Topic: Financial literacy Name: Simpee Pal
References:
George Okello, (2018). Nexus between financial literacy. The international journal of Bank Marketing. Holden (2010) observe that financial decisions are compelled and constrained by non-financial factors. These include personality characteristics of individuals as well as their social environment which decisions are made. Advocates of financial literacy and practitioners have always tended to develop financial literacy materials with the assumption that if individuals are presented with knowledge and financial tools, they will full be better and able to choose the options most likely to achieve their financial goals. However, these financial literacy materials rarely reflect the role of cognition in shaping financial decision making especially among the poor who are presumed illiterate.
Wan Mashumi, (2023). The effects of financial attitudes, financial literacy and health literacy on sustainable financial retirement planning. Financial planning for retirement is essential to ensure that people have enough money to live the lifestyle they desire when they retire .Self-employed business owners in developed countries widely do financial retirement planning however, in Malaysia, the percentage of self-employed individuals concerned identify the relationship between the financial attitude, financial literacy and health literacy of self-employed individuals towards sustainable financial advisors. The study utilize structural equation modelling. Data were collected a survey questionnaire and analysed using SMART PLS 3.3. The total sample size was 416 self-employed individuals from the northern Malaysian region. The findings revealed that financial attitude and financial literacy significantly impact retirement planning. Moreover, the role of financial advisors moderates the relationship between financial attitudes, financial retirement planning and financial literacy. The result of the study will fulfil the needs of self-employed individuals to plan their retirement by including the financial planning determinants needed for a well-planned retirement.
Saeed, P. S., & Naghavi, (2020). Family financial socialization, financial information seeking behaviour and financial literacy among youth. Knowledge of personal financing and more importantly financial literacy is particularly important among today’s adolescents and youth as they are more exposed to financial decision-making than their parents (Apna et al, 2016). A low level of financial literacy with the mentality of “own now, pay later” and the relative ease of access to credit cards may carry into indebtedness and hinder them from financial planning for a secure future (Pahlevansharif and Yeoh, 2018; Lusardi et al. , 2009). Moreover, their financial behaviour during this period of time would probably persist into adult life. This is because, most of the youth at this stage of life actively learn and build the skills that they need to be financially independent (Shim et al, 2010).
Respati, D. k., (2023). How do student’s digital financial literacy and financial confidence influence their financial behaviour and financial well-being. The younger generation finds it extremely difficult to manage their finance because they have a dynamic lifestyle that is devoid of knowledge of financial management and more worrisome is the fact that some even find it difficult to manage their finance based on a priority scale (FSA, 2020). As the younger generation, college students ought to be highly knowledgeable about managing their finance to meet their daily personal needs and to fund their education so that they do not experience financial difficulties (Sholes, 2019).Their skills in managing their finance or their daily financial behaviour greatly depend on the levels of their financial literacy.
Xiao, J. J., & Porto, (2017). Financial education and financial satisfaction: Financial literacy, behaviour, and capability as mediators. The International Journal of Bank Marketing. In recent decades, consumer financial education has drawn the attention of consumers financial, practitioners, and researchers (CFPB, 2015, FLEC, 2012, PACFC, 2013). Consumer financial education refers to any form of education on basic financial knowledge for consumers in high schools, colleges, and workplaces. Raising the level of financial literacy and encouraging desirable financial behaviour’s though financial education are assumed to enhance consumer’s financial capability and improve consumer’s welfare (Atkinson et al, 2006; Human and McQuitty, 2009, Mauna and Jarboui, 2015). Financial education is believed to improve financial literacy, motivate desirable financial behaviours, and enhance financial well-being among consumers (Lusardi and Mitchell, 2014). A recent meta-analysis has examined many studies about financial education and literacy on financial behaviour’s and found mixed evidence (Fernandez et al, 2014). However, new studies continue to show that financial education has positive effects on consumer’s financial behaviour’s and welfare.
Khan, K. A., (2022). Financial capability as a function of financial literacy, financial literacy, financial advice, and financial satisfaction. The present study’s theoretical framework is based on the definition above mentioned (Brown, 2020) that internal capabilities are about knowledge, skills and behaviour and external capability related to existing structure and system prevailing in the economy. Several definition can be traced from the various literature, such as the concept of financial capability covers several dimensions ranging from resources, accessibility, habits to knowledge (Lin et al., 2016). Financial capability is about an individual knowledge of finance, reflected by persons potential to manage and control their money and funds. High income does not necessarily reflect higher financial capability or vice versa. It depends on how wisely a financially capable individual plans, manage and take control of finance (Taylor, 2011). Xiao et al. (2014) purport that financial capability is the application of financial knowledge and it favours those financial behaviour that Impact the enhancement of overall financial well-being. Researchers conceived financial capability not only as knowledge, but they argue that the term ‘financial capability’ comprises the individual ability to use this knowledge in their daily lives. According to Vivian et al. (2014), financial attitude, knowledge, and behaviour are among the key factors affecting financial capability. Similarly, financial advice being an external opportunity is the part of system and structure we live in, for which literature has strong support. Additionally, prior papers suggest a positive influence of financial satisfaction on financial capability (Xiao et al., 2015; Xiao & O’Neill, 2016).
E., & Seligman, (2022). Trust, financial literacy, and financial market participation. Journal of Pension Economics & Finance. An extensive literature examine financial market participation and the relationship between such participation and economic well-being. Brown et al. (2004) report that individuals who participate in the stock market accumulates significantly more wealth relative to a given level of savings, than individual who do not. Fechner and Seligman (2018) find that active participation in the equities market was an important predictor of wealth preservation for retired households over the 2008-2014 period. Given the high return of stocks, the failure of many households to participate in the financial markets has been described as a ‘participation puzzle’ (Chine and Morris, 2017). Market participation depends critically on both the willingness of individuals to participate and their competence in doing so. Some have questioned the ability of ordinary people to engage in ‘do-it-yourself finance’ effectively (Ryan et al., 2011).
Wiagustini, Ramantha, (2023). Financial literacy and financial behaviour encouraging business sustainability by mediation of financial performance. Village financial institutions based on local wisdom have benefits for various community activities and developing business in the village, so that they become the main indicator in advancing village economic growth. Many village financial institute do not operate due to competition with formal financial institution. This study aims to analyses the effect of financial literacy on financial performance, sustainability and financial behaviour, the influence of financial behaviour on financial performance and sustainability as well as the influence of financial performance on sustainability. The sample if this research is village of financial Credit Institutions totalling 100 units in districts/cities in Bali which are determined by the solving formula. The analysis technique using SEM-PLS, it was found that increasing literacy was able to improve financial performance and sustainability, as well as reduce behavioural financial bias; increasing behavioural financial bias can reduce financial performance and sustainability, and improving financial performance can improve financial performance and sustainability easing financial literacy was able to improve financial performance and sustainability, as well as reduce behavioural finance bias; increasing behavioural finance can reduce financial performance and sustainability, and increasing financial performance can sustainability.
Khan, F. (2023). Importance of financial literacy in promoting digital financial inclusion. Journal of Internet Banking and commerce. The use of digital technology to provide financial service to consumers is referred to as digital financial services. Mobile banking, online banking, digital wallets, and other electronic payment system are example of this. Digital financial services have the potential to completely transform how financial service are offered in poor countries. They give a low-cost and simple way to underprivileged populations and provide them with financial services. Services in finance Digital finance and financial inclusion help consumers, digital financial service providers, government, and thus the economy, but impediments persist. If obstacles are removed, digital finance could finance could benefit consumers, business, and governments. The problem presented in this paper are relevant to the ongoing debate and efforts to improve financial inclusion in emerging as an economic system in which all economic sectors, particularly those in developing and low-income countries, have access to efficient financial services. A solid financial inclusion system may be required before expanding the breadth of money services.
Lahiri, Biswas, (2022). Does financial literacy improve financial improve financial behaviour in emerging economics? Evidence from India. Managerial Finance, 48(9). In this paper, we examine the role of financial literacy in affecting financial behaviour in India. India is an interesting case study for two specific reasons. First, the level of financial literacy in India is inferior compared to that observed in developed countries (Agarwal et al., 2015). In fact, clapper et al. (2015) find that has the lowest financial literacy score among BRICS countries. According to the Organization for Economic Cooperation and Development, International Network on Financial Education study conducted in 2017 (OECD INFE, 2017), India stands below the average score of 12 among 21 countries. Recognized the importance of financial literacy, the Reserve Bank of India (central bank) launched the financial literacy AND Credit Counselling Centres in 2007, with the stated objectives of providing free financial education to individuals. Second, the government introduced its flagship Pradhan Mantri Jan Dhan Yojana (PMJDY) in 2014, to accelerate financial inclusion in the country by ensuring access to formal finance, especially to the poor. With a committed push from the government, 80% of Indian adults now own a bank account, and the gender gap in account holding has also shrunk (Demirguc-Kunt et al., 2018). Since the introduction of the financial inclusion scheme, access to financial has improved. If sub-optional financial behaviour was a result of supply-side factors, financial literacy should not matter after the introduction of PMJDY. In other words, if financial literacy and financial infrastructure are substitutes, one would expect the limited influence of financial literacy on financial behaviour with the easing of supply-side constraints.
Conclusion:
Financial literacy empowers every individuals, youth, every business, and countries to informed financial decisions. It equips them with knowledge and skills necessary to manage their finance effectively, plan for the future, and achieve their financial goals. Financial literacy is not a one time achievement but a lifelong journey. Schools, employees and financial institutions have a responsibility to provide resources and information to enhance financial understanding. Effort to promote financial education and awareness can help people make more informed, responsible, and secure financial decisions, ultimately leading to improved financial wellbeing and economic study. Every country should work on this make their people more aware of financial literacy, as it is very important tool for every country. Use digital technology to make people aware of it.
