Financial Illiteracy Research Articles

Financial Inclusion in Rural South Africa: A Qualitative Approach

Financial inclusion efforts have resulted in a rapid increase in access to financial services. However, the usage of these financial services has not expanded at the same pace, especially in rural areas. The paper explores the factors that have caused usage to lag behind access using a qualitative approach. Data is collected from two predominantly rural provinces in South Africa using focus group discussions. While supply-side factors of distance and transaction costs are important, demand-side factors, including lack of employment, low and irregular incomes, financial illiteracy, and risk and trust perceptions, play a more significant role. We suggest that creating an enabling environment for the development of mobile money could overcome proximity barriers and result in better inclusion of rural communities. There is a need to invest in technology to improve network and Internet reception in rural areas. In addition, the government needs to reconsider the exclusive issuance of e-money by banks. Partnerships with supermarket money markets also have the potential to expand financial inclusion. Moreover, post-adoption financial education should complement efforts to expand financial inclusion. Simplified and transparent cost structures could help resolve the mistrust of banks.

Demand and supply constraints of credit in smallholder farming: Evidence from Ethiopia and Tanzania

Credit constraint is often considered as one of the key barriers to the adoption of modern agricultural technologies and low agricultural productivity in low- and middle-income countries. Past research and much of the policy discourse associate agricultural credit constraints with supply-side factors, such as limited access to credit sources or high costs of borrowing. However, demand-side factors, such as risk-aversion and financial illiteracy among borrowers could also affect credit-rationing of smallholder agricultural households. This study investigates the nature of credit constraints, factors affecting credit constraint status, and the effects of credit constraints on adoption and intensity of use of three modern agricultural technologies – small-scale irrigation, chemical fertilizer, and improved seeds. The paper also assesses whether credit constraints are gender-differentiated. Primary survey data were collected from sample farmers in Ethiopia and Tanzania, and Tobit and two-step hurdle econometric models were used to analyze these data. Results show that demand-side credit constraints are as important as supply-side factors in conditioning smallholders’ access to credit in both countries. We also find that credit is a binding constraint for the decision to adopt technologies and input use intensity in Tanzania but not statistically significant in Ethiopia. Results suggest that women are more likely to be credit constrained (from both the supply and demand sides) than men in both study countries. Based on these findings, we suggest that policies should focus on addressing both supply- and demand-side credit constraints to credit access, including through targeted interventions to reduce risk, such as crop insurance, and to strengthen the gender sensitivity of credit policies.

Financial Inclusion of Rural Households in Andhra Pradesh, India

Socio-economic development of rural households is directly linked with the extent of access and usage of financial services, since it equips the households with credit in times of emergency and also useful in upliftment of their status by investing in the productive purposes. Despite possessing bank account by all rural households under study, access and usage of the financial services was found to be very low. The present study was conducted during the year 2019-20 with an attempt to analyse the determinants of usage of banking services and constraints that would be responsible in availing the financial services by rural households in Andhra Pradesh and to suggest measures to improve the financial inclusion. A total of 410 rural households in Andhra Pradesh were selected using multistage sampling procedure. The data on the determinants of usage of banking services were tabulated, coded and analysed through logistic regression using SPSS version 20.0 software and responses collected on constraints of financial inclusion were analysed using Garrett Ranking Technique. Explanatory variables like occupation, education status, income level of the household and land holding were statistically significant and a one unit increase in these variables favours the odds ratio of a household usage of banking services. Among the constraints identified, financial illiteracy emerged as the top most constraint of accessing the financial services followed by the difficulty in getting a loan/emergency credit from the financial institutions. So, to improve the accessibility and usage of formal financial services, there is need to simplify the procedures of financial institutions and also the security norms have to be relaxed for the rural households. Financial literacy has to be increased by conducting periodical training programmes by the concerned banks in the area to strengthen the accessibility to financial services.

Digital Financial Inclusion

Digital financial inclusion is an issue which needs to be addressed in today's era. Its impact, reach and outcome were obvious at the time of corona. This paper highlights the significance of digital literacy and financial literacy and shows how the lack of these two can act as a roadblock in achieving digital financial inclusion along with demographic barriers. This paper highlights the factors relevant to achieve digital financial inclusion. For this primary data was collected from the respondents of the age group 18-60 having an education from intermediate to post graduate level coming from rural to metro regions working in an unorganized, contractual, self-job having an income base of 10000-40000. It was seen that digital and financial illiteracy varies along with education, income and regional boundaries. Financial and digital illiteracy was evident among many respondents due to lack of access, usage, aptitude and application. Proper financial training and knowledge can be a solution to this problem.

A Transcendental Phenomenological Analysis on the Financial Literacy among Senior High School Teachers in Carrascal National High School, Philippines

Financial literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. Unfortunately, many people have a weak grasp of basic personal finance principles. Inadequate financial literacy among salaried workers and teachers, particularly on how to save and invest, the kind of financial products to choose, and how to prepare for retirement, is a major concern in the Philippines, especially among teachers. The researcher undertakes the study to assess how financially literate teachers are and also offers valuable recommendations to improve their level of financial literacy and the nation in general. This study employed a Transcendental Phenomenological qualitative research design developed by Moustakas. The study revealed that the level of financial literacy among teachers is inadequate. In the long run, this lack of adequate financial knowledge has far-reaching consequences on the teacher as it is observed that teachers' knowledge of insurance and investment is not good and encouraging, which in the long term will limit participants' financial decisions and planning. Financial illiteracy and its resultant consequences on the teachers could potentially hinder their productivity since the teachers' performance can be seriously affected as they will always have financial worries and challenges to think about.

Credit and Financial Access in Nepalese Agriculture: Prospects and Challenges

The credit and financial access are urgent needs for agricultural development. This paper has attempted to find out present status of agricultural credit and their prevalent challenges and problems. The study is fully based on the statistical data, reports and findings of MoALD, MoF, NPC, NRB, and other relevant publications. The Government has targeted to expand agricultural credit through banking and financial institutions (BFIs) by implementing several acts, policies, strategies and programs through NRB, MoALD and MoF. However, constraints like credit ceiling, high value collateral demand, limited redemption facilities, limited agriculture insurance, financial illiteracy, lack of farmer friendly technologies, and poor monitoring and regulation of BFIs are responsible for lower credit expansion. Thus to promote and motivate BFIs and farmers to invest in agriculture, government need to address these challenges. The study also suggests to segregate farmer according to demand of credit volume and expand the branchless banking.

Jouska: a lesson on financial (il)literacy of Indonesian millennials?

Learning outcomes The learning outcomes are as follows: Students/participants can understand the type of financial fraud pertaining to the case; Students/participants can analyse the case using the fraud triangle perspective; students/participants can describe detection/anticipation strategies to prevent such acts from taking place in the future; students/participants can evaluate the case using the ethical decision-making framework; and students/participants can comprehend the importance of financial literacy when investing, especially in this digital era. Case overview/synopsis This case discusses the investment funds mismanagement accusations addressed to PT Jouska Finansial Indonesia (Jouska). Jouska is a financial planner business that was immensely popular among Indonesian young investors. It actively posted interesting content on its social media accounts, gaining attention from the millennial and Gen Z generations. However, in 2020, many of its clients reported and filed complaints that their portfolio values decreased significantly because of Jouska’s decision to invest their funds in low-quality stocks. Jouska was also alleged to violate its role as a financial planner by being able to perform several activities that fell under the authority of investment managers. This case attracted the attention of authorities so that the Investment Alert Task Force (SWI) stopped Jouska’s operational activities and initiated an investigation into the case. SWI also blocked Jouska’s websites, applications and social media accounts, in cooperation with the Ministry of Communication and Information. Despite settlement agreements that Jouska claimed had been offered to several clients, at the end of 2020 some of its clients and former clients filed a formal lawsuit. As of January 2021, several alleged criminal actions attributed to Jouska were still under investigation, comprised of money laundering, clients’ funds embezzlement, fraud, and insider trading. In October 2021, Aakar’s status was a suspect in the allegations. This case is another example of investment misconduct or fraud; to put it another way, it is the effect. It is expected that the participants can deliberate other perspectives during the discussion that could be the cause of such a case, hence viewing it holistically. Complexity academic level Undergraduate level. Supplementary materials Teaching notes are available for educators only. Subject code CSS 1: Accounting and Finance.

Hope in the Presence of Continuous Hardships: Investigation of the Challenges Hampering the Chances of Economic Empowerment among Yemeni Women

Women's economic empowerment is an important issue for development in order to achieve inclusive and sustainable growth, and it is also one of the most effective ways to advance the role of women in society. It is therefore a lifeline for bringing Yemeni women into economic life, but the economic opportunities available to Yemeni women are very limited. That is because there are many challenges facing their economic empowerment. Therefore, this study aims to identify the views of Yemeni women regarding the most important challenges and obstacles that stand in the way of economic empowerment of women in Yemen by adopting the analytical descriptive methodology with the help of primary data collected by a developed questionnaire tool, and secondary data which was obtained from official reports, previous studies and other resources relevant to the study topic. The findings indicate that women's financial illiteracy and negative customs and traditions in the society are the most critical challenges to the economic empowerment of Yemeni women, with percentages of 56% and 52% respectively, with other factors receiving various percentages. Meanwhile, 2% of the total sample size (421 women) brought to light other challenges to women's economic empowerment in Yemen, the most important of which was the insufficient proliferation of Islamic financial institutions. Based on the results and findings, the study recommends more attention be paid to making education compulsory in the society, and the gradual correction of negative customs and traditions in Yemeni society through spreading knowledge and awareness, which could improve the chances of economic empowerment of women.

Predicting Students’ Financial Knowledge from Attitude towards Finance

Attitude towards finance and financial attitude are very different constructs. Despite the popularity of the latter, it has recently been subject to criticism. Following Di Martino and Zan (2010), the former explicitly considers emotions and beliefs (about self and finance) and the mutual relationship between them. At present, there is a paucity of evidence on how ‘attitude toward finance’ may impact financial knowledge: this is a new area of inquiry in academic literature. Research is at a preliminary stage, although the jigsaw of financial literacy is receiving greater attention worldwide. This study measures individual attitudes towards finance and determines the effects of this profile on financial knowledge level. It uses about 500 economics students in Italy as sample respondents. It is based on a structured questionnaire survey as a data collection method. The data is analysed using Structural Equation Modeling. A significant positive correlation is found between financial knowledge and attitude toward finance. The direction of causality is found to be from attitude toward finance to financial knowledge, and this finding suggests that attitude toward finance can play an important role in financial education. Among the various dimensions of attitude toward finance, emotional disposition towards finance, and secondly, the self-confidence level, are the most influential factors on economic students’ financial knowledge level. Gender is also found to be closely correlated to both financial knowledge and attitude toward finance. Findings mainly suggest the importance of attitude toward finance on financial knowledge. For policymakers, the results of this study could indicate new ways of solving the financial illiteracy problem.

Importance of Developing Financially Literate Families and Communities: Opportunities for FCS Educators

Financial literacy has been an issue for decades in the United States; however, the COVID-19 pandemic put financial illiteracy in the spotlight. Family and Consumer Sciences (FCS) educators have the ability to influence the financial literacy rates among individuals, families, and communities. Despite Hogarth’s 2002 call to action for FCS educators to promote fiscal education, this has not happened. FCS educators must now respond to this call. This manuscript addresses the financial illiteracy problem in the United States, the importance of financial literacy, financial literacy in the FCS National Standards, and the actions FCS educators can take to improve financial literacy.

Financial Literacy Among Millennials

Financial literacy aids the investor in devising rational financial decisions which in turn provides financial stability to an individual and has emerged as a key to economic development in this rapidly changing financial and investing landscape. A financially illiterate person will make poor financial and investment choices which will have a detrimental effect on their financial wellbeing. The present study aims at assessing the level of basic and advanced financial literacy as well as its association with the demographic profile of millennial investors in the Delhi-NCR Region. A Chi-square test was used to analyse the data collected for the study. The findings revealed that millennials' financial literacy is low and they have poor knowledge about the time value of the money concept and find bond prices by the interest rate concept hard to comprehend. The study concludes that financial illiteracy is acute in females. The common belief that higher education qualification is an indicator of higher financial literacy holds for the study. The millennials with a lower level of income have a lower level of basic and advanced financial literacy. These conclusions were found to be statistically significant. This paper fills the research gap of millennials' financial literacy in India.

Financial literacy and business performance among female micro-entrepreneurs

The poor performance of female entrepreneurs, exemplified in their inability to realize their full potential and compete fairly with their male counterparts owing to financial illiteracy, motivated this study. Therefore, this study examined the effect of financial literacy on business performance among female micro-entrepreneurs. Using the survey research design, data were collected from 247 female entrepreneurs from six states in the North-Eastern region of Nigeria. The hypotheses developed for the study were tested using path modeling-structural equation modeling with the aid of SmartPLS software version 3.2.7. The result revealed that all proxies of financial literacy (financial education, cash forecasting, and bookkeeping have significant effects on business performance of female entrepreneurs. Additionally, the paper revealed that financial education contributed more to the variance in business performance of the female micro-entrepreneurs, this was followed by bookkeeping practices, while cash-forecasting has the least effect on the variance in business performance. This implies that financial education is essential for the success of female micro-entrepreneurs. Thus, this study advocates the need for continuing trainings and workshops for female micro-entrepreneurs on financial concepts such as bookkeeping, cash forecasting, and market volatilities.

A Qualitative Study on Financial Inclusion Initiatives in India

Bankers’ perception about various financial inclusion programs is a significant factor in successful implementation of financial inclusion initiatives. This study is aimed to investigate the experiences of bankers about various financial inclusion initiatives through qualitative research design. In-depth interviews of bank managers have been carried out in Ghaziabad district of India. The results indicate that shortage of staff in banks is a major challenge in Indian banking sector. Financial illiteracy and unawareness are the other challenges which are being addressed albeit through Financial Literacy initiatives of the Reserve Bank of India. Timely hiring of new staff in banks, their preparation and readiness for better decision making would certainly affect the situation of financial inclusion. The study is unique as it highlights the issues of financial inclusion through a qualitative research and provides bankers’ point of view on same.

Finansijska pismenost - kako to rade najbolji

The most commonly accepted definition of financial literacy is the one given by the OECD, which includes awareness, knowledge, skills, attitudes, and behaviours. The concept of financial literacy must be distinguished from the concepts of financial education, financial knowledge, and financial culture. The research results show that financial illiteracy is widespread, and it is generally necessary to pay more attention to this aspect of education. After defining the basic concepts, the paper presents experiences in organizing and monitoring the effects of financial education of three countries (Estonia, Finland, the Netherlands) whose students have achieved a high level of financial knowledge in international tests compared to other participating countries. The organisation of financial education in these countries is also presented, in order to assess how applicable their experiences are in our conditions. The experience thus far has shown that the best results are given by financial education beginning in high school, whose main characteristics are an interdisciplinary approach and constant support to teachers. Significant differences are also evident, that is to say, some groups of residents have a lower level of financial literacy, which indicates the need for different approaches in their education.

СУЧАСНІ МЕТОДИ ФОРМУВАННЯ ФІНАНСОВОЇ ГРАМОТНОСТІ НАСЕЛЕННЯ УКРАЇНИ

The presented work describes the urgency and necessity of the formation of financial literacy among the population of Ukraine. The importance of financial literacy formation among the youth of the country is substantiated, especially it is necessary for higher education seekers, which are potential carriers and future transmitters of knowledge and skills to the next generation. The essence and significance of financial literacy of a person are analyzed, and its main characteristics and features are described. The analysis of statistical information on the main components of the Financial Literacy Index of the Organization for Economic Cooperation and Development of the population of Ukraine was conducted based on such factors as age, sex, level of education and place of residence (city or village). It is established that the category of the young population of Ukraine needs knowledge and skills in financial literacy and rational financial behavior the most. The preconditions of the low level of the Financial Literacy Index of the young population of Ukraine are described. The main reasons for financial illiteracy are the lack of information, knowledge and skills on financial literacy acquired in the family and educational institutions. The article justifies the significance and importance of integration of financial literacy in the form of an educational component for applicants in HEIs. The role and place of a teacher in HEIs for the development of financial literacy among students are described. The main conceptual, methodological and practical problems and contradictions of the introduction of financial literacy in the cognitive process of HEI students are presented. The main recommendations and proposals for improving the level of financial literacy of applicants for higher education in Ukraine are given. Current and innovative methods and ways allowing to improve the level of financial literacy of seekers of higher education in modern socio-economic conditions were highlighted.

Exploring Causes, Effects, and Solutions to Financial Illiteracy and Exclusion among Minority Demographic Groups

Exploring Causes, Effects, and Solutions to Financial Illiteracy and Exclusion among Minority Demographic Groups

Financial (il)literacy vs. individual’s behavior

We explore the role that financial (il)literacy and personal traits have on financial behavior. Using a sample of 156 college students from the United States, we provide unique empirical evidence by specifically differen- tiating between individuals with higher levels of financial literacy versus individuals declaring not knowing the answers to financial literacy questions and those answering incorrectly. Thus, we assess the implications of revealed lack of financial knowledge on financial behavior regarding credit card use in comparison with two other cohorts; cohort one answering correctly, and cohort two failing to answer correctly. A novelty of our study is that we contrast these results to the behavioral factors of over spending and surprised levels of spend- ing—proxies for personality traits—when using credit card. Our exploratory empirical findings indicate that among personal-traits considered in this study overspending results in lack of payment in full in credit card debt, and more importantly these effects dominate any gains derived from financial literacy. To this extent fi- nancial literacy appears to only play a marginal role avoiding month-to-month credit card debt. Furthermore, financial knowledge derived from parents has a strong positive effect on individuals’ financial behavior espe- cially for students characterized by a relevant financial illiteracy. The implications of this research support the argumentation that early financial literacy may have the strongest effect in shaping individuals inherent behav- ior patterns; that is, early exposure to financial education is strictly preferred and should be promoted at early stages of the educational system.

Taking Financial Literacy Downtown: Leveraging Community Partnerships to Increase Communication of Essential Financial Information in an Urban Area

Financial illiteracy is a systemic issue across the country, especially among lower-income individuals in urban communities. This low level of financial literacy often leads to higher levels of debt, lower credit scores, less wealth accumulation, and poor retirement planning. Increasing financial literacy in these priority populations can be effective in combatting some of these negative financial outcomes. This study emerged from a partnership between community organizations in a large urban metropolitan area and scholars from diverse disciplinary backgrounds. Guided by formative research principles, this manuscript reports on research findings derived from several focus groups with community members. These focus groups helped to identify existing perceived financial knowledge levels, categorize barriers to enhancing financial literacy, and illuminate potentially pathways to effective financial literacy program development.

TRENDS AND PERSPECTIVES ON ENTREPRENEURIAL EDUCATION IN ROMANIA AND THE EU

Entrepreneurial education (EE) has been a blossoming subject over the past years especially due to its importance and relevance to the economy both regionally and globally. The academic world still needs to conduct sustained research on the topic in order to fully throw a light on the importance that EE has on the society and its decisive role in transforming it. Economic, financial and EE has gained new dimensions lately, with an important raise of the focus both in theory and practice. This research studies the need for EE and financial literacy. In Europe, recent surveys show that young people acknowledge their lack of knowledge regarding entrepreneurship and state that schools should help them have an entrepreneurial mindset and know more about finances. In today’s dynamic environment and especially after the covid-19 crisis, the need on the workplace has changed and the skills that can be acquired through entrepreneurship and financial training and acknowledged by scholars, population, businesspeople and media as vital for the way things work in today’s economy. Teaching individuals how to think entrepreneurial becomes even more important in times of crises, or in a dynamic environment, where creativity, adaptability and innovation are key for survival. Key trends and developments are analyzed and the actors involved in shaping and raising awareness regarding financial illiteracy and the need for EE. This paper combines literature review methods and it also develops a conceptual debate around the research conducted in the field of EE with the purpose of contouring a consolidated methodological approach based on the so-far experience linked with today’s challenges. Due to the fact that EE is now one of the fastest growing research subjects in the world, an important emphasis has to be placed on the comprehension of the connection between business management practices and the academic theory, as research has previously indicated. The outcome of this analysis aims to throw more light to understanding the evolution EE has had and provides an overview of the relevant trends in the field.

The Effect of Abusive Factors on the Emergence of the Financial Abuse between Partners: An Exploratory Study for the opinions of a sample of married women within the geographical location at Duhok city specifically Avro City

It remains the dominant concept when talking about intimate partner violence that physical violence is predominant, predominately in academic researches and reports published by media. In this study we focus on another form of unseen abuse that is committed in close partner relationships. It is an economic abuse which is likewise indicates to as financial abuse in a wide range of the literature. In this study we concentrate on five factors that affect the financial abusive which are Engaging in Activities, Culture & Traditions, Financial Skills, Financial Knowledge, and Financial Illiteracy. The research sample include only married women within geographical location at Duhok city specifically Avro City, 120 electronic form of the research questionnaire was distributed on the respondents, and about 105 form were valid which represent a percent of 87.5% from the distributed questionnaire. The results revealed that there is a significant and positive correlation between the five abusive factors and financial abuses at the levels of research variables. According to the conclusions We suggested that there should be more interest in our society to increase women's awareness of how to manage their income and to have an opinion and a role in managing their own financial affairs and managing family finances.