerial perspective, additional attention needs to be devoted to the adoption of financial inclusion and innovation in DFS.

FINANCIAL LITERACY, INFORMALITY, AND SMALL BUSINESS OPERATIONAL PERFORMANCE IN ZIMBABWE

Introduction: The exponential growth of small and medium enterprises (SMEs) in many developing economies is a well-documented phenomenon in business literature. However, research indicates that the expansion of most SMEs is hindered by financial illiteracy and high levels of informality, posing significant challenges to their performance and long-term sustainability. Concerns arise from the fact that only a small fraction of these enterprises successfully transition into larger firms. This study sought to address these issues by investigating the levels of financial literacy among 120 SMEs operating in Harare and Bindura, taking into account the pervasive informality within the sector. The research also aimed to evaluate the relationship between financial literacy and SME operational performance. Methods: Employing a quantitative approach within an explanatory research design, data collection was facilitated through a structured questionnaire. To capture the diverse landscape of SMEs operating in an informal context, both purposive and convenience sampling methods were utilized to select participants for the survey. Descriptive and inferential analyses were conducted using SPSS software. Results: The findings of the study revealed a significant positive impact of financial literacy on SME operational performance, indicating that advanced financial literacy can contribute to enhanced business outcomes. Moreover, the research observed an improvement in financial literacy within SME operations, evidenced by increased awareness and application of financial management skills. Conclusion and suggestion: The study recommends that efforts to promote financial literacy among SMEs should be intensified through advanced financial education initiatives, awareness campaigns, and enhanced financial inclusion strategies. Financial service providers are encouraged to play a proactive role in supporting SME growth by investing in financial awareness programs, funding educational initiatives, and actively engaging SMEs in key economic policy frameworks. Ultimately, SMEs are urged to fully embrace financial literacy as a fundamental pathway for achieving sustainable growth and long-term business success amidst the challenges of informality.

PENSION STRATEGIES OF UNWILLING JOINING PENSION PLANS: AN ISSUE OF A RATIONAL CHOICE

This article presents the analysis of Russian «silencers» participation in mandatory pension accumulation. The paper examines the peculiarities of pension strategies of the Russians in forming a funded pension with automatic enrolment through an interdisciplinary approach and methods of statistical data analysis. Based on the achievements of economic science of neoclassical, institutional and behavioral directions, the author argues that the use of such methodological prerequisites as rationality and irrationality of individuals leads to an oversimplification of the relationship between behavioral strategies and their results. The purpose of this article is to analyze the features of “silent” pension strategies through the prism of irrationality and rationality and to assess the consequences of passive participation strategy in the Russian pension process in the 2000s. The article examines the works of foreign and Russian scientists on pension programs with automatic enrolment, while the factual base is presented by materials of the Federal state statistics service and Russian Pension Fund. The article provides an overview of prior works on аutomatic enrolment to retirement plans in the United States and other foreign countries: it reveals critical remarks on the practice of automatic enrolment and reveals the problems of using automatic enrolment in the pension process. The author argues that the economic behavior of the Russian «silent» is primarily due to the specifics of institutional environment as well as the level of trust in the state and financial institutions. It has been established that irrationality and financial illiteracy are not always the primary causes of “silent accession” strategy. The conclusions and proposals of the work can be used for further research in pension strategies and the development of pension policy in Russia.

Суть и истоки повышения роли финансовой грамотности в современной экономике

The article examines the increasing importance of financial education in Russian society in the conditions of a qualitatively transforming Russian economy, in which events and phenomena significantly change the attitudes of society, knowledge, and understanding of familiar things and circumstances. It identifies three historical stages, which were identified as the origins of the elimination of financial illiteracy, then the emergence and increasing role of financial education, and, finally, the development of the population’s need to acquire competencies in the financial and digital spheres. The author believes that it was financial shocks that provoked state, financial, and educational structures to study international experience and implement a whole range of educational measures in the field of finance. The paper records the theoretical essence and significance of the concept of “financial literacy” corresponding to the second stage and the unfolding of “digital financial literacy” corresponding to the current stage of the economy under the conditions of digitalization. And if the financial education of Russians, as reflected by the indices of the level of financial enlightenment, is growing, then the digital format is difficult for certain categories of the population and scares away by the presence of many fraudulent schemes that bring losses to users. And in order to achieve an increased level of digital financial literacy, effective, innovative pedagogical technologies are recommended, reflecting the prospects and prestigious advantages for those who have mastered modern digital financial competencies.

Financial literacy of technical university students: self-assessment of the state and dynamics of its development

Introduction. In the context of the rapid development of digital financial technologies, an increase in banking services and fraudulent schemes, the problem of a low level of financial illiteracy among the population is becoming acute. Proper management of your own finances is useful knowledge that will help you achieve financial well-being and stability. Poor understanding of trends in the global economy and country development plans; response to advertising without critical thinking, recalculation of numbers, inability to see hidden commissions and other negative factors leading to loss of capital, all this is the reason for the formation of financial competence of the younger generation. The purpose of the study is to analyze technical university students’ self-assessment of their financial literacy. Materials and methods. The research material was based on survey data from 230 students of the Stupino branch of the Moscow Aviation Institute (Russian Federation). Statistical differences were assessed using the χ²-Pearson goodness-of-fit test. Results. It was revealed that digitalization and lockdown contributed to increasing the motivation of technical university students to master financial literacy: 99.1% of students use financial services, 76.1% of respondents are aimed at increasing their level of financial literacy and are ready to gain knowledge as part of the course program (54.3%) or through the introduction of a separate subject (36.1%) and only 9.6% of respondents believe that studying personal finance management issues at the university is maximized. The analysis showed that in a comparative analysis of respondents’ answers in 2020 and 2023, statistical differences are significant (χ²obs > χ²cr) for almost all questions of the second module. Thus, the observed value of the Pearson criterion χ²obs = 7.33 exceeds the critical value χ²cr = 3.84 at the significance level α = 0.05 by almost two times for questions about the key rate of the Central Bank. Students are interested in the discount rate, understanding its role in solving financial issues. For the group of issues related to investing in financial markets, statistical differences are also significant (χ²obs = 27.8 при χ²cr = 11.07, α = 0.05). Respondents in 2023 are showing greater interest in trends in the stock, foreign exchange and other markets. There are also significant statistical differences in the group of questions about acquiring knowledge in the field of financial literacy (χ²obs = 22.79, χ²cr = 5.99 at a significance level of α = 0.05). Engineering students surveyed in 2023 are ready to study personal finance management in college. Conclusion. The study showed the feasibility of introducing elective classes on financial literacy at a university, where innovative approaches using quest technologies, master classes, and intellectual and entertaining quizzes can help engineering students overcome gaps in managing their own finances.

Factors associated with smallholder farmers’ financial illiteracy in the context of an emerging economy

Factors associated with smallholder farmers’ financial illiteracy in the context of an emerging economy

Personality, Risk and Financial Planning: A Consigned Credit Analysis

Abstract This article examines Brazilian Navy personnel's psychological and behavioral characteristics in the context of credit risk, the consigned credit, utilizing multiple linear regressions and correspondence analyses. Incorporating personality traits through the Big Five model, the research considers various sociodemographic and military characteristics. The payroll-deductible loan sample comprises individuals with high financial planning and above-average or high-risk tolerance. This research contributes novel insights by integrating personality traits as determinants of military indebtedness, financial planning, and risk tolerance. The study reveals that the personality trait "openness to experience" positively impacts financial planning, indicating a tendency toward financial discipline. Women, older individuals, and those with less service time exhibit a riskier financial profile. The research identifies a lack of basic financial knowledge among indebted military personnel, underscoring the need for interventions to address this issue. Financial planning and risk tolerance are critical factors influencing decisions, reflecting broader societal challenges of increasing indebtedness and financial illiteracy. JEL classification numbers: D14, G21, G32. Keywords: Credit Risk, Personality Traits, Risk-taking, Consigned Loans, Military Personnel in Brazil.

Financial Literacy of Microentrepreneurs and its Effect on the Business Performance and Innovativeness: Empirical Evidence from India

Micro-entrepreneurs are the strategic assets of the nation, given their mammoth share in maintaining the socio-economic equilibrium and inclusive growth of the economy. Despite their contribution to India’s economy, they are still confronted with several on-ground hurdles, such as inadequate financial literacy among entrepreneurs, inaccessibility to affordable credit, financial mismanagement and lack of innovation. The extant literature has revealed that financial illiteracy and lack of innovation have raised pertinent concerns across the world, given the increasing rate of business failures. Nonetheless, the effect of financial literacy on organisational performance and innovativeness remains underexplored and fragmented. This study aims to examine the effect of financial literacy on the business performance and innovativeness of the micro-entrepreneurs in Delhi-National Capital Region (NCR) in India. Primary data were gathered from around 302 micro-entrepreneurs registered in Delhi-NCR through self-administered questionnaires. Data analysis was conducted through SmartPLS 4 software. The results indicated that financial literacy significantly impacts business performance and innovativeness among micro-entrepreneurs. Therefore, the study advocates wider participation of policymakers, financial service providers and managers in designing tailored strategies aimed to enhance the financial education of micro-entrepreneurs.

Empowering Indigenous Wealth: Analyzing Financial Literacy, Risk Preferences and Stock Market Engagement within Scheduled Tribes in India

The purpose of this study is to address the enduring multi-dimensional poverty faced by nearly 65 million Scheduled Tribes (STs) in India, with one prominent cause being their limited investments in productive financial assets. Financial literacy has been identified as a crucial factor in enhancing personal financial management skills. The focus is specifically on investigating the relationship between financial literacy, sociodemographic factors and stock market participation among STs in Himachal Pradesh, India. Using a structured questionnaire, data was collected from 300 ST households. The study employed multinomial logistic regression to analyze the impact of financial literacy and sociodemographic variables on stock market participation. The findings indicate that a significant majority of STs (over 80%) lack financial awareness and do not participate in the stock market. Notably, financial illiteracy, risk tolerance, age, education and income were identified as significant factors influencing SMP. The insights derived from this research offer valuable guidance for policymakers, financial institutions and educators, urging the development of targeted interventions. These interventions should empower tribal individuals to make informed financial decisions and encourage their engagement in stock market activities.

Analysing Challenges Faced by Micro Finance Institutions and Exploring Linkages on Rural Development and Quality of Life

Micro finance institutions play a significant role in economic development of India. Such institutions provide financial access to lower income people. These institutions are very helpful for poor people who lack access of banking services. Micro finance institutions provide a large variety of financial and non-financial services to people including credit, counseling, and training. Such institutions are necessary to achieve rural development, financial inclusion and women empowerment. Today micro finance institutions are faced many problems. Problems of non-performing assets are considered as a big challenge for micro finance institutions. Financial illiteracy, lack of speedy generation of funds, lack of proper infrastructure, political interference and competition are the other challenges faced by micro finance institutions. This chapter made an attempt to analyze the problems faced by micro finance institutions and understand the role of micro finance in rural development

ФІНАНСОВА ГРАМОТНІСТЬ ЯК ФАКТОР ЕКОНОМІЧНОГО ЗРОСТАННЯ ГРОМАДИ

The article highlights the problematic issues of financial literacy of the population. The necessity of increasing the level of financial literacy of the population is considered. Some aspects of the interaction between financial literacy and financial behavior of households are highlighted, taking into account current trends. It is determined that Ukraine has a low level of financial literacy of the population. The level of financial literacy is analyzed based on sociological studies and surveys of our citizens. It was found that half of Ukrainians have only a general idea of their income and expenses, which does not allow them to determine what is happening to their budget and where their money goes. Ukrainians practically do not use so-called investment services, in particular financial instruments such as stocks, bonds or investing in non-state pension or investment funds. Studies have shown that Ukrainians are not interested in news from the financial sector. It was determined that the most financially illiterate groups of the population are young people and the elderly. The study provides a clear breakdown of the level of financial illiteracy by age. At the same time, objective factors are also catalyzed by the appropriate mentality and inability to adapt to the market economy. The author substantiates the understanding that financial literacy implies the ability to effectively manage the budget; includes the ability to manage loans and debt; and has an understanding of the principles of investment. The existing ratings of financial literacy of the population of foreign countries are analyzed. It has been determined that even in countries where a modern system of economic education is being implemented, a significant number of citizens are poorly versed in personal finance. The factors that influence the level of financial literacy are systematized. It is substantiated that financial literacy is not only the key to financial well-being, but also an important element of personal development and life success. A financially literate population is able to prevent poverty, make more effective and informed financial decisions, promote the stable development of financial markets and stimulate economic growth in the country.

Position of Labour in Silk Industry

The productivity level of sericulture (land and leaf) is not low compared to that of the major silk producing states in the country, which opens further scope to research and analyse its productivity. This paper has explored several dimensions of its growth pattern during the planning periods of West Bengal. A field level survey in the major silk producing district of West Bengal has exposed few factors like household size and male hired labourers which are positively raising the level of average employment in the sericulture farms, while education level acts as a significant reducing factor, along with mandays involved with the activities. It implies sericulture is still only a popular livelihood activity among the backward people. On the other hand, small holding capacity of the rural farmers and poor economic condition of the artisans have been identified as major impediments in the path of development of sericulture in West Bengal. The rural moneylenders/ traders (dadani mahajan) utilizes this advantage and extracts a major part of the pay-off intruding into the chain of the industry. In the textile policy, the objective of the government always centres on the issues like extension of sericulture through acreage and production, ignoring the issues like ‘economic-exploitation’ faced by the artisanal classes at each level of value addition in the supply chain. In the absence of institutional apathy and well-linked credit system in the remote rural areas coupled with financial illiteracy of the rural artisans, the objective of development of artisanal silk industry in West Bengal seems to be far away.

STRUCTURAL EQUATION MODEL FOR FINANCIAL LITERACY OF STUDENTS

Financial illiteracy is prevalent worldwide. Financial literacy is an important but ignored skill that is vital for young people especially in the country like India which has the largest young population of world but with very poor rate of financial literacy. Therefore an in-depth study was carried out to develop a model for the financial literacy of students. Total 143 UG and PG level students were selected randomly and the primary data was collected through the well-prepared questionnaire. Financial Literacy Model was developed using Structural Equation Model (SEM) to meet the objective of the study. The study revealed that model for the financial literacy of students was found correct and it was concluded that financial knowledge, behavior and attitude have significant positive effect on financial literacy of students. Age and education of the students having positive and significant impact on the financial literacy of students.

Challenges deterring the progress of women small-scale entrepreneurs in Rwanda

The research assesses the challenges deterring the progress of women’s small-scale businesses in Rwanda. It was guided by the following specific objectives: identify challenges faced by women’s small-scale businesses in Rwanda and assess how those challenges affect women’s small-scale businesses' progress. Findings were collected from 109 respondents who have been running small-scale businesses over a period ranging from one to three years. Results were collected through a questionnaire and desk review and quantitatively analyzed. The findings shed light on the challenges which small-scale women entrepreneurs face namely family expenses (53.2%), drunkenness (67%), family conflicts (93.6%), financial illiteracy (100%), and poverty (100%). The above-mentioned challenges affect small-scale businesses in that women entrepreneurs find themselves mixing up businesses and family expenses. Family conflicts were also highlighted to be another cause of business failure in that women who conflict with their husbands cannot easily prosper in their businesses. In addition, financial illiteracy makes them unable to assess their profit and find their businesses stagnant or closing. Thus, there is a need to provide support to small-scale businesswomen about how to assess business progress, and calculate their interest rate so that they may come up with financial skills. This would enable them to align their daily family expenses with their business interest. Once properly implemented, it would decrease the business failure rate.

Impact of Financial Education and Literacy on Investment Behaviour

Abstract: Economists are beginning to investigate the causes and consequences of financial illiteracy to better understand why investment and retirement planning is lacking and why so many households arrive close to retirement with little or no wealth. This study reveals that many households are unfamiliar with the most basic financial and economic concepts needed to make saving and investment planning. Such financial illiteracy is widespread: young and older people in many countries appear miserably under-informed about basic financial computations, with serious implications for saving, investment planning, and other financial investment decisions. Governments and several non-profit organizations have undertaken initiatives to enhance financial literacy. This study estimates how financial education affects a person’s financial literacy score, short-term and long-term financial behaviours from collected data. There are three financial education categories: at school level, college level and learning with additional courses. These courses detail has not been studied current literature about financial education. An essential indicator of people’s capability to make financial and investment decisions is their level of financial literacy. Results are found to be robust across different measurements of financial knowledge and behaviour, and the issues were specifically addressed. This study provides a comprehensive insight for policymakers as well as financial individual investors.

ФИНАНСОВАЯ БЕЗГРАМОТНОСТЬ КАК ЭКОНОМИЧЕСКАЯ УГРОЗА

The paper demonstrates financial illiteracy as an economic threat. The topic is relevant due to the fact that the debt load of the Russian population indicates low financial literacy. Polls and studies only prove this thesis. At the same time, the low level of financial literacy leads to economic problems throughout the state, and therefore the situation must be eliminated. At the end of the article, the author forms proposals that, when put into practice, are able to solve the identified problem.