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Financial literacy and financial planning: Evidence from India

Author

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  • Agarwal, Sumit
  • Amromin, Gene
  • Ben-David, Itzhak
  • Chomsisengphet, Souphala
  • Evanoff, Douglas D.

Abstract

In this study we report findings about financial literacy and financial planning behavior based on a financial advisory program in India. We evaluate survey responses to three standard questions previously used to measure financial literacy. We then break down the data across particular demographic and socioeconomic groups and compare responses. Finally, we examine the investment behavior, liability choice, risk tolerance and insurance usage of program participants. We find that the vast majority of respondents appear to be financially literate based on their answers to questions concerning interest rates (numeracy), inflation, and risk/diversification. However, we do find variation across demographic and socioeconomic groups. We are also able to obtain additional information about the financial tendencies of the program participants (including risk tolerance, investment preferences, investment goals, etc.) and to relate those tendencies to financial literacy.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:jhouse:v:27:y:2015:i:c:p:4-21
    DOI: 10.1016/j.jhe.2015.02.003
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    More about this item

    Keywords

    Financial literacy; Financial education; Household finance; Consumer behavior;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • L8 - Industrial Organization - - Industry Studies: Services
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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