Journal of Advanced Computing and Communication Technologies (ISSN
Journal of Advanced Computing and Communication Technologies (ISSN
Journal of Advanced Computing and Communication Technologies (ISSN
know don't need ii) be satisfied with their level of to females. They also found that education level as well
savings iii) dissatisfied with their current financial as course taken in business has an influence on general
situation whereas men are far more likely than women and financial product awareness.
to i) feel that their financial situation is better than
that of others at the same socio-economic level ii) to Agarwal et al. (2010) surveyed select group of Indians in
be satisfied with their ability to handle financial Hyderabad. The findings of this study were that the
emergencies and to be satisfied with their ability to participants are generally financially literate based on
meet long term goals. Thus overall results suggest that their responses to the survey questions. The results also
men are much more satisfied than women as far as their suggest that probability of getting all survey questions
finances are concerned. correct was higher for male respondents and it increases
with education level and the aggressiveness of the
Henry et at (2001) surveyed 126 undergraduate education investors.
majors at the University of Louisiana at Lafayette using a PiIlai et al. (2010) explored the magnitude of financial
13-item questionnaire on income, debt, and budgeting literacy among youth focusing on expenditure and
practices. They found that majority of the students were savings trend. This study attempted to uncover financial
unaware about the basic concepts of financial planning. preparedness of graduate students who are prospective
They also found that majority of the students did not have and entrants into job, market and young working adults
or use a written budget, of those who use a written within the age group of 20-30 years of age. This study used
budget, women, married students, and older students a comprehensive questionnaire designed to cover major
were most likely to follow their budgets. aspects of personal financial prudence. The questions were
divided into four categories namely financial literacy,
Palmer et al. (2001) measured financial knowledge of savings and spending habits, credit card usage and
1500 high school seniors and found that students answered borrowing and financial planning. The questions
correctly only 57.3% of 31 items measuring financial comprised of MCQs, attitudinal rating questions and
knowledge such as money management, income, credit, semi-closed ended questions. From this study it was
and savings and spending. Also 10.2% of the students found that it is not the question of financial literacy that
got a C or better grade suggesting a low degree of matters, but rather the practical application of such
financial literacy among the youth. knowledge to real life situations.
Hogarth and Hilgert (2002) explored the financial Almenberg and Soderbergh (2011) examined the
literacy of adults in the U.S using 28 true/false type relationship between financial literacy and retirement
questions on topics related to personal finance. The study planning of Swedish adults. They found significant
showed that in general, less financially knowledgeable differences in financial literacy between planners and
respondents were more likely to be single, relatively non-planners. Financial literacy levels were found lower
uneducated relatively low income, minority, and either among older people, women and those with low education
young or old (nor middle aged). or earnings.
own way even in the presence of smaller, more irregular, and groups. For example, women, the poor, and lower
and often more unreliable incomes. educated respondents are more likely to suffer from gaps
in financial knowledge. This is true not only in
Kumari and Viz (2013) conducted a study to understand developing economies but also in countries with well-
the meaning of financial literacy and findings indicate developed financial markets. Country-level financial
that Reserve Bank of India , Securities Exchange literacy ranges from 71 percent to 13 percent. Many
Securities exchange board of India (SEBI) and Insurance users of financial products lack financial skills.
Regulatory and Development Authority (IRDA) are
working actively towards promoting financial literacy. Bhabha et al (2014) assessed the financial literacy and its
impact on saving-investment behaviour of working
Bhushan Puneet (2014) measured financial literacy by women in Pakistan and revealed that people are
combining its three probable dimensions i.e. financial financially illiterate; only one third people possess
knowledge, financial attitude and financial behaviour. knowledge about financial services and products. It is
The study provides evidence of low awareness of concluded that working-women in Pakistan are
respondents towards new financial products. It also financially illiterate; female workers in Pakistan only
contributed to the scant literature available on tax know that they are depositing money in various
literacy. Tax literacy of salaried individuals has been institutions in order to get more wealth in name of profit
assesed by using it all probable dimensions i.e tax but they don’t know what exactly they are doing and they
knowlede, tax attitude and tax behaviour. are ignorant about the functions and existence of
financial markets.
Mathivathani and Velumani (2014) conducted a study
which measured the level of financial literacy by Bahadur Lavanya Rekha (2015) conducted a study of
examining the factors influencing it and barriers to 202 individuals varies in nature of occupation residing in
acquire financial knowledge for women in Tamil Nadu. Mumbai city and provides evidence that the levels of
They founded that Financial literacy of marginalized financial literacy in the area were very low. It concluded
rural women is very low. Further, they suggested that the that financial literacy and financial education should be
participation of the women in economy contributes to on the agendas of educators, businesses, government
their own wellbeing as well as nation’s economic growth. agencies, policy makers, NGOs and the issues should be
dealt with policy reforms at the national level.
Singh (2014) conducted an exploratory study and used
secondary data to analyze financial literacy as a tool 2. IMPORTANCE OF THE STUDY
which enhances the ability to effectively monitoring of
financial resources for developing the economic security In the recent years financial literacy has become a much
of a person. Financial stability of economy is based on talked about phenomena. It is attracting the attention of
these terms and currently it is necessary for developing not only central and state government, central bank and
and developed country. Currently most of countries are commercial banks but also the common man trying to
adopting various programmes for financial education. meet his financial needs on a daily basis and planning for
India is having large population, growing economy with a safe future. A number of countries have now carried
national focus on inclusive growth and an urgent out financial literacy surveys of their adult populations,
requirement to develop a vibrant and stable financial which provide insights into savings –related knowledge,
system. RBI has developed various strategies and attitudes and behaviour.
adopted programmes to develop a smooth process of
financial literacy. He focussed on some important aspects According to numerous studies conducted to measure the
which are necessary for financial literacy to effective financial literacy, it is found that the financial literacy
financial and economic stability. He also discussed about level of the country is less than acceptable level. India
the role of RBI for improving financial knowledge of stands in the 23rd position out of 27 countries in the
individuals. recent survey conducted by Visa. Government and other
agencies have taken various steps to improve this which
Leora et al. (2014) investigated financial literacy based includes addition of Financial literacy concepts in school
on questions added to the Gallup World Poll survey. curriculum, establishment of Financial literacy centres,
More than 150,000 nationally representative and conduction of workshops and seminars on various related
randomly selected adults in more than 140 economies aspects of investments decisions.
were interviewed during the 2014. The surveys were
conducted face-to-face in economies where less than 80 The topic of financial literacy is relatively new, and not
percent of the population has access to a telephone. The much of research is available particularly with respect to
target population consists of the entire population aged India. In India, some researchers have conducted surveys
15 and above. Financial literacy was measured using to measure financial literacy rate of different regions and
questions assessing basic knowledge of four fundamental mention few demographic factors which effect financial
concepts in financial decision-making: knowledge of literacy, but the current study exceptionally focussed on
interest rates, interest compounding, inflation, and risk summarizing all the demographic and socio economic
diversification. The S&P Global FinLit Survey findings variable factors which influence financial education level
are sobering. Worldwide, only 1-in-3 adults are of Indian investors mainly and how this is reflected upon
financially literate. Not only is financial illiteracy their investment decisions. The current study has taken
widespread, but there are big variations among countries
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Journal of Advanced Computing and Communication Technologies (ISSN: 2347 - 2804)
Volume No.5 Issue No.3, June 2017
consideration previous research and literature as back investment decisions. It was also observed that investors
ground. of two extremes of age i.e. 18 to 35 years and 56 years
and above possess a lower level financial literacy.
3. RESULTS (Jariwala Harsha Vijaykumar (2013). It is also observed
that young people are attracted more towards risky
Demographic and Socio-Economic Factors influencing investment alternatives and want to invest but they are
Financial Literacy indecisive due to lack of resources and awareness (Bashir
et al 2013). A study reveals that young investors in the
Gender : Many studies on Financial Literacy provides age category of 25-35 years are more interested in
indication that gender importantly effects investment investing in financial market products, than the adult
decisions. The outcomes of mainly of the studies show investors in age grouping of 40 years and above (Bindu
that males are more financially literate as compared with P.K. 2013). Despite having sensible attitude towards
females(Agarwal et al 2010; Jariwala Harsha Vijaykumar managing their funds, youngster tend to behave in a
2013). Studies conducted in different colleges also proximate manner which therefore gives rise to the
revealed that male students are more knowledgeable on observed negative association between attitude and
financial matters(Dilip et al 2015;Agarwal & Gupta behaviour (Agarwalla et al 2013).
2014). it is also observed that male investors are more
risk seekers in comparison with female investors Region: The elaborate data analysis of research studies
(Girdhari and Satya 2011).Further it can be noticed that also reveals the fact that the urban households inhabited
the participation of females in financial matters in the city, prefer to save or invest their money for
importantly contributes to nation's economy( meeting more of social obligation like: wards marriage,
Mathivathani and Velumani 2014). self‟s marriage, or for repaying debts etc.. Thus it can be
stated that urban people have more financial literacy
Income-Level : The previous literature provides levels in comparison with rural people (Bindu P.K.
evidence that Income level of the individual positively 2013).
correlated with financial literacy and shows an impact on
his investments decisions. It can be observed that high Marital status: The marital status of an investor have an
income individuals are more aware about the different influence on his investments decisions (Jain and Mandot
financial products and scores high in financial literacy 2012). Young married couples are found to more
level (Chaturvedi & khare 2012) The financial literacy of financially literate and knowledgeable in comparison to
marginalised people is very low and theirway to park unmarried single household individuals (Bindu P.K.
their small saving are very informal (Joseph Job 2012). 2013). Cole et al (2008) provides evidence that in India,
Higher income group individuals show relatively high people who are living in rural areas have lowest level of
inclination towards investment in share market (Das financial literacy.
2011).
Family size:. Different studies have conducted to survey
Educational Qualification: Education is also one of the impact of family size and concluded that the factor have
important demographic factor which influences considerable influence on investment decisions of
investments decisions of the investors. Different investors. The family whose size is large are more
researches indicate that education qualification is knowledgeable in financial matters i.e. their financial
positively correlated with financial awareness. Highly literacy is high. Joint-family and consultative decision
qualified investors are more financially knowledgeable. making process are found relatively better.(Agarwalla et
It was surveyed that higher the education qualification, al 2013; Jain and Mandot 2012)
higher the level of comprehension of complexities
involved in investment decisions. Graduates and above in 4. CONCLUSION
qualification preferred to invest in share-market (Verma
2008). Income level affects the awareness level of As India is a developing country, financial sectors
investors towards financial matters (Chaturvedi & Khare reforms are in second phase, new investment avenues are
2012) evolving rapidly. The diverse characteristics of different
investment avenue demand high levels of financial
Nature of Occupation: Different studies give literacy. But the results of past studies expose that the
impressions that work activity also have an influence on financial literacy levels of Indian investors are very low
investment decisions of an individual. White collar which is influenced by variety of demographic and socio-
employees and self employed individuals have better economic factors i.e. gender, age, educational
financial literacy levels in comparison with lower level qualification, marital status, region, occupation, and
employees (Bindu P.K. 2013). The occupation of the family size. Many households are unfamiliar with even
investors have an important role in increasing financial the most basic economic concepts needed to make saving
knowledge of investors (Chaturvedi & Khare 2012; and investment decisions. Female investors, rural people,
Girdhari & Satya) youngsters require special consideration in this matter.
There is an imperative need to frame strategies for
Age: Most of the researchers found age as a significant improvement in financial literacy levels of investors so
demographic factor which affects financial literacy level. that the financial wellbeing of individuals as well as of
Different age-groups have different behaviour towards the economy can be achieved.
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Journal of Advanced Computing and Communication Technologies (ISSN: 2347 - 2804)
Volume No.5 Issue No.3, June 2017
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