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Analyzing Factors Affecting Financial Literacy and its Impact on Investment Behavior among Adults in India

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  • Gangwar, Rachna
  • Singh, Ritvik

Abstract

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.

Suggested Citation

  • Gangwar, Rachna & Singh, Ritvik, 2018. "Analyzing Factors Affecting Financial Literacy and its Impact on Investment Behavior among Adults in India," MPRA Paper 89452, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:89452
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    More about this item

    Keywords

    Financial Literacy; Investment Behavior; Household Finance; Socioeconomic Characteristics;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D19 - Microeconomics - - Household Behavior - - - Other
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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