Financial literacy among the educated youth in kerala measurement and evaluation

Abstract

Financial literacy is the ability of individuals to effectively manage their personal finance, newlinewhich is recognised as an important life skill helping to secure one s financial wellbeing. newlineFinancial literacy is also acknowledged as a key element in contributing to the inclusive newlinegrowth and economic stability of nations. As a result, the subject of financial literacy has newlinedrawn heightened policy and research attention in recent times. However, little is known newlineabout the state of financial literacy in India, especially in Kerala, the most literate state in newlineIndia. In this background, the present research measures and analyses the levels of financial newlineliteracy and its correlates among the educated youth in Kerala. newlineThe research uses primary data collected from the young adults and college newlinestudents in Kerala in two distinct surveys conducted during 2015 and 2017 respectively, newlineutilising the tailor-made questionnaires. The samples comprise of 795 young adults (aged newline18-34) and 2,490 college students from across the state. The data are analysed using newlineappropriate descriptive statistics and multivariate statistical techniques such as analysis of newlinevariance, correlation, chi-square test, logistic regression, cluster analysis and structural newlineequation modelling. newlineThe study firstly assesses the levels of financial literacy among young adults in newlineKerala. It also evaluates the impact of demographic and socio-economic attributes and newlinebuilds a predictive model for financial literacy. A 37-item questionnaire was developed and newlinevalidated through an item and test analysis. A total of 795 respondents from 9 districts newlineparticipated in the survey. The findings reveal the low levels of financial literacy among newlinethe young adults, with an average respondent answering only 44 per cent of the financial newlineliteracy questions correctly. The statistical analyses show the varying degrees of newlinesignificance for variables such as gender, age, religion, discipline of study, occupation and newlinepersonal income.