Lack Of Financial Literacy Research Articles

Post-crisis trends in household credit market behavior: evidence from Hungary (Literature review)

In response to a sharp rise in household credit repayment risk after the 2008 crisis, the banking sector was consolidated, borrowing conditions were tightened and the regulatory authorities had to improve the financial literacy of population. The study evaluates the effectiveness of regulatory measures to prevent excessive indebtedness, and analyzes the results of the latest survey of population financial literacy in Hungary after the 2008 financial crisis. The results confirm the scientific studies of different economists and scholars who state that the financial awareness is closely related to household saving and borrowing patterns. The outcomes of the analysis reveal the risks associated with the lack of financial literacy in Hungary. In fact, the financial awareness of households over the past years has not improved significantly either in the wake of losses suffered on FX-based loans, or as a result of the preventive actions undertaken by the government regulatory bodies.

Information Communication Technology (ICT) based Business Correspondence Model: A Growing Avenue for Ensuring Financial Inclusion in Rural India.

There is a genuine demand for finance requirement in the remote rural areas, absence of formal banking forced private lenders exploit the rural public. Government of India made several attempts towards financial inclusion of the poor, since independence, particularly in rural areas. Lack of financial literacy and no bank branch operation in their remote location restrains them to have access to formal banking. To overcome these constraints the RBI introduced ICT based Business Correspondences as agent to undertake banking activity in the year 2006.Though BC model was successfully performing well, but the growth and share of Business correspondence decreasing gradually. Further, penetration of the usage of mobile technology even in the remote rural areas opens positively for the successful performance of BCs in rural. Hence this research paper is a descriptive study which focuses on understanding BCs as a growing avenue for ensuring financial inclusion in Rural India.

Debt Close to Retirement and Its Implications for Retirement Well-being

We analyze debt and debt management of Americans nearing retirement age, to document that older people have numerous financial obligations that can lead to financial distress. Using data from the 2015 National Financial Capability Study and drawing on an extensive literature review, we show that lack of financial literacy, lack of information, and behavioral biases help explain the prevalence of debt later in life. Our evidence indicates that debt at older ages can negatively influence retirement well-being.

FINANCIAL LITERACY AMONG SME’S IN MALAYSIA

Purpose of Study: The objective of this study is to investigate the financial literacy among the SMEs in food and beverage sectors in Malaysia.
 Methodology: Small and Medium Enterprises (SMEs) play an important role in countries’ economic growth. However, the failure rate among SMEs getting higher. The literature stipulated that the lack of financial literacy is one of the main reasons caused this failure.
 Results: The results of 122 returned questionnaires shows that the socio-demographic factors such as age and marital status have influenced SME’s financial literacy. Moreover, the financial attitude and financial behavior found to be positively related to the financial literacy among the SMEs.

Agents of alienation: accountants and the land grab of Papua New Guinea

PurposeThe purpose of this paper is to explore and examine the role of accounting and accountants in customary land transactions between Indigenous peoples and foreign corporate entities. The paper uses the case of two accountants who utilised accounting technologies in lease agreements to alienate customary land from Indigenous landowners in Papua New Guinea (PNG).Design/methodology/approachEmploying a case study methodology, the paper draws on contemporary data sets of transcripts related to a Commission of Inquiry established in 2011 to investigate PNG’s Special Agricultural Business Lease system. Analysis of other publicly available data and semi-structured interviews with PNG landowners and other stakeholders supplement and triangulate data from the inquiry transcripts. A Bourdieusian lens was adopted to conceptualise how accounting was used in the struggles for customary land between foreign developers and Indigenous landowners within the wider capitalist field and the traditional Melanesian field.FindingsThis paper reveals how accountants exploited PNG’s customary land registration system, the Indigenous peoples’ lack of financial literacy and their desperation for development to alienate customary land from landowners. The accountants employed accounting technologies in the sublease agreements to reduce their royalty obligations to the landowners and to impose penalty clauses that made it financially impossible for the landowners to cancel the leases. The accountants used accounting to normalise, legitimise and rationalise these exploitative arrangements in formal lease contracts.Originality/valueThis paper responds to the call for research on accounting and Indigenous peoples that is contemporary rather than historic; examines the role of accountants in Indigenous relations, and examines the emancipatory potential of accounting.

Defined Contribution Plans and the Challenge of Financial Illiteracy

Retirement investing in the United States has changed dramatically. The classic defined-benefit (DB) plan has largely been replaced by the defined contribution (DC) plan. With the latter, individual employees’ decisions about how much to save for retirement and how to invest those savings determine the benefits available upon retirement. We analyze data from the 2015 National Financial Capability Study to show that people whose only exposure to investment decisions is by virtue of their participation in an employer-sponsored 401(k) plan are poorly equipped to make sound investment decisions. Specifically, they suffer from higher levels of financial illiteracy than other investors. This lack of financial literacy is critical both because of the financial consequences of poor financial decisions and because of a legal structure that relies on participant choice to limit the fiduciary obligations of the employer with respect to the structure and options provided by the retirement plan. In response to this concern, we propose mandated employer-provided financial education to address limited employee financial literacy. We identify and discuss three requirements that a financial education program should incorporate – a self-assessment, minimum substantive components, and timing. Formalizing the employer role in evaluating and increasing financial literacy among plan participants is a key step in providing retirement plan participants with the resources necessary to manage important decisions regarding retirement planning and, ultimately, for enhancing the financial security of American workers.

Financial insight and behaviour of household consumers in Port Elizabeth

Financial literacy is a crucial factor affecting individuals, households, financial institutions and the broader economy of South Africa (Oseifuah 2012: 23–24). Lack of financial literacy has been cited by various commentators (Brink 2011: 3, Schüssler 2014: 1–2; Dempsey 2015: 1–3) as the main reason for poor saving rates, increasing consumer debt and inadequate retirement planning among South Africans. The purpose of this study was to investigate the financial insight and behaviour of household consumers in Port Elizabeth. Economists have urged South Africans to start living within their means, improve their money management skills and ensure they eliminate debt, which can be viewed as the symptoms of mediocre financial insight and behaviour. Addressing these problems requires empirical evidence. A research model guided the investigation. A field survey (n = 560 consumers) was conducted in Port Elizabeth. The survey revealed six factors for financial behaviour and one for financial insight. The negative results for most factors confirmed the need for improved financial literacy of Port Elizabeth consumers. Significant relationships between demographical variables and financial behavioural factors were further observed for the sampled population. Educators and training facilitators should focus in their financial literacy programmes on financial planning, executing, vigilance, discipline, control and outsourcing personal financial services. Marketers and providers of credit should act responsibly when dealing with consumers with inadequate financial literacy.

Remittances in North and Central Asian Countries: Enhancing Development Potential

The article addresses the impacts of remittances in recipient countries in North and Central Asia, noting the high level of dependence of many countries of the subregion on remittances. While remittances are found to produce positive short-term benefits related to the reduction of transitory poverty, they also can contribute to negative impacts such as “Dutch Disease”, dollarization, public and private moral hazard. Few recipients make use of formal means of saving remittances, due to the lack of dedicated remittance-backed products, low levels of development of and trust in the financial sector, and lack of financial literacy among recipients of remittances. Measures to address this situation are proposed and assessed for their relevance to countries of the subregion.

House Ownership Circumstances in Rural Area: Evidence from Indonesia

Barriers to entry of housing affordability are not only existed in urban but also in rural areas. This condition makes rural households difficult to obtain their own house. However, it is still common for them to ask help from parents, in term of financial support or buy the house for them. The purpose of this paper aimed at understanding the phenomenon of society in the rural area to meet their need for house ownership. This research used the descriptive method, employed 15 participants in the Village of Olak-Alen, District of Selorejo, Regency of Blitar, Indonesia. The results of this research showed that newly formed households find their most significant obstacle to own house is inadequate income. Their low income is majorly caused by lack of financial literacy and insufficient work experience.

Financial Literacy about Stock Market among the Participants of Bombay Stock Exchange

Financial mistakes made at any stage of life can be costly. To avoid such mistakes, financial literacy is very important. Financial literacy is buzzword now days, and its importance has accepted all over the world. Financial literacy is required for any financial decision making. But his term is subjective in nature. So it varies according to investors. Investing in stock market is still not so popular in India because of its complicated nature and lack of financial literacy. This paper attempts to find out the literacy levels of stock market participants of Bombay Stock Exchange. Stock market participation is strongly related to financial literacy. Previous research was focused on financial literacy and reasons behind less stock market participation. In this study, stock market participant’s financial literacy regarding stock market functions has been assessed. Those who participate in stock market are considered to be a risk taking investors, and it is expected that investor must have basic knowledge about stock market. BSE is one of the oldest stock market in world. So the participants of BSE will be the great population to test financial literacy levels. This study is based on primary data collected through a survey from BSE participants as well as on secondary data.

Proposed Theoretical Measurement Model for Financial Inclusion with Perspective of Refuge Inhabitants

Financial inclusion takes into account the participation of vulnerable groups such as weaker sections of the society and low income groups, based on the extent of their access to financial services such as savings and payment account, credit insurance, pensions etc. Also the objective of financial inclusion exercise is easy availability of financial services which allows maximum investment in business opportunities, education, save for retirement, insurance against risks by the rural individuals and firms. The penetration of financial services in the rural areas of India is still very low. The factors responsible for this condition can be looked at from both supply side and demand side and the major reason for low penetration of financial services is, probably, lack of supply. The reasons for low demand for financial services could be low income level, lack of financial literacy, other bank accounts in the family, etc. On the other hand, the supply side factors include no bank branch in the vicinity, lack of suitable products meeting the needs of the poor people, complex processes and language barriers. There is no studies conducted earlier especially financial inclusion initiatives with refugee inhabitants. Therefore this study was undertaken to propose the model of refugee inhabitants towards financial inclusion initiatives by the banks. The exhibited model consisting four essential factors, which are very useful for measuring financial inclusion practices.

Stock Market Participation Puzzle in Emerging Economies: the Case of Lithuania

We examine underlying factors that explain an exceptionally low stock market participation rate among Lithuanian households by carrying out a comprehensive survey of mass affluent individuals. The probit regression analysis of the survey results indicates that lack of financial literacy, low risk tolerance and lack of trust in financial institutions are the three key factors explaining the stock market participation puzzle in Lithuania, while high investment fees, high stock market return expectations or underdeveloped local capital markets do not have a significant effect. The paper also examines whether the same factors also have influence on investment fund, bond and real estate market participation rates. Interestingly, lack of financial literacy, low risk tolerance, lack of trust in financial institutions and high stock market return expectations increase household participation rate in real estate market. The latter finding should be of particular interest to macro-prudential policy makers as increasing financial literacy of households and increasing trust in financial intermediaries would likely cause higher stock market participation at the expense of investments in local real estate market thus not only improving household portfolio diversification and liquidity, but also potentially mitigating local real estate boom and bust cycles.

Mainstreaming tribals through financial literacy – a review of literature

PurposeThe present paper is an attempt to understand the various concepts related to financial literacy. For the development of this paper, secondary data have been considered by visiting various sources of information. The reviews are made on four parameters, which include social exclusion among tribes, government initiatives for tribal development, socio-economic condition of tribes and impact of financial literacy on the lives of tribes. The purpose of this paper is to identify the variables and to undertake an empirical research on this topic. It is found that excluded from income-generating activities, formal education, political system are not getting adequate exposure for maintaining the standard of living. Mostly, the changing economic scenario of consumers, discrimination of wage and employment, lack of capital and financial literacy leads to the mismanagement of money. The financial products are the various causes of financial exclusion and need to be addressed through adequate financial literacy. Moreover, the study attempts to understand the various reasons of financial exclusion and to comprehend the empirical research on the topic as well.Design/methodology/approachThe present paper is based on the secondary data. In this regard, various sources of information have been visited to collect the data.FindingsThe study finds that owing to exclusion from income-generating activities, lack of formal education, absence of patronage political in adequate means for maintaining an acceptable standard of living, caste discriminations, poverty and migration, exploitation in the hands of money lenders, marginal increase in income, absence of infrastructure, unemployment, lack of financial literacy and its resultant mismanagement of money among the tribal community has pushed them to the utter stage of poverty universally.Originality/valueThe paper can help administrators and the policymakers of different regions across the world to take appropriate measures to focus on educating the people on different financial products and to increase the accessibility. Moreover, the paper can help research scholars to build platform of their research banking upon the data presented in this study.

Uncovering Barriers to Financial Capability: Underrepresented Students’ Access to Financial Resources

Financial aid is designed to increase access to postsecondary education at all socioeconomic levels; however, college students are not always knowledgeable about personal finances or capable of making sound decisions regarding complex college and program choices, debt options, and long-term spending. This article reviews previous research on the need for financial literacy training among underrepresented students and the barriers caused by inadequate access to financial services and information. Studies reviewed explore (a) the abilities of underrepresented students to make informed financial decisions; (b) the disadvantages faced by minority and first-generation students compared to their more advantaged peers; and (c) the need for cross-campus collaboration when developing a multipronged informational access system to overcome existing cultural biases. We used survey data, focus-group information, and personal interviews to determine current barriers impacting access to financial information and define the best practices leading to financial capability, as identified by faculty and staff working directly with underrepresented students. Barriers denying access to financial information include students’ lack of financial literacy, lack of trust in resources and services, and lack of reliable online resources. Best practices include workshops, online informational resource pages, and one-on-one advising. We describe the unique barriers faced by students who self-identified with one of nine specific student resource cultural centers on campus serving underrepresented minorities, women, LBGTQ+, students with disabilities, veterans, and others. Our results suggest that with an increasingly diverse student body, it is critical to student success that all university faculty and staff nationwide increase awareness and support of financial issues impacting underrepresented populations.

Does Financial Literacy Affect Stock Market Participation?

This study examines whether financial literacy affects stock market participation. We use data from the Preference Parameter Study, a nationwide survey in Japan, made by Osaka University. Our results show that financial literacy significantly improves stock market participation even after controlling the demographic, socio-economic, and psychological factors. The influence of financial literacy on stock market participation is robust against the measurement of financial literacy, investment in risky assets, investors’ risk aversion, and endogeneity issue. The results imply that lack of financial literacy is the reason behind people’s reluctance in stock market participation in Japan.

Financial Literacy-A Present Day Need in India

Financial literacy has secured a vital role in the recent scenario due to many reasons viz. development of the new financial products, complexity of the financial markets, information asymmetry and the changes in the other economic factors in the economy. To understand, explore and to make use of the sophisticated financial products in the emerging financial markets, there is a need for every individual to have an adequate level of financial literacy in India. The level of financial literacy in India is very low (24 percent) as compared to BRICS Nations (28 percent) and European Nations (52 percent) in the year 2015. Lack of financial literacy leads to the ill-informed financial decisions and these decisions in turn, have tremendous negative impact on the financial system as a whole. The present study aims to analyse the various initiatives taken by Government (Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority) to improve the level of financial literacy in India. Further, thepresent status of financial literacy in India has also been studied. Some suggestions have been made to strengthen up the financial literacy which will lead to the overall growth of the economy.

A STUDY ON THE EFFECTIVENESS OF FLCC PROGRAMME LAUNCHED BY FEDERAL BANK

The new economic reforms of government, advances in technology and great market orientation and financial innovation have reshaped the financial landscape. It means the people have so many investment opportunities. Poor people particularly in rural areas are often wary of banks and finds branches intimidating. A profound lack of financial literacy also reinforces the sense of alienation. The rural poor are also unaware about how to deal with credit, how to avoid incurring debts that cannot be repaid. In order to solve these problems RBI has decided to provide financial literacy along with credit counselling. As such RBI has come out with a model scheme on FLCC and advised banks to set up as many FLCC in order to achieve at least one FLCC per block.
 In consonance with RBI directives the Federal Bank, the first bank in the state which started FLCC, established a trust namely ‘Federal Ashwas Trust’. The main objective of this trust is the establishment and running of ‘Federal Aswas Financial Literacy Centers’ (FAFLC) for providing financial education to the public. The objective of the scheme is to provide free financial literacy education and credit counselling to people in rural and urban area. Through this FLCC centers across the state, customers are educated on responsible borrowing, proactive and early savings and also offers debt counselling to individuals.

Informal Loans in Russia: Why Not to Borrow from a Bank?

After the 2008 crisis, the Russian consumer loan market shows high growth rates, accompanied by the quality deteriorating even faster. At the same time, a great proportion of households are not attracted by the banks and borrow informally. In this paper, we aim to learn why households refuse to become bank clients, using the data from a 2009–2010 national survey of Russian households. Our results suggest that household's choice of the informal credit market is based not only on credit rationing, but also on a lack of financial literacy, credit discipline and trust in the banking sector as a whole.

Financial Inclusion and Pradhan Mantri Jan Dhan Yojana: An Empirical Study Conducted in the villages of Mulshi Taluka in Pune District.

Objectives: The aim of financial Inclusion schemes is to allow the poorer sections to avail themselves various financial products and services through bank account. This study is an attempt to examine the knowledge level of Jan DhanYojana schemes and usage / adoption of scheme benefits by the Farmers of Mulshi Taluka of Pune District. Methods/Statistical Analysis: This paper carries forward the data and information collected through structured interview schedule and discussions. The general information of banking habits, awareness level and using the benefits of Pradhan Mantri Jan Dhan Yojana (PMJDY) Scheme, etc were analyzed especially the first phase of PMJDY implementation. Purposive cum referral sampling method was carried out in the villages of Marunji, Hinjiwadi, and Punawale villages. Sample size consisted of 62 farmers. The data analysis was prepared using descriptive statistics and Chi-Square Test. Findings: There is no major impact of the Jan Dhan Yojana schemes especially of first phase implementation on farmers. Majority of them are not aware of the benefits derived from the financial inclusion mission. Most of the people are having partial information about the scheme, which is about the insurance schemes and nothing more. The result to verify the guesses shows clearly that there is no significant difference between the demographics such as gender, age, education, maritial status and monthly income of farmers and knowledge of Jan Dhan Yojana Scheme benefits. It is also viewed majority of them have opened Jan Dhan Yojana accounts in banks because it can be opened with zero balance. There is lack of financial literacy in rural areas. The findings corroborates with rest of the available studies. Creating consciousness to use the financial products and services through awareness campaign among the rural people as well as training to business correspondents is considered necessary for the success of Jan Dhan Yojana. Improvements: Further this paper could be enhanced by broadly discussing the other facets of financial Inclusion mission in the selected villages as well as for other talukas of the district.

Financial literacy and portfolio diversification: an observation from the Tunisian stock market

Purpose– The purpose of this paper is to focus on the lack of financial literacy as one probable factor explaining the low levels of portfolio diversification. The authors consider distinct aspects of financial literacy and control for socioeconomic and behavioral differences among individual groups of investors.Design/methodology/approach– The proposed models in this paper use multivariate analysis to examine the relationship between financial literacy and portfolio diversification. Investors’ biases have been measured by means of a questionnaire comprising several items, including indicators of investors’ portfolio fragmentation, financial literacy and socio economic variables. The sample consists of 256 small investors actively trading on the Tunisian stock market.Findings– The results suggest that investors’ experience, financial literacy level, age, their use of the availability heuristic, familiarity bias and portfolio size, have a significant impact on the diversity of assets included their portfolios.Research limitations/implications– The main limitation of the empirical study is the small size of the sample. A larger sample would have given more reliable results and could have enabled a wider range of analyzes.Practical implications– The paper encourages investors to make their investments decisions based on their financial capability and experience levels and to avoid relying on their sentiment.Social implications– The paper encourages governmental organizations to establish training programmes aimed to develop the individual investor’s financial literacy level.Originality/value– The current study is the first of its kind focusing on the link between financial literacy and portfolio diversification, within the specific context of Tunisia.