IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2021-05-12.html
   My bibliography  Save this article

Impact of Financial Literacy on Household Decision-Making: A Study in the State of West Bengal in India

Author

Listed:
  • Shubhra Biswas

    (Finance Officer, West Bengal State University, Barasat, West Bengal, India)

  • Arindam Gupta

    (Professor of Commerce, Vidyasagar University, Midnapore, West Bengal, India.)

Abstract

The study assesses the status of financial literacy in West Bengal and finds its impact on household decision-making of 600 respondents from eight selected districts of the state. Financial literacy of female and rural respondents is found to be lower. Higher income and education remain the other significant determinants of financial literacy. Financial literacy is found to significantly affect saving decision, investment decision, borrowing propensity and borrowing quality, the first three being positively and fourth being negatively influenced by financial literacy. However, on retirement planning no significant impact is observed.

Suggested Citation

  • Shubhra Biswas & Arindam Gupta, 2021. "Impact of Financial Literacy on Household Decision-Making: A Study in the State of West Bengal in India," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 104-113.
    • Handle: RePEc:eco:journ1:2021-05-12
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijefi/article/download/11759/pdf
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijefi/article/view/11759/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bucher-Koenen, Tabea & Lusardi, Annamaria, 2011. "Financial literacy and retirement planning in Germany," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 565-584, October.
    2. Sekita, Shizuka, 2011. "Financial literacy and retirement planning in Japan," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 637-656, October.
    3. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy and retirement planning in the United States," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 509-525, October.
    4. Margarida Abreu & Victor Mendes, 2010. "Financial literacy and portfolio diversification," Quantitative Finance, Taylor & Francis Journals, vol. 10(5), pages 515-528.
    5. Boisclair, David & Lusardi, Annamaria & Michaud, Pierre-Carl, 2017. "Financial literacy and retirement planning in Canada," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(3), pages 277-296, July.
    6. Jere R. Behrman & Olivia S. Mitchell & Cindy K. Soo & David Bravo, 2012. "How Financial Literacy Affects Household Wealth Accumulation," American Economic Review, American Economic Association, vol. 102(3), pages 300-304, May.
    7. Sumit Agarwal & Bhashkar Mazumder, 2013. "Cognitive Abilities and Household Financial Decision Making," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 193-207, January.
    8. Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, May.
    9. Arrondel, L. & Debbich, M. & Savignac, F., 2013. "Financial Literacy and Financial Planning in France," Working papers 465, Banque de France.
    10. Hans-Martin Von Gaudecker, 2015. "How Does Household Portfolio Diversification Vary with Financial Literacy and Financial Advice?," Journal of Finance, American Finance Association, vol. 70(2), pages 489-507, April.
    11. Johan Almenberg & Jenny Säve-Söderbergh, 2011. "Financial Literacy and Retirement Planning in Sweden," CeRP Working Papers 112, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    12. Almenberg, Johan & Säve-Söderbergh, Jenny, 2011. "Financial literacy and retirement planning in Sweden," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 585-598, October.
    13. Klapper, Leora & Panos, Georgios A., 2011. "Financial literacy and retirement planning: the Russian case," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 599-618, October.
    14. Shizuka Sekita, 2011. "Financial Literacy and Retirement Planning in Japan," CeRP Working Papers 108, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    15. repec:ecj:econjl:v:122:y:2012:i::p:449-478 is not listed on IDEAS
    16. Leora Klapper & Georgios A. Panos, 2011. "Financial Literacy and Retirement Planning in View of a Growing Youth Demographic: The Russian Case," CeRP Working Papers 114, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    17. Sondra G. Beverly & Marianne A. Hilgert & Jeanne M. Hogarth, 2003. "Household financial management: the connection between knowledge and behavior," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 309-322.
    18. Chen, Haiyang & Volpe, Ronald P., 1998. "An Analysis of Personal Financial Literacy Among College Students," Financial Services Review, Elsevier, vol. 7(2), pages 107-128.
    19. Fornero, Elsa & Monticone, Chiara, 2011. "Financial literacy and pension plan participation in Italy," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 547-564, October.
    20. Annamaria Lusardi, 2014. "Retirement planning and financial literacy," Chapters, in: International Handbook on Ageing and Public Policy, chapter 37, pages 474-490, Edward Elgar Publishing.
    21. Nolan, Anne & Doorley, Karina, 2019. "Financial Literacy and Preparation for Retirement," IZA Discussion Papers 12187, Institute of Labor Economics (IZA).
    22. Bernheim, B. Douglas & Garrett, Daniel M., 2003. "The effects of financial education in the workplace: evidence from a survey of households," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1487-1519, August.
    23. Emanuele Bajo & Massimiliano Barbi & Sandro Sandri, 2015. "Financial Literacy, Households' Investment Behavior, and Risk Propensity," Journal of Financial Management, Markets and Institutions, Società editrice il Mulino, issue 1, pages 157-174, June.
    24. Hussein A. Hassan Al-Tamimi & Al Anood Bin Kalli, 2009. "Financial literacy and investment decisions of UAE investors," Journal of Risk Finance, Emerald Group Publishing, vol. 10(5), pages 500-516, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rani, Mamta & Siwach, Manoj, 2023. "Financial Literacy In India: A Review Of Literature," Economic and Regional Studies (Studia Ekonomiczne i Regionalne), John Paul II University of Applied Sciences in Biala Podlaska, vol. 11(2), September.
    2. Rani Mamta & Siwach Manoj, 2023. "Financial Literacy in India: A Review of Literature," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 16(3), pages 446-458, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Azra Zaimovic & Anes Torlakovic & Almira Arnaut-Berilo & Tarik Zaimovic & Lejla Dedovic & Minela Nuhic Meskovic, 2023. "Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends," Sustainability, MDPI, vol. 15(12), pages 1-30, June.
    2. Oscar A. Stolper & Andreas Walter, 2017. "Financial literacy, financial advice, and financial behavior," Journal of Business Economics, Springer, vol. 87(5), pages 581-643, July.
    3. Tabea Bucher-Koenen & Annamaria Lusardi & Rob Alessie & Maarten van Rooij, 2017. "How Financially Literate Are Women? An Overview and New Insights," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 255-283, July.
    4. Zuzana Brokesova & Andrej Cupak & Gueorgui Kolev, 2017. "Financial literacy and voluntary savings for retirement in Slovakia," Working and Discussion Papers WP 10/2017, Research Department, National Bank of Slovakia.
    5. Luc Arrondel, 2020. "Financial literacy and French behaviour on the stock market," Working Papers halshs-02505320, HAL.
    6. Li, Xiao, 2020. "When financial literacy meets textual analysis: A conceptual review," Journal of Behavioral and Experimental Finance, Elsevier, vol. 28(C).
    7. Elisabeth Beckmann & Sarah Reiter, 2020. "How financially literate is CESEE? Insights from the OeNB Euro Survey," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/20, pages 36-59.
    8. Agarwal, Sumit & Amromin, Gene & Ben-David, Itzhak & Chomsisengphet, Souphala & Evanoff, Douglas D., 2015. "Financial literacy and financial planning: Evidence from India," Journal of Housing Economics, Elsevier, vol. 27(C), pages 4-21.
    9. Łukasz Kurowski, 2021. "Household’s Overindebtedness during the COVID-19 Crisis: The Role of Debt and Financial Literacy," Risks, MDPI, vol. 9(4), pages 1-19, March.
    10. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    11. Shen, Chung-Hua & Lin, Shih-Jie & Tang, De-Piao & Hsiao, Yu-Jen, 2016. "The relationship between financial disputes and financial literacy," Pacific-Basin Finance Journal, Elsevier, vol. 36(C), pages 46-65.
    12. Annamaria Lusardi, 2019. "Financial literacy and the need for financial education: evidence and implications," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 155(1), pages 1-8, December.
    13. Lin, Chaonan & Hsiao, Yu-Jen & Yeh, Cheng-Yung, 2017. "Financial literacy, financial advisors, and information sources on demand for life insurance," Pacific-Basin Finance Journal, Elsevier, vol. 43(C), pages 218-237.
    14. Niu, Geng & Zhou, Yang & Gan, Hongwu, 2020. "Financial literacy and retirement preparation in China," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    15. Luc Arrondel, 2018. "Financial Literacy and Asset Behaviour: Poor Education and Zero for Conduct?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 144-160, March.
    16. Shunsuke Ono & Pattaphol Yuktadatta & Takafumi Taniguchi & Tomoe Iitsuka & Masafumi Noguchi & Sawa Tanaka & Haruka Ito & Kousei Nakamura & Nanako Yasuhara & Chihiro Miyawaki & Katsumi Mikura & Mostafa, 2021. "Financial Literacy and Exercise Behavior: Evidence from Japan," Sustainability, MDPI, vol. 13(8), pages 1-15, April.
    17. Barrett, Alan & Mosca, Irene & Whelan, Brendan J., 2013. "(Lack of) Pension Knowledge," IZA Discussion Papers 7596, Institute of Labor Economics (IZA).
    18. Xu, Lisa & Zia, Bilal, 2012. "Financial literacy around the world : an overview of the evidence with practical suggestions for the way forward," Policy Research Working Paper Series 6107, The World Bank.
    19. Kamer Karakurum-Ozdemir & Melike Kokkizil & Gokce Uysal, 2019. "Financial Literacy in Developing Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(1), pages 325-353, May.
    20. Yang Li & Jan E. Mutchler & Edward Alan Miller & Jing Jian Xiao & Reginald Tucker-Seeley, 2022. "Space, Context, and Human Capital: A Micro–Macro Perspective on the Social Environment and Financial Literacy in Later Life," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 41(3), pages 1385-1404, June.

    More about this item

    Keywords

    Financial literacy; Household decision making; Retirement planning; Borrowing quality;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2021-05-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.