FINANCIAL LITERACY
AUTHOR: ANUSHKA S. DHALE
Solution for mobile based financial literacy programme
Gunupudi and Dharmarajan (2023) concludes that in this study, a sample of 1383 participants were engaged in a basic financial literacy program. Customers of ten institutions including seven banks (cooperative), a trust, a state rural livelihood promotion society and a financial literacy and credit counselling (FLCC) center who gave their consent were recruited as participants. states this study based on design science research establishes that mobile based platforms can contribute significantly towards financial literacy. I want to highlighting that this study is also a contribution to the literature on continuous learning programs through the content, context, delivery-mode framework. Content, context and delivery mode (channel) are the important facets that cannot be overlooked in enhancing the effectiveness of the literacy programs. The impact of these financial literacy programs has to be measured, monitored and reported in order to garner support and partnership (Master Card Foundation [2023]). This can be measured through objective parameters such as increase in the number of bank accounts, increase in the number of people who have started saving in their bank accounts etc. It can also be measured through more soft or perceptual responses of participants such as feedback about the program, satisfaction with the program etc. Such data can be gathered through surveys, workshops, forums and other informal discussions.
The Importance of Financial Literacy
Lusardi & Mitchell (2023) states that this research has shown that financial literacy produces better investment outcomes. For example, the more financially literate are more likely to invest in the stock market, and hence, earn higher (risk-adjusted) returns on their investments (van Rooij, Lusardi, and Alessi 2011, Clark, Lusardi, and Mitchell 2017). Stock market participation can be a conduit to higher wealth and, potentially for society as a whole, to greater wealth inequality, as we discuss below. Financial literacy also shapes the liability side of the balance sheet. Debt has risen across generations in the United States, and people are increasingly carrying debt well into retirement (Mitchell and Lusardi 2020). People who are more financially literate are also better able to manage this debt (Lusardi, Mitchell, and Oggero 2020).
Study on the role of financial literacy in poverty reduction
XU et al. (2023) says that the main factors are delineated constructing interest rate calculation questions, inflation understanding and venture capital questions. When the answers are correct, cannot be calculated, or unknown, they are denoted with six dummy variables, dummy1–dummy6. This result does imply a difference between financial literacy and knowledge gained through education, as financial literacy is a kind of professional knowledge that differs from the comprehensive knowledge obtained through education. (2023) Further analyses revealed that financial education can significantly improve households’ financial literacy and effectively enhance the current, long-term and dynamic impact of financial literacy on improving rural households’ poverty reduction status.
Financial Literacy Education
Derbyshire et al (2023) concludes that the findings of this case study research indicate that the business practice themes identified are all relevant within the context of small- and micro-enterprises even if a certain enterprise type has more advanced practices in place than the other. This suggests that financial literacy education strategies do not have to, but could, differentiate between micro- and small-enterprises. However, if the education is provided for both small- and micro-enterprise owners, it is recommended that the education strategies should evolve from very basic content to more sophisticated content to cater for both small-enterprise and micro-enterprise owners.
Gender Differences and Financial Literacy
Gudjonsson et al. (2022) emphasizes that a quantitative research method was applied. Three questionnaires were utilized in the survey. The respondents’ gender, age range, and highest level of education were all queried in the background questions. The first two questions are based on a questionnaire created in 2006 for an Empathy Quotient and Systemizing Quotient study ([62]). There are 23 questions on the first questionnaire and 25 questions on the second. The possible responses to the first two questionnaires are offered on a six-point Likert scale: strongly disagree, disagree, neither agree nor disagree, agree, and strongly agree. It indicates that the findings are significant, but age has less of an impact on financial literacy than gender. Education also affects financial literacy, but the higher the education, the better financial literacy.
The relationships between financial literacy, behaviour and well‐being
Hwang& Park (2023) states that this study consolidated the existing findings regarding the degree to which financial literacy is related to consumers’ desirable financial behaviours and financial well‐being. The results of this study reinforce the findings of existing consumer science research that financial literacy is a key contributor to consumer economic empowerment. Based on these results, suggestions can be made for areas that need to be addressed in the future. Future research on financial literacy should facilitate cooperation among stakeholders and contribute to the development of policies to promote consumers financial well‐being. Given that financial literacy serves as the foundation for consumers economic empowerment in the current diversified financial environment, consumer science researchers must continue to focus on this topic. Ultimately, empowered consumers will be able to proactively adapt to the changing economic climate, thereby promoting more responsible decision‐making and enhancing the economic health of society.
Financial socialization
Silinskas, et al (2023) writes that financial education at school increases students confidence in using financial services; in particular, confidence in using digital financial services increases financial literacy performance. This is important because financial literacy is known to benefit individuals and households, as individuals can make better and more informed decisions moreover, policymakers increasingly perceive the development of financial skills among young people as essential Interestingly, as our results show, financial education is more accessible to students in higher grades than those in lower grades. Given that younger students are increasingly being targeted by financial service providers, financial literacy can be introduced to younger students.
Financial literacy in students
Almeida et al (2023) concludes that the findings revealed that a high knowledge about cryptocurrencies does not necessarily lead to an increase in the adherence to digital platforms for the acquisition of these currencies. Students revealed that they were curious to explore this topic, even though it is not specifically proposed in the FEB and addressed in the context of compulsory education in Portugal. The sample focused on students attending undergraduate courses. As future work, we suggest analyzing financial literacy policies across countries and including the various advanced training programs in higher education, like graduate degrees and lifelong learning. Finally, it would also be relevant to explore the structure of courses in higher education across institutions to explore the impact of different approaches to promoting financial literacy.
Financial literacy engagement with finance
Sinnewe et al (2023) examined their engagement with their finances and l the role of financial socialization, motivation and financial literacy in affecting their behaviour in semi‐structured interviews. Perhaps the major limitation of this study is the purposeful sampling approach and consequent participant pool in this research. There was no apparent relationship between subjective financial literacy and spending behaviour, their participants, who lack confidence to invest their money expressed their frustration with the complexity of financial investments suggesting a lack of comprehension. Thus, a financial health communication campaign may be relevant in improving confidence in deliberate financial decision‐making contexts
Link between financial literacy and education
Jerrim et al (2022) says that young people are being taught about financial literacy by teachers who are not specifically trained in this important area. Policymakers and school leaders may seek to change this by employing staff who specialize in financial education or who completed a specialized financial education training course. In the long term, once a high-quality financial education curriculum has been developed, it could then become a compulsory school subject, with the aim of ensuring all young people develop the necessary financial skills to equip them for the demands of an increasingly complex financial world.
Conclusion:
Various studies underscore the significance of financial literacy programs, especially through mobile platforms, in enhancing individuals’ financial knowledge and behaviours. These programs cover diverse aspects such as stock market participation, debt management, and poverty reduction. They emphasize the importance of tailored content delivery, considering factors like gender, education level, and business context. Additionally, integrating financial education into school curricula and training teachers in specialized financial education could further promote financial literacy among young people, potentially leading to widespread economic empowerment and informed decision-making across society
References:
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