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Overconfidence in Financial Literacy and Its Determinants: The Indian Scene

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  • Sumit Kumar Maji

Abstract

Empirical evidence suggests that the financial decision-making process of individuals is influenced not only by objective financial literacy (OFL), but subjective financial literacy (SFL) also plays a pivotal role in such a complex process. Often it is observed that there exists a notable difference between OFL and SFL of any individual. Such a difference between actual and perceived financial literacy (FL) gives rise to either financial overconfidence or financial underconfidence. Employing the secondary data from the Financial Inclusion Insight, 2017 database, the article seeks to unfold the existence of financial overconfidence amongst the people of India and its determinants. Approximately 62% and 30.4% of the sample respondents were found to be financially overconfident and underconfident, respectively. The result of the study also indicated that the sample respondents overestimated their FL confidence by nearly 17.41%. Gender, age, education, occupation, location of residence and smartphone availability significantly determined the FL overconfidence amongst the sample respondents.

Suggested Citation

  • Sumit Kumar Maji, 2026. "Overconfidence in Financial Literacy and Its Determinants: The Indian Scene," IIM Kozhikode Society & Management Review, , vol. 15(2), pages 160-174, July.
    • Handle: RePEc:sae:iimkoz:v:15:y:2026:i:2:p:160-174
    DOI: 10.1177/22779752251323718
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