Relevance of Financial Literacy in Financial Sector Development and Stability in Nigeria

This study was aimed at assessing the relevance of financial literacy in financial sector development and stability in Nigeria. The study theoretically evaluated the relevance of financial literacy in stability and development of financial sector in Nigeria with more reference to the deposit money banks. Financial literacy is a set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. From the literature, it was observed that financial literacy promotes financial system stability by increasing market demand, equitable use of financial services, improves savings culture and financial discipline, and stimulates economic activity. Financial literacy is essential for a viable financial system which in turn positively affects the economy as a whole. Lack of financial knowledge is the main driver that pulls people away from financial markets. The study therefore recommend that professional bodies like Chartered Institute of Banker of Nigeria (CIBN), Chartered Institute of Loan and Risk Management of Nigeria (CILRMN) etc should expedite more actions to incorporate financial literacy as part of professional training and organize capacity building for members and other target groups. Deposit Money Banks (DMBs) in collaborate with the CBN and other stakeholders in the implementation of financial literacy initiatives should continuously carry out in-house training programmes and capacity building for staff who will subsequently educate the customers on products/services being offered especially the terms and conditions, fees, charges and risks associated with such products.