Abstract
Financial education plays a significant role in poverty reduction and sustainable economic growth. It also increases individuals' financial well-being. Unfortunately, global financial literacy is low, and in developing countries, it is far below the global average. Nepal is a developing country with low financial literacy. Therefore, this study aimed to analyze the impact of financial literacy training on financial literacy levels and financial decisions among 399 randomly selected rural households in Bhojpur District, a rural area in Nepal. Multiple linear and logit regression models were used to analyze the data. The results revealed that financial literacy training increased the financial literacy level of training participants compared with that of non-participants. Education, financial literacy training, and migration of family members (personal migration history and plans to migrate) were other significant predictors. Respondents' financial and economic behavior was influenced by their financial literacy level, sex, age, education, family size, whether the respondent lives with parental family, and whether the respondent has migrated family members. The study suggested well-organized and inclusive financial literacy training program interventions to improve rural individuals' financial and economic decisions.
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The datasets used and/or analysed during the current study are available from the corresponding author on reasonable request.
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Acknowledgements
The authors would like to express profound gratitude to SaMi/HELVETAS Nepal staff members Sita Ghimire, Sanat Sapkota, and Pratibha Gyawali, SaMi/DEPROSC-Nepal staff member Sagar Bikram Basnet, district program co-ordinator Tek Bahadur Shrestha for providing an initial list of participants and non-participants, as well as creating an accessible environment for the field survey in Bhojpur District. Additionally, we would like to thank Editage (www.editage.com) for their English language editing services.
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Conception and design were performed by SKK and IT. Data was collected by SKK. Modeling and data analysis were performed by AA and SKK. The first draft of the manuscript was written by SKK and AA and all authors commented on previous versions of the manuscript. All authors read and approved the final manuscript.
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The study was conducted in accordance with the guidelines approved by the Institutional Review Board for Human Research of Soka University (Date of approval: July 31, 2021; Approval No. 2021042).
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Appendices
Appendix A
The goal of Safer Migration Project (SaMi), it’s training purpose, and selection criteria of training areas and participants.
Goal of the SaMi | Purpose of training | Selection of training area | Trainee selection criteria |
|---|---|---|---|
Migrants & their families are better protected by concerned Nepali institutions and benefit from decent work conditions abroad | Provide the financial knowledge and skill to family members of the migrant workers Encourage to open bank account, keep the record of income and expenses, making family budget, and saving Encourage to make a business plan, mobilization of available financial resources and invest in income generating activities for sustainable livelihood inside Nepal Consultation with family members in their social and phycological problems | Area should be highly dependent on remittance At least 80 percent participant should be from endogenous, dalit (backward caste), and marginalized people Ninety eight percent of participants should be female in average Suitable area that can divide four groups by different community | Age of participant should be between 16 to 50 One participant from one household (if there is more than one members is in foreign employment m their spouse can participate) Participant should be either wife or husband of foreign worker Majority of the participants should be endogenous, dalit (backward caste), and marginalized people Priority to those people who have no account in bank or financial institutions Participant should have basic knowledge of read and write Choose for those people who can regularly participate in training |
Appendix B
Questions measuring financial literacy.
1. Suppose you had Nepalese rupees (Rs.) 100 in a saving account and interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? (a) More than Rs. 102** (b) Exactly Rs. 102 (c) Less than Rs. 102 (d) Do not know (e) Refuse to answer |
2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? (a) More than today (b) Exactly the same (c) Less than today** (d) Do not know (e) Refuse to answer |
3. Please tell me whether this statement is true or false. “Buying a single company’s stock usually provides a safer return than stock mutual fund.” (a) True (b) False** (c) Do not know (d) Refuse to answer |
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Karki, S.K., Andaregie, A. & Takagi, I. Impact of financial literacy training on the financial decisions of rural households in Nepal. Int Rev Econ (2023). https://doi.org/10.1007/s12232-023-00438-3
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DOI: https://doi.org/10.1007/s12232-023-00438-3