Awareness of Financial Literacy on Banking services in Sivaganga District

 

Dr. E Saranya Devi¹, Dr. G Parimala Rani², Dr. K Ramu³

¹Teaching Assistant, Department of Banking Management, Alagappa University-Karaikudi.

²Professor, Department of Banking Management, Alagappa University- Karaikudi.

³Assistant Professor, Department of Commerce, Peri College of Arts and Science-Chennai.

 

ABSTRACT:

Financial Literacy enhances the ability to effectively monitoring of financial resources for developing the economic security of a person. Financial stability of economy is based on these terms and currently it is necessary for developing and developed country. Presently most of the countries are adopting various programmes for financial education. India is having large population, growing economy with national focus on inclusive growth and an urgent requirement to develop a vibrant and stable financial system. Financial literacy is the cognitive understanding of financial components and skills such as budgeting, investing, borrowing, taxation, and personal financial management. Achieving financial literacy is crucial in today’s society due to everyday facets of life, such as availing loans, mortgages, credit cards, investments, and health insurance. The study focuses on the financial literacy based on the banking services and insurances towards people residing in Sivaganga districts in Tamil Nadu.

 

 

INTRODUCTION:

Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. Being financially literate gives you the groundwork for a relationship with money that is a lifetime learning process (M A Hilgert, J M Hogarth, S G Beverly 2003). A person's long-term financial success can be severely harmed by a lack of financial literacy, given the significance of money in today's world. A lack of long-term planning or making poor spending decisions can result in unmanageable debt loads, which is just one of the many risks associated with being financially illiterate (M E A Guidolin, La Jeunesse 2007).

 

This can then result in bad credit, bankruptcy, home foreclosure, and other unfavorable outcomes (Lyons et al., 2007).

 

Both long-term and short-term financial strategies are covered by financial literacy, and the one they choose will rely on a number of variables, including the age, time horizon, along with risk tolerance (Mandell 2008). Understanding how one's current investment decisions will affect one's future tax obligations is a key component of financial literacy. It is essential for managing various aspects of finances, ranging from everyday expenditures to long-term budget forecasting (Laure 2013) It's critical to budget and save enough money to support a comfortable retirement while avoiding excessive debt that could lead to defaults, bankruptcy, and foreclosures.

 

Basic Elements Of Financial Literacy:

Financial literacy is comprised of a few financial components as well as abilities that enable a person to gain knowledge about effective money and debt management(World bank group 2018). The core elements of knowledge about finances that have to be learned are listed below in the figure 1.

 

Figure 1: Basic Elements of Financial Literacy

 

Source: Secondary Dataa:

1.     Budgeting:

In estimating, there are four basic uses for money that form a financial plan: spending, saving, creating investments, and donating away(Tim 2017). Maintaining the correct balance among the basic uses of money enables people to better utilise their earnings, contributing to financial stability and success(Amira et al., 2018). In general, a financial plan should be constructed in such a way that it pays off all current obligations while still allowing for savings and advantageous investments.

 

2.     Investing:

To become financially educated, one must first understand about fundamental components of investment. Interest rates, diversifications, price levels, risk reduction, and indices are some of the components that should be studied to ensure profitable investments(Ajide 2021). Learning about important investing components enables people to make better financial decisions, which could result in a bump in income.

 

3.     Borrowing:

Almost every person is obliged to use borrowed money at some point in their lives. Understanding interest rates, time value of money, compound interest, payment intervals, and loan structure is critical for efficient borrowing (Anarfo 2020). If the preceding criteria are properly grasped, an individual's financial literacy will improve, providing practical borrowing recommendations and reducing long-term financial stress (Boone 2008).

 

4.     Taxation:

Understanding the various types of taxation and the way they affect an individual's net income is critical for achieving financial literacy. Each source of income is taxed differently, whether it be job, investment, leasing rental, inheritance, or unexpected situation arise for spending money(Chinoda 2019). Understanding the various income tax rates promotes economic stability and improves financial success through income management.

 

5.     Personal Finance Management:

The most significant criterion, personal financial management, combines all of the preceding components. Financial security is achieved by balancing the above-mentioned financial components in order to strengthen and expand the savings and investments while decreasing borrowing and debt. A thorough understanding of the financial components outlined above ensures an increase in an individual's financial literacy.

 

OBJECTIVE OF THE STUDY:

1.     To study the socio-economic status of the people in Sivagangai district.

2.     To analyse the awareness of the account holding details of the district people.

3.     To find out the knowledge level about the digital banking among the respondents.

 

RESEARCH METHODOLOGY:

The study was blend of both primary and secondary source of data. The descriptive approach was used in the study's design. A series of questionnaires were used in the collection of the primary data. On the other hand, the secondary data was gathered from already published works of related literature, journals, articles, the internet, and other sources. The primary data questionnaires—will offer insightful information pertinent to this investigation. Not all of the respondents could be included in the study because it covers such a large area. Therefore, selecting a sample from the population is important. A total of 207 questionnaires were distributed to villagers.

 

Demographic Profile of the Respondents:

Socioeconomic information that has been statistically expressed, such as employment, education, income, percentages of marriages, gender, age, and more, is referred to as demographic data. The goal of this study was to learn about the demographics and identify more about the characteristics and intentions of a population regarding the awareness of both insurance and banking in the district.

 

Table 1: Distribution of Demographic Profile of the Respondents

S. No	Particulars	Options	No. of the Respondents	In (%)
1	Gender	Male	110	53
		Female	97	47
		Total	207	100
2	Age	19-29	45	22
		30-39	56	27
		40-49	45	22
		50-59	43	21
		Above 59	18	9
		Total	207	100
3	Income of the Respondents	Upto 5,000 INR	19	9
		5,000INR-10,000 INR	34	16
		10,000 INR-15,000 INR	40	19
		15,000 INR- 20,000 INR	72	35
		25,000 INR-25,000 INR	42	20
		Total	207	100
4	Occupation	Agriculture	53	26
		Government sector	32	15
		Self-Employer	59	29
		Employed	63	30
		Total	207	100

Source: Primary data deprived from SPSS 23.0

 

Table 1 shows that 53 percent of the respondents are male and 47 percent are female respondents. It is observed from the table that majority (53%) are male category. The majority of the respondents (27%) are between the age limit of 30-39.

 

For accessing the income level that the majority of the respondents are getting with 35 percent to receive the monthly income level of Rs 15,000-20,000. 20 percent of the respondents belong to the income level of Rs 25000-50000. 19 percent of the respondents receive the income range of Rs 10,000-15,000. 16 percent of them belong to the income range of upto Rs.5000 –Rs.10,000 and 9 percent of them belong to the income range of upto Rs. 5,000.

 

Table 1 shows that majority of the respondents (53%) are doing the agriculture and allied activities. They are having the own yield land and cultivating paddy, groundnuts, cereals, grains, vegetables and transporting to the local markets. Most of the respondents are doing the own business like petty shop, fancy stores and so on. Hence the self-employed of the respondents level is 29 percent., Government sector (15%), and rest of the respondents are employed in private sector some belong to are salaried class and wage earners.

 

AWARENESS OF FINANCIAL LITERACY AND THE PROSPECTS OF THE RESPONDENTS:

To manage all facets of finances, from daily spending to long-term budget forecasting, financial literacy is crucial. Budgeting and saving enough money are essential to maintaining a comfortable retirement whereas avoiding excessive financial obligations that may result in defaults, bankruptcies, and foreclosures. A questionnaire titled "To budget is an arrangement for the money you have, a financial plan ought to encompass both the revenue and expenditures, a budget in deficit is better compared with a surplus, and the rate of interest that the lender charges it when you borrow revenue is higher compared to the interest pace that they pay you on details savings," was posted by the researchers in an effort to gauge the respondents' level of financial literacy awareness. Buying something on impulse is when you spend money you didn't have planned to spend. It will cost you more money to buy things with a bank loan than it will if you use savings.

 

These factors continue to influence the towards the financial literacy. To estimate the effects of more than one independent variable, the null hypothesis shows that there is no significant difference between the prospects of the respondents and awareness of financial literacy.

 

The main purpose of two-way MANOVA is to understand if there is an interaction between more independent variables and the multiple dependent variables.

Table 3: Multivariate Tests^a

Effect		Value	F	Hypothesis df	Error df	Sig.
Intercept	Pillai's Trace	.721	296.643b	9.000	232.000	.000
	Wilks' Lambda	.039	296.643b	9.000	232.000	.000
	Hotelling's Trace	10.710	296.643b	9.000	232.000	.000
	Roy's Largest Root	09.080	296.643b	9.000	232.000	.000
Education	Pillai's Trace	.428	2.720	36.000	1743.000	.000
	Wilks' Lambda	.796	2.891	36.000	549.573	.000
	Hotelling's Trace	.321	3.063	36.000	1062.000	.000
	Roy's Largest Root	.251	9.636c	9.000	234.000	.000
Income	Pillai's Trace	.103	1.141	36.000	1370.000	.247
	Wilks' Lambda	.347	1.149	36.000	724.573	.239
	Hotelling's Trace	.104	1.156	36.000	1052.000	.214
	Roy's Largest Root	.007	2.902c	9.000	223.000	.000
Investment	Pillai's Trace	.154	1.800	27.000	637.000	.008
	Wilks' Lambda	.647	1.850	27.000	742.817	.005
	Hotelling's Trace	.104	1.900	27.000	761.000	.004
	Roy's Largest Root	.171	4.768c	9.000	253.000	.000
Are you Insured	Pillai's Trace	.612	1.585	135.000	2430.000	.000
	Wilks' Lambda	.208	1.746	135.000	2053.664	.000
	Hotelling's Trace	1.074	1.935	135.000	2342.000	.000
	Roy's Largest Root	.417	11.489c	15.000	270.000	.000
Education * Income	Pillai's Trace	.434	1.671	108.000	2430.000	.000
	Wilks' Lambda	.395	1.889	108.000	1919.910	.000
	Hotelling's Trace	.725	2.147	108.000	2342.000	.000
	Roy's Largest Root	.347	11.645c	12.000	270.000	.000
Investment * Education	Pillai's Trace	.271	1.084	108.000	2430.000	.007
	Wilks' Lambda	.439	1.103	108.000	1919.910	.095
	Hotelling's Trace	.518	1.278	108.000	2342.000	.000
	Roy's Largest Root	.264	8.435c	12.000	270.000	.000
Income * Investment * Education Are you Insured	Pillai's Trace	1.476	1.536	276.000	2430.000	.004
	Wilks' Lambda	.208	1.024	276.000	2306.419	.000
	Hotelling's Trace	1.726	1.377	276.000	2342.000	.000
	Roy's Largest Root	1.037	6.084c	34.000	270.000	.000

 

From the table 3, it can be seen that the significant values are less than 0.05 for the are you insured and the education. This indicates that there is a significant difference between the people are involve to investment their valuable money in the post office or made in other investments. There is a significant difference between the investment and education. There is a significant difference between the education and income level of the respondents and investment made by the respondents. Hence the Wilks’ Lambda F value is closer to 0 to 1 range, which means that the two groups have higher discriminant ability and the p-value is less than 0.05, therefore null hypotheses is rejected. Thus, there is a significant difference between the awareness about the financial literacy and the prospects of the respondents.

 

CONCLUSION:

Financial literacy constitutes one of the most critical things a person can do to secure long-term financial security. It is the capacity to handle money sensibly and effectively. These include making a budget, figuring out how much savings are required, choosing favorable loan terms, understanding the impact on credit, and knowing the differences between retirement vehicles. These skills help people make better decisions and manage their personal finances more responsibly. Being financially educated is a skill that provides a variety of benefits which can raise an individual's level of living by increasing financial security. ability to make healthier financial decisions, Effective money and debt management, Better positioned to achieve financial objectives, Expense reduction through improved regulation, Less financial tension and anxiety Increased ethical decision-making while choosing insurance, loans, investments, and using a credit card Effective budget creation, Taking measures to become financially literate is a vital aspect of life that may provide financial stability, stress and worry, and promote the attainment of financial objectives.

 

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