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Research Methodology in Commerce and Management 77 A Study on

Financial Literacy of Undergraduates of Jaipur City

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Research Methodology in Commerce and Management 77

12

A Study on Financial Literacy of Undergraduates of Jaipur City

Anushka Kedawat
Daksha Pathak**

Introduction
Finance represents money management and the process of acquiring needed
funds. Finance also defines the oversight, creation, and study of money, banking,
credit, investments, assets, and liabilities that make up financial systems. As of
today’s world, the significance of financial knowledge has drastically increased with
outgrowing number financial options that are available to us. And with this rapid
development in the financial markets of the world one has to keep up in order to
benefit from it. Unlike older times, today’s youth plays an active role in financial
markets. This study is to understand the amount of knowledge and role they play in
world’s finances.
Brief Introduction of Key Concepts
 Fundamental financial literacy: Knowledge and understanding of basic
financial concepts, principles and numeracy like scope of investment, risk, risk
return trade off, insurance, financial markets, banking, regulatory body as a
part of market structure, asset allocation, KYC etc.
 Personal Finance: Financial planning includes analyzing the current financial
position of individuals in order to formulate strategies for future needs within
financial constraints. It is specific to every individual's situation as well as
activity; therefore, financial strategies rely largely on one’s earnings, living
requirements, goals, and desires.
 Corporate Finance: It is that part of finance which deals with financing, capital
structuring, and investment decisions. It is mostly concerned with maximizing
shareholder value using long and short-term financial planning and the
implementation of various strategies. Corporate finance activities fall between
capital investments decisions to investment banking.
 Public Finance: It is related to the role played by the government in the
economy. It is that branch of economics which deals with the government
revenue and expenditure of the public authorities and the adjustment of one or
the other to achieve desirable effects and avoid undesirable ones.


Student, B.Com.(H) Semester IV, IIS University, Jaipur, Rajasthan, India.
** Assistant Professor, Department of Financial Studies, IIS University, Jaipur, Rajasthan, India
78 Research Methodology in Commerce and Management
 Scope of Financial Literacy: Roy Morgan Research (2003)10 described the
scope of the term ― financial literacy is not limited up to mathematical literacy
and standard literacy, but it also includes knowledge and understanding,
behavior, attitudes, perceptions and awareness towards financial world
Review of Literature
 Lusardi, Annamaria .et.al (2010)5 analyzed financial literacy among the
youthful, they demonstrated that financial literacy is low, short of what 33% of
youthful grown-ups have fundamental information of loan costs, expansion and
hazard broadening. Financial literacy was emphatically identified with socio
statistic qualities and family financial complexity
 Ramasawmy, Deerajen.et.al (2013)9 established that in general,
administration understudies at the University of Mauritius connect a sound
level of significance to financial literacy to their subject of study., it was
likewise established that age, gender, language, race and pay level don't
affect the level of financial literacy
 Taft, Marzieh Kalantarie, et.al (2013)11 established that that age and
instruction are emphatically associated with financial literacy and financial
wellbeing. Hitched individuals and men are more financially literate. Higher
financial literacy leads to more noteworthy monetary prosperity and less
financial concerns
 Fatoki (2014)3evaluated the surviving literature on financial literacy in South
Africa recommended that there is the requirement for reliable production of
research discoveries on the levels of financial literacy by the administration or
private organizations associated with estimating financial literacy in South
Africa.
 Chen and Volpe (1998)2 conducted a survey of 924 college students from
thirteen colleges. The survey attempted to examine the personal financial
literacy of the U.S. college students across four main areas: general
knowledge, savings and borrowings, insurance and investments. This study
found that personal finance skills and knowledge are inadequate; with the
overall median percentage of correct scores was 55.56 percent
 National Council on Economic Education (2007)8 The National Council on
Economic Education attempted to investigate personal financial education in
schools across all states by running a biennial survey. Results of the later
survey revealed that only 34 states had standards for personal finance and 20
of these required that these standards be implemented
 Beal and Delpachitra (2003)1 The survey was targeted a first year students
across five disciplines: Arts, Business, Education Engineering and Surveying
and Sciences. Complete primary data was collected from 789 students.
Overall, it was concluded that university students in Australia were not skilled
nor knowledgeable in financial matters
 MoneySENSE (2005)6 A national survey of 2,023 Singapore citizens and
Permanent Residents. The basic objective of the study was to measure the
A Study on Financial Literacy of Undergraduates of Jaipur City 79

current levels of financial literacy. The findings of the study showed that the
mean financial literacy score including knowledge and action for tier I was 74
and for tier II, it was 62 from a total of 2023 respondents. Mean financial
literacy score for tier III was 67 out of 662 who had invested
 Hilgert, Hogarth and Beverly (2003)4. A financial practice index was
calculated for each of the four financial management activities: cash-flow
management, credit management, saving and retirement. Compared with
those who have less financial knowledge, those with more financial knowledge
are also more likely to follow recommended financial practices and engage in
recommended financial behaviors
 Moore (2003)7 Conduct a financial literacy study to investigate financial
knowledge, behavior, attitudes and experiences. The main purpose of the
study was to provide DFI with the information needed for them to develop an
effective financial literacy program to educate, inform and assist consumers in
making financial decisions. Although the results indicated that consumers
would benefit from such a program, especially those in the victim pool, the
major challenge identified was to motivate participation
Research Methodology
Objectives
 To compare fundamental Financial Literacy among the college students of
different faculty (Finance and Non-Finance).
 To compare the fundamental Financial Literacy among the selected college
students on the basis of gender.
Hypothesis
Null Hypothesis (Ho):
 There is no significant difference of fundamental financial literacy among the
college students of different faculty (Finance and Non-Finance).
 There is no significant difference of fundamental Financial Literacy among the
selected college students on the basis of gender.
Alternate Hypothesis (H1):
 There is a significant difference of basic financial literacy among the college
students of different faculty (Finance and Non-Finance).
 There is a significant difference of fundamental Financial Literacy among the
selected college students on the basis of gender.
Research Design
It includes survey, fact findings and filling up of questionnaires. The main
purpose of descriptive research is description of state of affairs as it exists at the
present. The main characteristics of this method are that the researcher has no
control over the variables; he/she can only report what has happened or what is
happening.
Population
Population for this research is youth of Jaipur city.
80 Research Methodology in Commerce and Management
Sampling Design
This study is based on primary data
 Sample Area- Jaipur City
 Sample Size-100 students of selected colleges.
 Sample Technique- Stratified random sampling
 Tool for Data Analysis-SPSS software will be used for analysis and Microsoft
excel.
Data Interpretation and Analysis
 Descriptive Analysis
For this study the respondents are equally distributed on the basis of gender,
their stream and selected colleges. On the basis of the data collected one can
interpret that more than 50% of the respondents’ had knowledge regarding the basis
banking services, KYC, DEMAT account, Foreign exchange market and the central
bank of India whereas more than 50% of the respondents had no knowledge
regarding various financial instruments like secured, unsecured and balanced etc.
And only 15% of the students invest their money in financial instruments as a way of
saving money. When asked the majority of the students were aware about the
concepts of shares, bonds and debentures but not of Treasury bill, commercial paper,
future and option. About 45% of the respondents were aware about the concept of risk
return trade off.
 Hypothesis Testing
Tests of Normality
Gender of the Kolmogorov-Smirnova Shapiro-Wilk
respondents Statistic df Sig. Statistic df Sig.
Total Female .108 50 .200* .971 50 .246
Male .103 50 .200* .983 50 .703

From the above table we can see that the data for both male and female is
normally distributed as the significance value of Shapiro wilk test is greater than 0.05.
In both the cases and to conduct a independent sample z test one of the main
condition is that the data should be normally distributed.
Hypothesis
There is no significant difference of fundamental Financial Literacy among the
selected college students on the basis of gender.
Table 1
Male Female
68.70 67.42 mean
4.76 5.03 std. dev.
50 50 n
1.280 difference (Male - Female)
0.980 standard error of difference
A Study on Financial Literacy of Undergraduates of Jaipur City 81

0 hypothesized difference
1.31 z
.1915 p-value (two- tailed)

The calculated z value 1.31 is lying between the table value at 0.05 level of
significance [ Critical value Z ( two tailed) at 0.05 level of significance is -1.96 to +
1.96] therefore Null hypothesis is accepted
P-value i.e .1915 is more than 0.05 level of significance so null hypothesis is
accepted. So, we can say that there is no significant difference in the fundamental
Financial Literacy on the basis of gender
Hypothesis
There is no significant difference of fundamental financial literacy among the
college students of different faculty (Finance and Non-Finance).
Finance Non Finance
66.36 69.76 mean
3.87 5.29 std. dev.
50 50 n
-3.400 difference (Finance - Non Finance)
0.927 standard error of difference
0 hypothesized difference

-3.67 z
.0002 p-value (two-tailed)
The calculated z value .-3.67 is not lying between the table value at 0.05 level
of significance [Critical value Z ( two tailed) at 0.05 level of significance is -1.96 to +
1.96] therefore Null hypothesis is rejected
P-value i.e. .0002 is less than 0.05 level of significance so null hypothesis
is rejected. So, we can say that there is significant difference in the fundamental
Financial Literacy of finance and non finance students.
Finding and Conclusions
Findings
Majority of the respondents had basis knowledge regarding a bank account
and the concept of DEMAT account whereas only few of the respondents had ever
invested in financial instruments. It was also discovered that majority of the students
had knowledge regarding KYC and different financial markets. Not many of the
students were aware about the concept of risk return trade off. Majority of college
students believed that the basic financial knowledge should be inculcated in the
curriculum of all the respective courses
Conclusion
Looking at the statistics of the conducted research one can say that the
majority of the selected college students have a bank account or at least the
knowledge of opening one which indicates that more and more people are shifting
 82 Research Methodology in Commerce and Management
towards digitalization. It can also be concluded that the knowledge regarding financial
market is widely known by the students regardless of their courses. But also, one can
see that there is a significant difference between the basic financial knowledge of the
students of finance and non-finance. And after studying the views of both finance and
non-finance students it can be concluded that more than 50% of students agree with
addition of basic financial knowledge in the curriculum of all the courses.
References
 Beal, D.J. & Delpachtra, S.B. (2003). Financial literacy among Australian
university students, Economic Papers, 22 (1), 65-78
 Chen, H. & Volpe, R. P., (1998). An analysis of personal financial literacy
among college students. Financial Services Review, 7 (2), 107-128.
 Fatoki Olawale & Olabanji Oni (2014) “Financial Literacy Studies in South
Africa: Current Literature and Research Opportunities” Mediterranean Journal
of Social Sciences, ISSN 2039- 2117 (online),ISSN 2039- 9340 (print) Vol 5
No 20 pp 409-414
 Hilgert, M.A., Hogarth, J.M. & Beverly, S.G. (2003). Household financial
management: the connection between knowledge and behavior, Federal
Reserve Bulletin, July, 309-322.
 Lusardi, Annamaria.et al (2010) “Financial Literacy among the Young”, The
Journal of Consumer Affairs, Vol. 44, No. 2, 2010 ISSN 0022-0078 pp 358-
380.
 Money SENSE (2005). Quantitative Research on financial literacy levels in
Singapore. The Money SENSE Financial Education Steering Committee.
Singapore: Media Research Consultants Pvt. Ltd.
 Moore, D. (2003). Survey of financial literacy in Washington State: Knowledge,
behavior, Attitudes, and Experiences. Technical Report # 03-39. Social and
Economic Sciences Research Center, Washington State Department of
Financial Institutions, Olympia, WA. Pullman: Washington State University
 National Council on Economic Education, (2007). Economic, Personal Finance
& Entrepreneurship Education in Our Nation's Schools in 2007. New York:
National Council on Economic Education.
 Ramasawmy, Deerajen et al (2013) “A Study of the Level of Awareness of
Financial Literacy among Management Undergraduates”, Proceedings of 3rd
Asia-Pacific Business Research Conference Kuala Lumpur, Malaysia, ISBN:
978-1-922069-19-1.
 Roy Morgan Research. (2003). ANZ Survey of Adult Financial Literacy in
Australia. ANZ Banking Group. Melbourne: Roy Morgan Research.1-77.
 Taft. Marzieh Kalantarie et al (2013) “The Relation between Financial Literacy,
Financial Wellbeing and Financial Concerns” International Journal of Business
and Management; Vol. 8, No. 11; 2013 ISSN 1833- 3850 E-ISSN 1833-8119.
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