Basic Financial Literacy: A Comparative Study at Delhi NCR

 

Neetu Chhillar1, Swaranjeet Arora2

1Research Scholar at Northcap University Gurugram, Haryana.

2Associate Professor at Northcap University Gurugram, Haryana.

*Corresponding Author E-mail: neetudabas0203@gmail.com

 

ABSTRACT:

Basic Financial literacy refers to the basic financial knowledge about budgeting, interest rates, time value of money, inflation, debit-credit, money management, investment, banking products, risk-return, etc. Lack of basic financial knowledge leads to ineffective financial decision making and loses. Factors that influence basic financial literacy level are demographic factor, socio-economic factors, education level, workplace activity, etc. Some of these factors may dominate in certain cases while they may not be significant in other situation. Understanding the impact of such factors on the basic financial awareness level among people is essential for effective policy making. Hence present study is aimed at exploring basic financial literacy level among people of Delhi NCR. The online survey was carried out with questionnaire as the research instrument on a sample of 326 people from Delhi NCR region using convenience sampling technique. The collected data was analyzed using Non-Parametric test of independent samples Kruskal-Wallis test and Mann-Whitney U test. The study identified that there is a significant difference in the basic financial awareness among different age groups while the basic financial literacy level across gender, employment status and education level were found to be not significantly different.

 

KEYWORDS: Basic financial literacy, financial decision making, effective policy making, demographic factor, socio-economic factors, education level.

 

 


INTRODUCTION:

Evidences from previous studies (IRBD, OECD, DFID, CGAP, 2009) have identified that the low level of financial knowledge is an important contributor of the economic crisis. With growing competition, there exists a vast variety of complex financial products in the financial market which makes the possession of financial knowledge highly significant. At the microeconomic level, households and business firms with greater financial literacy are more likely to avoid ineffective financial decisions. There is a strong positive ­­­­­­­relationship between financial knowledge and the available savings in the country. At macroeconomic level, high level of financial literacy of the population of a nation results in a stable financial system since less expenditure is required on redistribution and stabilization. Development of financial literacy has a beneficial effect on every participant in the economy and the competitiveness of the country as a whole (Klapper et al., 2012).

 

Empirical researches have witnessed that people with high level of financial awareness makes better budgeting decisions, save more money, and manage the expenditure well (Moore, 2003; Perry and Morris, 2005); handling loans and advances (Campbell, 2006; Lusardi and Tufano, 2009); role of individual in the financial system (Van Rooij, Lusardi et al., 2011; Christelis, Jappelli et al., 2010; Yoong et. al., 2012); investment for retirement (Lusardi and Mitchell, 2008); and eventually, building wealth fruitfully (Stango and Zinman, 2009). Recent international efforts to measure financial literacy suggest that the scenario of financial literacy is not adequate around the world. The financial crisis around the globe has demonstrated the need of effective financial markets at national and international level.

 

In current scenario several challenges are being faced by an economy that range from socio-economical, cultural, environmental, technical, political causes. Financially knowledgeable people are asset for an economy. Therefore, Government, organizations and the international community keep on developing measures towards improvement of financial literacy and building strong financial system. Financial literacy means the education and skills that enables a person to make sound economic decisions by way of their discernment of finance.

 

Research studies suggest that in many countries, women score lower on various parameters of financial knowledge as compared to men and they also showed lack of confidence in handling financial matters. But it have also been noticed that women are superior to males in areas like ad-hoc money management. For instance, Australian women are better in budgeting on routine basis and pay more attention on reducing their expenditure (AGFLF, 2008). Adequate knowledge about financial concepts is important for individuals to effectively contribute towards the economic development process of their nation. Some of the studies based on respondents’ self-assessed financial knowledge suggests that females are well aware of their low level of financial knowledge (Bucher-Koenen et al., 2012; Lusardi and Tufano, 2009). Even when there exists no proven gender gap in financial knowledge, studing the gender-specific causes of financial literacy area wise is essential for effective policy design. Increase in age reflects accumulation of knowledge based on one’s practical life experiences (Agarwal, S., et. al., 2009).

 

Bhushan et. al. (2013) found a positive correlation between education level, income level and financial literacy level amongst salaried individuals of Himachal Pradesh. According to him, people with higher education level have higher level of financial literacy. Even, income level positively impacts the level of financial literacy. Financial literacy level was found more among people having higher income level. Also, it was found that employees in government sector displayed higher financial literacy scores than those working in private sector. Age has a significant correlation with financial literacy. Rooij et al. (2007) identified the profile of basic financial literacy is negatively skewed with respect to age with lower literacy level of young people as compared to middle-age respondents and declining slightly with advancing age of sixty-one years and above. Similar results were observed among people belonging to age group (18-24) and (70 and above) in Australia as they displayed low level of financial knowledge (ANZ, 2008).

 

The level of financial literacy depends on various parameters including employment status, level of education and economic condition of people. Previous studies have shown that highly educated and qualified person with high income group may have problems in understanding financial matters that can be easily interpreted by not so well-educated person having lower income level. Rapidly changing technology, diverse investment options, globalization and liberalization have made new financial instruments widely available leaving majority of the population less equipped to make sound financial decision as they fail to evaluate complex financial products because of low levels of financial literacy (Lusardi and Mitchell, 2007).

 

Individuals’ financial literacy level is influenced by a number of factors such as age, gender, income level, marital status, education, area of residence, working environment, etc. There are various studies done on the determinants of financial literacy in different parts of the world and at different points of time. In some cases a few factors dominate while in other cases those factors are found not to be significant. Moreover, financial instruments have become increasingly complex and access to credit is easier than ever before. Study on the factors affecting financial knowledge has helped policy makers in framing policies to address the problem of low levels of financial awareness. Sophisticated financial instruments, low level of financial awareness and lack of knowledge about financial matters makes the want of financial literacy even more significant. Therefore, present study aims at comparing basic financial literacy level among people in Delhi NCR region with respect to demographic factors, economic factors and level of education.

 

REVIEW OF LITERATURE:

Luksander, et. al., (2014) conducted empirical research by measuring the financial literacy level of 1743 young adults (18–25 age group) using the Financial Knowledge Index (FKI) containing fifty per cent theory and fifty practical based questions. The FKI’s value was calculated on the basis of the answers given to a set of 20 questions with values between 0 and 1 (the closer the answer is to 1, the better the student’s financial knowledge). Regression models and variance analysis were utilized in addition to descriptive statistical methods. The SPSS software package was utilized to process data. The findings showed that men performed better on the test measuring financial knowledge than women. Financial knowledge of students grows over time as they grow older, young adults frequently find themselves in situations like taking loan, buying a real property – that help expand their financial knowledge. Students performed better on average in the theoretical questions. Teaching of financial-economic topics in secondary school level does not have any significant influence on the financial knowledge level of young people.

 

Lusardi and Mitchell (2011) concluded that the level of financial literacy is generally found low across different nations, notwithstanding the level of its financial market development. Women generally have low financial literacy, than do men and they are aware of it too. Older population showed low levels of financial knowledge. Most of the workers, both young and old, had not planned or even thought much about investment for their retirement. People who have good understanding of financial concepts and its numerical application showed better retirement planning. But this relationship is causal that is, financial literacy influences retirement planning, and not vice versa. It was also observed that these estimates perhaps undervalue the effects of financial literacy on retirement planning. In short we can say that financial literacy is critical to retirement security around the world.

 

Das (2016) in his review-based study found the key determinant factors of financial literacy includes age, gender, education, profession, income, place of residence and race/ethnicity. Most of the prior studies have focused on the three main issues related to financial literacy – measurement, levels and determinants. The approach to the measurement of financial literacy were classified as the objective based approach via questionnaires and the self-assessment method where the respondents are asked to rate their own financial knowledge and skills. The researcher recommended the need for developing a well-organized education system to facilitate and improve financial literacy as it is an essential life skill across the population.

 

Sabri and MacDonald (2010) analyzed the relationship of savings behavior and financial problems among college students in Malaysia. The study sample comprised of students in eleven public and private universities, 350 students were selected randomly from each university. The data was analyzed using t-tests, ANOVA and Multiple regressions. It was observed that respondents with higher FKT scores showed better savings habits and they reported lesser financial issues. The influence of childhood consumer experience and financial socialization agents on savings and financial problems was more mixed. It means that financial experience before college may create bad habits or poor attitudes toward financial management among students that could be mitigated through impacting financial education during college.

 

Sucuahi (2013) studied the determinants of financial literacy of the 100 micro entrepreneurs in Davao City using a survey questionnaire and found that their financial management practices were not so impressive. In order to analyze the data multiple regression was employed which exhibit a positive correlation between education and the level of financial literacy. There was no relationship found between gender and financial literacy level among micro entrepreneurs. It was also observed that the entrepreneurs were not sophisticated in recordkeeping, saving, financing and budgeting; they were as well not unpolished in utilizing their skills.

 

Bhushan and Medury (2013) determined the financial literacy level of a sample of 516 salaried individuals of Himachal Pradesh using multistage sampling based on various demographic and socio-economic factors and found that the financial literacy level of people was low. Financial literacy level was seen to be influenced by sex, educational attainment, economic condition, employment status and place of work whereas it does not get affected by age and geographic area. Questionnaire consisted of thirteen questions related to financial numeracy, budgeting, loans, insurance, risk and return. ANOVA was utilized to test the hypothesis. The result concluded that the overall financial literacy level of respondents is not impressive indicating low level of financial awareness among people in India. Researcher suggested the need of adopting necessary measures by government to increase financial awareness among people so as to enable them to solve their financial issues and make efficient financial decision.

 

Agarwal, et. al., (2009) in cross-sectional data sets from ten credit markets concluded that young generation and senior people usually borrow at higher interest rates than middle-aged people. People in the age bracket of 50-60 years borrow at low rate of interest. Three complementary factors that contribute to these findings are: age-related cognitive effects, selection effects, and cohort effects. It was also noticed that cohort and selection effects have more effects on the reported outcomes for older borrowers. Also a strong relationship between age and financial sophistication was also noticed in the analysis.

 

Ansong and Gyensare (2012) explored the determinants of university working-students’ financial literacy by adopting a correlation research design and found that age, work-experience and mother’s education have positive impact on the financial literacy level of respondents. Though level of education of respondent, work location, father’s education and access to media were seen to have insignificant effect on the financial literacy. A self-developed and self-administered questionnaire consisting of 20 multiple choice items was used for data collection from 250 college students of a public university in Ghana. Descriptive statistics, Independent samples t-test and one-way analysis of variance (ANOVA) was done using SPSS Statistics for analyzing the collected data. It was identified that the score of male respondents on financial literacy was better than that of female respondents and also respondent with business as its major subject did fairly well than others.

 

Rasoaisi and Kalebe (2015) analyzed the basic financial knowledge among the students of National University of Lesotho using the drop and pick method during lecture sessions to fill up the questionnaires. For selecting the required sample stratified random sampling technique was adopted where each faculty was treated as a stratum and from each stratum ten students were selected randomly. The analysis revealed that male students have higher financial literacy level than female students. The reason observed for this finding was that male students don’t prefer borrowing from informal financial sources. Age was found to have insignificant impact on the level of financial literacy among the respondents since students on average belongs to same age category and hence there exist lack of age variation among students.

Beal and Delpachitra (2003) conducted empirical research among students at the University of Southern Queensland (USQ) in Toowoomba, Queensland by presenting e-questionnaire as research instrument which was pre-tested and revised before finally used to collect the required data. Logistic regression and regression modelling was done to analyze the data. It was found that financial literacy increases with work experience and income level. It suggests that people gradually learn to apply financial skills through trial and error. It was also seen that less risk averse people probably have more financial exposure. Students studying business studies scored better on financial knowledge test due to their higher level of interest in financial matters.

 

Mbarire and Ali (2014) in their study on determinants of financial literacy level on a sample of 500 employees of Kenya Ports Authority. The sample was selected using stratified multi-stage sampling to ensure demographic and socio-economic considerations in the sample chosen for the study. Drop and pick method was adopted to get the responses for the questionnaire. Employees’ financial awareness level was found to be considerably low. Factors influencing financial literacy of employees included gender, age, education levels, other wealth factors and sources of information and financial advice, whereas it was not affected by occupation status and type, and personal income. A descriptive research design was adopted and the data analysis was done using SPSS Version 20. It was identified that more percentage of women displayed higher score on financial literacy than men. This finding contradicts the existing findings of ANZ (2008), Gallery et al. (2011), etc. where it was noted that men are better than women in the area of financial awareness. It was also revealed that the young people below 30 years in age and the old respondents (over 50 years) have low level of financial literacy while it was seen highest among respondents belonging to 31-40 years and it was moderate among the respondents belonging to 41-50 years. The study showed that people in Kenya have low level of basic financial literacy.

 

One could say that a variety of studies have emphasized on investigating determinants of financial literacy and it has been found that age, gender, education level, occupation, area of residence, race, wealth, ethnical background, etc. are significantly affect the level of  financial literacy. It has been observed that some of these factors dominate in some situation while they have negligible impact in other situation. Since the impact of these factors on financial literacy differ in different location and at different point in time therefore, continues research in different areas is required to provide policy maker the correct information. Present study focuses on examining the impact of demographic factor, employment and education level on the basic financial literacy level among people residing in Delhi NCR region.

 

OBJECTIVES:

To compare basic financial literacy among people of Delhi NCR region with respect to demographic features i.e. gender and age. 

 

To compare basic financial literacy among people of Delhi NCR region with respect to employment status.

 

To compare basic financial literacy among people of Delhi NCR region with respect to level of education. 

 

RESEARCH METHODOLOGY:

The study

Present study is descriptive in nature and examines the impact of individual’s profile on the basic financial literacy level. The study utilizes primary data which is collected by means of questionnaire. The target group of the research was represented by male, female and youth living and working in Delhi NCR region.

 

The Sample

Non-probability convenience sampling method was employed to select the sample. The questionnaire was filled by 326 respondents including males, females and youth living in Delhi NCR region.

 

Tools for Data Collection

Close-ended questionnaire was used as this research is based on quantitative data. The research instrument used to collect data in the present research was adapted from the Scale of Financial Literacy developed by Leena B. Dam and Malti Hotwani (2018). The questionnaire consisted of 17 close-ended questions related to basic financial literacy. Respondents were asked to choose the degree of their agreement with respect to each question on a five-point Likert scale. The secondary data was collected through various research magazines, websites, journals and newspapers.

 

Tools for Data Analysis

Results of one sample Kolmogorov- Smirnov test sample reveal that does not follow normal distribution. Hence, non-parametric test were used to analyze data. Independent Samples Kruskal-Wallis test and Mann-Whitney U test were used to test the research hypothesis. The collected data was processed using SPSS version 24.

 

RESEARCH HYPOTHESES

Following hypotheses were formulated:

H01: The distribution of basic financial literacy is normal.

H02: There is no significant difference in the level of basic financial literacy across different age groups.

H03: There is no significant difference in the level of basic financial literacy with respect to gender.

H04: There is no significant difference in the level of basic financial literacy across different employment level.

H05: There is no significant difference in the level of basic financial literacy across different level of education.

 

RELIABILITY OF THE MEASURES

In order to assess the reliability of the data Cronbach’s alpha test was applied on all the 17 items. Cronbach’s alpha tests the internal consistency of the collected values that is do all the items within the instrument measure the same thing. It consists of estimates of how much variation in scores of different variables is attributable to chance or random errors (Selltiz et al., 1976). Usually, a coefficient value greater than or equal to 0.7 is considered acceptable and is considered as a good indicator of construct reliability (Nunnally, 1978). The calculated value of the coefficient of Cronbach’s alpha is 0.788 as shown in Table 1. Therefore, the collected data satisfies the reliability test and thus it can be used for further analysis.

 

Table no. 1:Reliability Statistic

Cronbach's Alpha

N of Items

0.788

17

 

 

KOLMOGOROV- SMIRNOV TEST

With the view to test the normality of the collected data Kolmogorov- Smirnov test is performed. It is important to test that the data follows normal distribution or not as it helps in deciding which type of statistical test can be applied to compare the averages of respondents. The result of the test (Table-2) show that values in Basic Financial Literacy among respondents does not follow normal distribution therefore H01 is rejected. It means the values do not follow normal distribution therefore; Non Parametric tests can be used for comparing means.

 

Table no. 2 Hypothesis Test Summary

S.

no.

Null Hypothesis

Test

Sig.

Decision

1

The distribution of FinLit is normal with mean 3.48 and standard deviation .44498.

One-Sample Kolmogorov-Smirnov Test

.001a

Reject the null hypothesis.

Asymptotic significances are displayed. The significance level is .050.

a. Lilliefors Corrected

 

One-Sample Kolmogorov-Smirnov Normal Test Summary

Total N

 

317

Most Extreme Differences

Absolute

0.071

 

Positive

0.071

 

Negative

-0.044

Test Statistic

0.071

Asymptotic Sig.(2-sided test)

.001a

a. Lilliefors Corrected

 

 

RESULTS AND DISCUSSION:

With the view to test the second hypothesis, that there is no significant difference in basic financial literacy among age group 18-24, 25-36 and 36 and above independent samples Kruskal-Wallis Test was applied. The results revealed that basic financial literacy of respondents among different age groups significantly differ in their mean values with p value .006 (Table 3), and hence null hypothesis H02 was rejected at 5 percent level of significance. People in age group 26-35 years are having highest mean values of 176.02 which shows that people in the age group 26-35 years have highest level of basic financial literacy, while mean values of people belonging to age group 18-25 years and 36 years and above are 140.43 and 168.38 respectively which represents the level of basic financial literacy in young adults belonging to age group 18-25 years is lowest (fig-3). Several studies indicate that age is one of the important factors determining financial literacy. The finding is not fully consistent with the findings of Almenberg and Save-Soderberg (2011) who observed that people age bracket of 35-50 years and those older than 65 years displayed low financial literacy level. A study on financial literacy by Van Rooij et al. (2007) found the profile of basic literacy to be negatively skewed with regards to age. Financial Literacy level has been found to be low among the young, highest among middle-age respondents (particularly 40 to 60), and declines slightly at an advanced age of 61 or over.

 

Table no. 3 Hypothesis Test Summary    

S. no.

Null Hypothesis

Test

Sig.

Decision

1

The distribution of Fin Lit is the same across categories of Age.

Independent-Samples Kruskal-Wallis Test

0.006

Reject the null hypothesis.

Asymptotic significances are displayed. The significance level is .050.

 

 

Total N

317

Test Statistic

10.219a

Degree Of Freedom

2

Asymptotic Sig.(2-sided test)

0.006

a. The test statistic is adjusted for ties.

 

In order to find out significant difference between three age group i.e. 18-25 years, 26-35 years and 36 years and above; pairwise comparison of age using Kruskal-Wallis test was applied as indicated in Table 3a. The p value in age groups 18-25 years and 36 years and above is 0.040 which is below 5 percent level of significance, therefore there is exists significant difference in the level of basic financial literacy among age group 36 years and above and 18-25 years; p value in age groups 18-25 years and 26-35 years is 0.002 which is below 5 percent significance, therefore there is significant difference in the level of basic financial literacy among age group 18-25 years and 26-35 years; and p value in age groups 36 years and above and 26-35 years is 0.588 which is above 5 percent significance, therefore there is no significant difference in the level of basic financial literacy among age group 26-35 years and 36 years and above. Hence, it can be inferred that there is significant difference in the level of basic financial literacy among age group 18-25 years and 26-35 years and among age groups 18-25 years and 36 years and above. Financial capability differs significantly with differences in age in a nonlinear way between genders and it develops with rising age (Taylor M. 2011).

 

Table no. - 3a Pairwise Comparisons of Age

Sample 1-Sample 2

Test Statistic

Std. Error

Std. Test Statistic

Sig.

Adj. Sig.a

1-3

-27.952

13.582

-2.058

0.040

0.119

1-2

-35.587

11.664

-3.051

0.002

0.007

3-2

7.636

14.076

0.542

0.588

1.000

Each row tests the null hypothesis that the Sample 1 and Sample 2 distributions are the same.
Asymptotic significances (2-sided tests) are displayed. The significance level is .05.

a. Significance values have been adjusted by the Bonferroni correction for multiple tests.

 

 

In order to test the third hypothesis, that there is no significant difference in the level of basic Financial Literacy between genders, Independent Samples Kruskal-Wallis Test and Mann-Whitney U Test were applied. The results of Independent Samples Kruskal-Wallis Test revealed that basic Financial Literacy of respondents between genders does not differ significantly in their mean values with p value .941 (Table 4a) and hence the null hypothesis H03 is not rejected at 5% level of significance. The results of Mann-Whitney U Test revealed that basic Financial Literacy of respondents between genders does not differ significantly in their mean values with p value .612 (Table 4b) and hence the null hypothesis H03 is not rejected at 5% level of significance. It means that there is no significant difference in the level of basic Financial Literacy between genders in Delhi NCR region. Although numerous studies around the world favors that male performs better than female on various financial literacy tests (ANZ (2008), Gallery et al. (2011), van Rooij et al. (2007)) while there exists studies demonstrating that female score higher on financial knowledge parameter than that of males (Mbarire, T. T., and Ali, A. I. (2014))

 

Table no. 4a Hypothesis Test Summary

S.

no.

Null Hypothesis

Test

Sig.

Decision

1

The distribution of FinLit is the same across categories of Gender.

Independent-Samples Kolmogorov-Smirnov Test

0.941

Retain the null hypothesis.

Asymptotic significances are displayed. The significance level is .050.

 

 

Independent-Samples Kolmogorov-Smirnov Test Summary

Total N

 

317

Most Extreme Differences

Absolute

0.060

 

Positive

0.028

 

Negative

-0.060

Test Statistic

 

0.530

Asymptotic Sig. (2-sided test)

 

 

Table no. 4b           

S.

no.

Null Hypothesis

Test

Sig.

Decision

1

The distribution of Fin Lit is the same across categories of Gender.

Independent-Samples Mann-Whitney U Test

0.612

Retain the null hypothesis.

Asymptotic significances are displayed. The significance level is .050.

 

 

Total N

317

Mann-Whitney U

12953.500

Wilcoxon W

26648.500

Test Statistic

12953.500

Standard Error

814.396

Standardized Test Statistic

0.508

Asymptotic Sig.(2-sided test)

0.612

 

In order to test the fourth hypothesis, that there is no significant difference in the level of basic Financial Literacy across different employment level, Independent Samples Kruskal-Wallis Test was applied. The results revealed that basic Financial Literacy of respondents across different employment level does not differ significantly in their mean values with p value .049 (Table 5) and hence the null hypothesis H04 gets rejected at 5% level of significance. It means that there is significant difference in the level of basic Financial Literacy across different employment level of respondents in Delhi NCR region. These findings are consistent with Mbarire and Ali (2014) who found that financial literacy level are not influenced by employment type and level of income. On the contrary there are study that have pointed out that employment level affects the financial literacy of individual. For instance, Worthington (2006) found that in context of Australia people doing white collar jobs showed higher score in financial literacy test than those who were unemployed or working in blue collar jobs.

 

Table no.5 Hypothesis Test Summary

 S.

no.

Null Hypothesis

Test

Sig.

Decision

1

The distribution of Fin Lit is the same across categories of Employment.

Independent-Samples Kruskal-Wallis Test

0.049

Reject the null hypothesis.

Asymptotic significances are displayed. The significance level is .050.

 

Independent-Samples Kruskal-Wallis Test Summary

Total N

317

Test Statistic

6.043a

Degree Of Freedom

2

Asymptotic Sig. (2-sided test)

0.049

a. The test statistic is adjusted for ties.

 

Table no.-5a

Sample 1-Sample 2

Test Statistic

Std. Error

Std. Test Statistic

Sig.

Adj.

Sig.a

3-2

14.594

14.418

1.012

0.311

0.934

3-1

28.200

11.473

2.458

0.014

0.042

2-1

13.606

14.093

0.965

0.334

1.000

Each row tests the null hypothesis that the Sample 1 and

Sample 2 distributions are the same.
 Asymptotic significances (2-sided tests) are displayed. The significance level is .05.

a. Significance values have been adjusted by the Bonferroni correction for multiple tests.

 

Salaried people are having highest mean values of 172.20 which shows that they have highest level of basic financial literacy, while mean values of self-employed people and students are 158.60 and 144.00 respectively which represents the level of basic financial literacy among students is lowest (fig-6).  

 

In order to find out significant difference among people based on the employment status; pairwise comparison of employment using Kruskal-Wallis test was applied as indicated in Table 5a. The p value in is 0.014 which is below 5 percent level of significance, therefore there exists significant difference in the level of basic financial literacy among salaried people and students; p value between salaried and self-employed people is 0.334 which is above 5 percent significance, therefore there is no significant difference in the level of basic financial literacy among salaried and self-employed; and p value in self-employed and students is 0.311 which is above 5 percent significance, therefore there is no significant difference in the level of basic financial literacy among self-employed and students. Hence, it can be inferred that there is significant difference in the level of basic financial literacy among salaried people and students.

 

In order to test the fifth hypothesis, that there is no significant difference in the level of basic financial literacy across different level of education, Independent Samples Kruskal-Wallis Test and Mann-Whitney U Test were applied. The results of Independent Samples Kruskal-Wallis Test revealed that the basic Financial Literacy of respondents across different education level does not differ significantly in their mean values with p value .803 (Table 6a) and the results of Mann-Whitney U Test also pointed that the basic Financial Literacy of respondents across different education level does not differ significantly in their mean values with p value 0.597 (Table 6b). Hence we fail to reject the null hypothesis H05 at 5% level of significance. It means that there is no significant difference in the level of basic Financial Literacy across different level of education. All the respondent selected in the present study were those who have passed their senior secondary education level. Although, the study by Almenberg and Säve-Söderbergh (2011) demonstrated that individuals who had lower levels of education (elementary stage- primary level) showed low financial literacy levels than degree holders and graduates, emphasis is however placed on the type of subjects and courses learned.

 

Table no. 6a Hypothesis Test Summary

S .no.

Null Hypothesis

Test

Sig.

Decision

1

The distribution of Fin Lit is the same across categories of Education.

Independent-Samples Kolmogorov-Smirnov Test

0.803

Retain the null hypothesis.

Asymptotic significances are displayed. The significance level is .050.

 

Independent-Samples Kolmogorov-Smirnov Test Summary

 

Total N

 

317

Most Extreme Differences

Absolute

0.073

 

Positive

0.073

 

Negative

-0.031

Test Statistic

 

0.643

Asymptotic Sig.(2-sided test)

 

0.803

 

Table no. 6b Hypothesis Test Summary

S.

no.

Null Hypothesis

Test

Sig.

Decision

1

The distribution of FinLit is the same across categories of Education.

Independent-Samples Mann-Whitney U Test

0.597

Retain the null hypothesis.

Asymptotic significances are displayed. The significance level is .050.

 

 

Independent-Samples Mann-Whitney U Test Summary

Total N

317

Mann-Whitney U

12634.500

Wilcoxon W

21412.500

Test Statistic

12634.500

Standard Error

803.609

Standardized Test Statistic

0.528

Asymptotic Sig.(2-sided test)

0.597

 

 

 

 

 

 

 

CONCLUSION:

Role of financial literacy has become more significant in financial reforms around the world. It is the effect of various financial crisis, technological advancements, sophisticated financial instruments, complex budgeting choices, taxation and handling household financial crisis. According to the literature there are various determinants of financial literacy which differ in their intensity with difference in geographical location. Present study focused on the impact of age, gender, education level and occupation on the basic financial literacy among people in Delhi NCR region of India. Findings suggest that age plays an important role in determining the basic financial literacy among people while other factors studied were found to be insignificant. People belonging to age group 26-35 years showed highest level of basic financial literacy while the young adults belonging to the age group 18-25 years was found to be vulnerable. Therefore, we recommend government of Delhi, educational institution and financial institutions in Delhi NCR to give more emphasis on providing financial knowledge especially to young adults in Delhi NCR region. The minimum level of education of the selected respondents were above high school level. Although some potential determinants of financial literary such as parents’ level of education, income level, source of financial information, effect of media, etc. were left out in the study. Therefore, the study is not exhaustive in nature and hence further study can be done taking more factors into consideration.

 

REFERENCES:

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2.        Agarwalla, S. K., S. Barua, J. Jacob, and J. R. Varma, (2012), A Survey of Financial Literacy among Students, Young Employees and the Retired in India, Indian Institute of Management Ahmedabad http://www.iimahd.ernet.in/fls/youngemployessandretired2012.pdf

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Received on 18.07.2020            Modified on 05.08.2020

Accepted on 17.08.2020           ©AandV Publications All right reserved

Asian Journal of Management. 2020;11(4):507-516.

DOI: 10.5958/2321-5763.2020.00075.X