Financial Literacy and its determinants: A Case of professionals’ in Sri Lanka

Abstract

The main focus of this study is to identify the level of financial literacy and its determinants among professionals engaged in the fields of Medicine (Doctors), Engineering (Engineers), Management (Managers), Law (Lawyers) and other fields such as Aviation and Navigation (Captains and Pilots) as they can be considered as strategic decision makers of different fields in the country. Further they are assumed to be having accumulated wealth or excess funds for buying investment products. So, it is important to know whether they have the knowledge in effective utilization of their wealth. Study employed a descriptive survey design. A sample of 300 respondents from Colombo district was selected as it has the highest level of service sector employability. For the purpose of collecting data, a well-designed questionnaire was distributed under stratified random sampling technique based on a way that all 13 divisional secretariats in Colombo district were represented. The analysis (One-way ANOVA test results) revealed that, basic financial literacy (knowledge on time value of money, inflation, interest rates and real values) as well as the advanced financial literacy (knowledge on stocks, bonds, mutual funds, stock market, and portfolio diversification) among the respondents are at medium level, except doctors, lawyers, captains and pilots. Therefore, results concluded that all educated people are not financially literate. Linear regression results indicated that economic and financial education, self-analytical skills, monthly income level and the field of employment are as significant determinants of financial literacy. Those who are in the professions where there is lack of touch in economic and financial education are possessed with low financial knowledge. Therefore, it is important to implement a national strategy of improving economic and financial educational programmes especially for those who are not engaged in the fields of management.

Keywords: Financial literacy, Financial and Economic education, Self-analytical skills