Analyzing Factors Affecting Financial Literacy and Its Impact on Investment Behavior Among Adults in India
24 Pages Posted: 7 Nov 2018 Last revised: 28 Jan 2021
Date Written: October 4, 2018
Financial literacy is essential for making key financial decisions related to saving, borrowing, and investment. Although numerable studies have been conducted to find elements of financial literacy, most of them focus on developed countries. This study aims to determine characteristics that affect levels of financial literacy in India and the impact of financial literacy on investment behavior. Primary data from 309 respondents across India was collected for the purpose of the study and was analyzed using empirical methods such as ordinary least square (OLS) regression and t-test. It was found that financial literacy among respondents was low and significant differences existed based on sociodemographic and economic factors. Unexpectedly, financial literacy was found to have no effect on investment behavior. To the best of the authors’ knowledge, this study is among the first, if not the first, of its kind to be conducted in India. The findings have significant implications for financial education and public policy programs.
Keywords: Financial Literacy, Investment Behavior, Household Finance, Socioeconomic Characteristics
JEL Classification: D14, D19, G11
Suggested Citation: Suggested Citation