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Digital Financial Literacy: A Study of Households of Udaipur

Digital Financial Literacy: A Study of Households of Udaipur Financial literacy has been center of discussion world over. Financial literacy can be generally defined as a person’s ability to understand, analyze, manage, and communicate personal finance matters. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances. It is the ability to make informed judgments and take effective decision regarding the use and management of money. Now the trend is change financial literacy become old wine people are moving towards digital financial literacy. The interesting side of digital financial literacy is more people are going of digital payments, the value of internet banking, debit card & credit card, mobile banking are going high. Indian Government is also promoting Digital India recently they have launched many schemes like are Pradhan Mantri Jan Dhan Yojna, Jeevan Jyoti Bima Yojna, Suraksha Bima, MUDRA Bank Yojna, BHIM. The Vittiya Saksharta Abhiyan (VISAKA) also been launched by Ministry of Human Resource. The prime objective of the research is to know the digital financial literacy among the households of Udaipur city. The awareness about various digital platforms and their frequency of use is taken as digital financial literacy. The study further aims to diagnose the impact of personal characteristics on digital financial literacy. The sample of the study is taken from Udaipur city of Rajasthan state of India. A sample of 268 households was selected randomly. A well-structured questionnaire was used to survey and generate digital financial literacy data. The results of study will be a useful direction for both digital platform providers and government to promote citizen for digital transactions. The study also suggests that a wave of awareness campaign is required for bringing more people in the umbrella of digital transaction. Further, a cash transaction oriented economy like India needs to have dual edged sword, where in one hand it needs to bring more policies for lesser use of cash and on the other greater use of digital cash. Keywords: Digital Financial Literacy, Digital Financial Transactions, Financial Inclusion Financial Literacy 1. Introduction to make informed judgments and take effective decision 1.1 Digital Financial Literacy regarding the use and management of money. The digital Digital financial literacy has become present need of mode of all of this comes in digital financial literacy. India. Financial literacy can be generally defined as Digital financial literacy is directly link or knowledge a person’s ability to understand, analyze, manage, and of online purchasing, online payment through different communicate personal finance matters. More specifically, modes, and online banking system. Digital and cash less it refers to the set of skills and knowledge that allows India is the mission of present India. The importance an individual to make informed and effective decisions of this mission is being felt, especially after the through their understanding of finances. It is the ability demonetization rollout by Govt. of India Present prime Professor, Faculty of Management, MLSU, India Research Scholar, Faculty of Management, MLSU, India Research Scholar, Faculty of Management, MLSU, India 23 BM The Journal of Business and Management Volume V | Issue I | December 2018 th minister of India has announced on 8 November 2016, account, linking Mobile to Aadhaar card and all other the demonetisation of all Rs.500 and Rs.1, 000 banknotes required information for digital financial literacy for of the Mahatma Gandhi Series. Mahajan and Singla transforming cash society to less cash society. They (2017) Indian government adopted demonetization will be imparted training in Aadhaar based payment to tackle with black money and make India a cashless system, pre-paid card, Unified Payments Interface (UPI), digital economy. The demonetization promotes cash-less Mobile wallet, Unstructured Supplementary Service economy and increase in use of digital financial services. Data (USSD). As per news publised in The New Indian th The e-wallet companies have seen a rapid surge in the Express on 13 Dec 2016, National Bank for Agriculture number of transactions and traffic on their web and app and Rural Development (NABARD) to launch digital based platforms which are mostly driven by urban and financial literacy programmes in Odisha. This kind of metropolitan parts of the country. Ganiger & B, (2017) activities and schemes are launched to increase digital India’s present experience of demonetization has revealed financial literacy of people. India’s present experience of the austere digital financial divide of the nation. Millions demonetization has revealed the austere digital financial of people are crowding the banks and queuing outside divide of the nation. Millions of people are crowding the ATM centers to deposit their cash before the deadline, banks and queuing outside ATM centers to deposit their revealing that India has a long way to go before it fully cash before the deadline, revealing that India has a long transitions into a digital financial economy. In spite of way to go before it fully transitions into a digital financial expanded digital access to bank accounts, a very small economy. In spite of expanded digital access to bank percentage of the population has been able to operate accounts, a very small percentage of the population has without withdrawing cash or visiting the bank regularly. been able to operate without withdrawing cash or visiting This is in part due to lower levels of digital Financial the bank regularly. This is in part due to lower levels of literacy. Thus, this makes people to learn the banking digital financial literacy. Thus, this makes people to learn mechanisms which not only boosts banking sector but the banking mechanisms which not only boosts banking also there can be growth of more literates. sector but also there can be growth of more literates. The However, recently the Government of India and Reserve high cost of building and operating bricks and mortar Bank of India has been pushing the concept and idea of bank branches has been a major obstacles for extending promoting Digital financial Literacy through the help of financial services to poor section of society or rural many campaign. based areas where such facilities cannot been provided. Physical branches are expensive to maintain in far flung Recently the Digital Saksharta Abhiyan (DISHA) project communities while traveling to urban areas is costly for sanctioned under the ministry of Electronics and IT, many rural customers. However, unbanked individual are which is being implemented by common service center increasingly gaining access to financial services through (CSC), will provide digital financial literacy training and digital channels. Digital finance holds an enormous facilitate access to such instruments for one core rural opportunity for greater financial inclusion and expansion citizens . of basic services with the use of mobile phones. The Vittiya Saksharta Abhiyan (VISAKA) also been 1.2 Financial Literacy launched by Ministry of Human Resource. More than Financial literacy is become a prominent item on the 1 lakh students of higher educational institutions have public agenda worldwide, with its relevance very much volunteered to be associated with the campaign. The underlined by the high-profile role played by consumer Training will be given to this students and during the finance in global credit crises from 2007 onwards training module, students will be trained about the (Williams & Satchell, 2011). Finances are important part opening of account, linking Aadhaar card with Bank Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 of everyday life and financial literacy is the best way to in the country. In this context a project called “Project prevent over-indebtedness of citizens. Tomaskova et.al financial literacy “has already been implemented. (Nash, (2011) financially literate citizens are well versed in 2012) Financial literacy in India is on the positive side issues of money and prices, and are able to manage their now. The survey conducted by The Financial Express personal budget responsibly. Financial literacy helps shows that India has made rapid progress in the field of individuals to improve their level of understanding of financial education among the ten leading nations of the financial matters which enables them to process financial world. information and make apprised decisions about personal rd India also has been ranked 23 out of 28 markets in Visa finance. 2012 Global Financial literacy barometer. Financial Financial markets around the world have become literacy has gained the attention of a wide range of major increasingly accessible to the ‘small investor,’ as new banking companies, government agencies, grass-roots consumer and community interest groups, and other products and financial services grow widespread (Lusardi organizations. In effective money management can also & Mitchell, 2013). result in behaviors that make consumers open to severe Michael et.al (2010) financial literacy is important to financial crises. Improved financial literacy can benefit understand the basic financial issues that most individuals individuals and families by giving them more control and families must deal with in our modern society. over their money and helping them make better financial Even if an individual has a defined benefit plan that decisions. (Subha & Priya , 2014) will hopefully meet most of the financial needs of one’s The Government of India and Reserve bank of India retirement years, that person still will spend a lifetime have taken initiatives to spread banking services such as dealing with issues related to mortgages, insurance expanding the number of rural bank branches, allowing (including automobile, home, life, and health), personal the banking correspondent model and adoption of CBS credit management, income taxes, and all of the other technology. While in implementing financial inclusion in financial considerations that are part of modern life in a diversified country like India, Financial Literacy plays our society. a pivotal role in the success of this great social initiative One of the causes of Financial Crisis is identified as opportunity (Shetty & Thomas, 2015). lack of Financial Literacy. India is a developing country 1.3 Financial Inclusion and we are entering into second phase of Financial Financial Inclusion has been center of discussion world Sector Reforms. Integration of our economy with world over. I.S.T. (2016), even after 60 years of independence, a economy will increase further and so the risk of world large section of Indian population still remain unbanked. crisis impacting Indian economy. In India there is large This malaise has led generation of financial instability unorganized sector and the Government is withdrawing and pauperism among the lower income group who do from pension schemes even in organized sector. In not have access to financial products and services. absence of any social security scheme, our economy may be in, for a major instability after demographic dividend The reach of basic financial services to every citizen is starts waning after 20 to 25 years. Thus improvement of known as financial inclusion. The concept of financial financial literacy in the country is inclusion is mostly applicable for that section of society who still does not have access to basic financial services. imperative for financial wellbeing of individuals as well as Thard & Singh (2015), Indian government has done for the economy (Ambarkhane et.al, 2015), The Reserve many efforts for financial inclusion. Few among them bank of India, which is the central bank, has been actively are Pradhan Mantri Jan Dhan Yojna, Jeevan Jyoti Bima participating in the field of eradicating financial literacy Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 Yojna, Suraksha Bima, MUDRA Bank Yojna, which was are provided by mobile network operators, either introduced recently. individually or in collaboration with commercial banks. The study found that DFS uptake is hindered by agents’ Guha (2015), hon’ble Prime Minister Mr. Narendra Modi lack of liquidity and the implicit costs that agents impose launched programme Pradhan Mantri Jan Dhan Yojana on consumers. In addition, consumers tend to fully spend (PMJDY) which was launched on 28 August 2014 with a the funds received through mobile money, but fail to mission of ensuring access to easy financial services for the use their mobile phones for saving purposes. Ghaffar & excluded section i.e. weaker section and the low income Sharif (2016) examined the level of financial literacy in group. As per the scheme one could open an account in Pakistan. The study revealed that the persons, who have any bank branch or Business correspondent outlet with more financial knowledge, usually save money. It was zero balance. The process of opening an account has found in the study that middle-aged and older people were been made easier. It was an approach to bring about careful in spending their money and male respondents comprehensive financial inclusion of all households in usually have better saving habits. Further it was also the country. The aim of the scheme is access to banking found that respondents earning high salaries agree that facilities, financial literacy, and access to credit, insurance financial literacy do help in leading a financially secure and pension facility. Moreover, the beneficiaries would life. get RuPay Debit card having inbuilt accident insurance Aggarwal and Gupta (2016) identified the linkage between covers of Rs. 1 lakh. The plan also envisages channeling all Government benefits to the beneficiaries’ accounts the gender gap in stock market participation and financial literacy while controlling for two major externalities of and pushing the Direct Benefits Transfer Scheme of the union Government. The technological issues like poor education level and wealth. It was found that female teachers participate less in stock market to an extent connectivity, on-line transactions will be addressed. Mobile transactions through telecom operators and their of 16.7% as compared to male. Results of corroborate the view that non-participation in stock markets was a established centers as cash outpoints are also planned to be used for financial Inclusion under the scheme. common response to deficiencies in advanced financial literacy and lack of risk attitudes. 1.4 Importance of Digital Financial Literacy Totenhagen et.al (2015) has identified the key Digital financial literacy is very important in present time as we know that now all financial services and products considerations and promising delivery methods which may inform positive changes in financial literacy and are available in digital form and present government is also focusing on cash less India and digital India. The behavior among youth. Study also has conducted a comprehensive review of the current literature on youth importance of digital financial literacy comes in light especially after demonetization. The global revaluation financial literacy education and identified characteristics of financial education programs which influence positive in mobile communication, along with rapid advances in Digital payment system is creating opportunities changes. to connect poor households to affordable and reliable Hospido et.al (2015) has measured the impact of financial financial tool through mobile phone and other digital literacy training in compulsory education in Spain. Study interface. Today the unbanked can make use of services used a matched sample of students and teachers in Madrid that were previously out of rang or not accessible to them. and two different estimation strategies. It was found in 2. Literature Review the study that students of private schools did not increase their knowledge much, possibly due to a less intensive Finau et.al (2016) examined rural dwellers’ perceptions of digital ªfinancial services (DFS) to identify which implementation of the program. Study also analyzed the bias that arises because the set of schools that participate factors may enhance or impede their adoption. DFS Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 in financial literacy programs was not random. Shih and Ke (2014) has discussed consumer money attitudes, financial literacy regarding financial decisions, Arif (2015) examined the relationship between financial and financial behavior. Study suggested that consumers literacy and the influence of the factors that affect the who have retention planning and achievement-esteem investment decision. The data was collected from 154 attitudes toward money make high-risk financial respondents through modified questionnaire containing decisions; anxiety toward money tends to exist mainly questions related to demography of the investors, in low-risk investors. Financial literacy affects consumer factors affecting the investment decisions and financial financial behaviors, and demographic variables play literacy level of the individual investors at Karachi Stock segmentation roles. Exchange. Study concluded that the financial literacy level of the investors was below average. Significant Park (2011) examined the impact of three dimensions difference in financial literacy was found between the of digital literacy on privacy-related online behaviors: respondents regarding age, gender, work activity and (a) familiarity with technical aspects of the Internet, (b) marital status of the respondents. awareness of common institutional practices, and (c) understanding of current privacy policy. Hierarchical Morris and Koffi (2015) has studied the relationship regression models analyzed data from a national sample between financial literacy level of Canadian university of 419 adult Internet users. The analyses showed strong students and their prior education on the subject. The predictive powers of user knowledge, as indicated by the results revealed that education on financial topics three discrete dimensions, on privacy control behavior. improved financial literacy level. However, the improvement was almost insignificant for courses taken Way & Wong (2010) state that the development and use at the secondary level. The results also showed that of technology-based tools for financial literacy education financial literacy was influenced by socio demographic has grown rapidly in recent years, often based on the variables as well. presumption that digital media will enhance past practice. The studies present an ecological model for technology- Potrich et.al (2015) has study the individual financial based financial literacy education intervention and level through socioeconomic variables. 1400 sample propose an action agenda for practice and further were collected and data analysis was performed by using research. descriptive statistics and multivariate analysis techniques. Following variable were considered to measure 3. Data and Methodology the financial literacy; dependent family members, The study aims to map digital financial literacy among occupation, educational level, father’s educational level, the house holds of Udaipur city of Rajasthan state mother’s educational level, individual income and family of India. The study has employed descriptive survey income. Results of study were indicating that men who research design. A questionnaire consisting of instrument do not have dependent family members and have higher to map the frequency of use of digital platform for educational and both individual income and family financial transactions in form of 11 statements related to income levels are those who are more likely to belong to variety of expenditures and investments was developed. the group with high financial literacy levels. Similarly one more instrument mapping the awareness about availability of digital platforms was inserted. M and M (2015) has examined the financial literacy and its determinants among Gen Y employees in coimbatore After a pilot survey and incorporating suggestions city. The study found that gender, education, income of a penal of experts to establish content validity, the and age impact the level of financial literacy. Study also questionnaire was administered on 300 households of concluded that financial literacy level is low among Gen Udaipur (Rajasthan), out of which 32 responses were Y employees in Coimbatore city. excluded due insufficient information. Finally, the 268 Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 responses were used to analyze the data using SPSS. by male member of the family and while making choice it was considered that those involved in making payment 4. Empirical Analysis of financial activities must be included in study. That The responses were collected from a well-developed may be the reason that male participants were more in the questionnaire designed to measure frequency of use of study. Similarly, the age wise distribution was categorized digital financial platforms as well as awareness about such in two category viz. youth and matured. The respondents platforms. The respondents were asked to rate on three of age 35and below were categorized as youth and above point rating scale, the frequency of use of digital financial 35 as matured. Similarly, education and profession wise platforms in form of 11 statements related to payments analysis shows that maximum respondents were graduate made for various type of financial activities. These and service oriented respectively. ratings were given scores 0-2. Similarly, awareness about digital financial platforms was mapped by asking ratings 4.1 Relationship between Use and Awareness of on four point rating scale. There ratings were assigned Digital Platforms scores ranging from 1 to 4. The reliability of instruments As it has been mentioned that the instruments inserted was estimated by calculating Cronbach’s alpha. Overall to map frequency of use and awareness was assigned reliability for the instrument was .808. These values are numerical score. The numerical score of all statements above threshold limits of 0.75 of Cronbach alpha values. in each instrument was added. The composite score of Frequency of use of digital platforms of financial Table I : Reliability Statistics for Frequency of Use and Awareness about Digital Platform for activities was named as Digital Financial Frequency Financial Activities Index (DFFI) and Composite score of Awareness was Cronbach’s Alpha Cronbach’s named as Digital Financial Awareness Index (DFAI). To Based on Standardized No. of Items Alpha Items examine the relationship between awareness level and .859 .822 11 frequency of use following hypothesis was framed. .795 .792 6 H : There is no relationship between awareness about Demographic Profile of the Respondents: financial digital platforms (DFAI) and frequency of use The initial part of the questionnaire was designed to of digital platform (DFFI). generate the demographic information. The summarized The above hypothesis was tested using Pearson responses are presented in the table below. correlations test using SPSS. The output of SPSS Table II :Frequency Descriptive correlations test is summarized below. Variables Groups Frequency Percent Table III : Relationship between Awareness and Use Male 180 67.2 Gender of Digital Platform for Financial Payments Female 88 32.8 Correlations Youth 116 43.3 Age DFFI DFAI Matured 152 56.7 DFFI Pearson ** 1 .595 Schoolers 12 4.5 Correlation Education Graduate 160 59.7 Sig. (2-tailed) .000 Professional 96 35.8 N 268 268 ** Profession Service 168 62.7 Correlation is significant at the 0.01 level (2-tailed). Non Service 100 37.3 The above null hypothesis is rejected at 1 percent level of significance and as it can be seen that a positive correlation As it can be seen from the above table that male respondent in the study just double of female respondents. It is evident of .595 was found. Thus it can be said that awareness about digital platforms for financial transactions results that most of the households, financial decisions are taken Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 in its actual use for various day today transactions. The post hoc analysis shows that the statistically significant awareness campaign about use of digital platforms may difference exists between schoolers (upto school prove to be boon for the prime objective of less cash educated) category of respondents and graduate & economy of Indian government. professionally qualified. The mean score of up to school educated respondents was very less. However, very 4.2 Influence of Education Level on Awareness and less difference was found in graduate and professional Use of digital platform for financial transactions category respondents. Therefore, the governments, It is general notion that highly educated person will banks and other institutions must focus their awareness acquire knowledge about any emerging trend. Therefore, programs to this category of respondents. The government researcher inserted question about the education level should also develop easy to use applications which are of respondents with intention to examine the impact of accessible and usable by even illiterate persons. education level on frequency of use and awareness about digital platform for financial transaction. To examine 4.3 Impact of Personal Characteristics on Awareness and these following hypotheses were formed. Use of Digital Platform for Financial Transactions: The personal characteristics like gender, age, occupation H : There is no difference among the educational level etc. also affects the use of digital platform for financial with regards to Digital Financial Frequency Index transactions. Therefore, respondents were asked to (DFFI). specify these. To examine the impact of personal H : The education level of the respondent has no relation 03 characteristics on awareness and use of digital platform with regards to Digital Financial Awareness Index following hypotheses were developed. (DFAI). H : There is no difference in the male and female respondents with regards to Aggregate score of Digital To test these hypotheses, F ANOVA was applied. The Financial Frequency Index . results are analyzed in the table below: H : The Digital Financial Awareness Index of male and Table IV: Influence of Education Level on Awareness female respondents do not differ significantly. and Use of Digital Financial Platforms Similarly, hypotheses H , H , H and H were 06 07 08 09 Sum of df F Sig. developed for age and occupation with regards to DFFI Squares and DFAI. *** DFFI Between 846.681 2 18.773 .000 Groups To test theses hypotheses test for difference between means (t-test) was calculated using SPSS. The results are Within 5975.767 265 Groups summarized in below table. Total 6822.448 267 Table V: Impact of Personal Characteristics on *** DFAI Between 575.557 2 25.110 .000 Awareness and Use of Digital Platform Groups Hypotheses T Sig. df Result Within 3037.100 265 H 4.333 .572 266 Failed to reject Groups H 5.200 .039 266 Rejected Total 3612.657 267 05 H 5.581 .503 266 Failed to Reject *** Means the test statistics is significant at 1% level H 2.964 .682 266 Failed to Reject The results exhibits that both of these hypotheses were rejected at 1percent level of significance. This means H 3.272 .000 266 Rejected that the education level is an important determinant for H 2.608 .012 266 Rejected awareness about the digital platform and its use. The It can be seen from the table that the hypotheses H , Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 H , H were related to DFFI (frequency of use). The questionnaire was administered on 300 households of 06 08 hypothesis related with occupation H was rejected at Udaipur (Rajasthan). Out of which 32 responses were one percent level of significance while the test failed excluded due insufficient information. From the findings to reject the rest two hypotheses related with age and of the research it can be said that male of households were gender. Which means that statistical difference in use of more familiar with digital financial platforms and more digital platforms exist in service and non-service class of aware. Similarly, the age wise distribution was categorized occupation. The mean score of service class was found in two category viz. youth and matured. The respondents more. It may be due to the fact that service class people of age 35and below were categorized as youth and above have disclosed money thus they do not hesitate in doing 35 as matured. Similarly, education and profession transaction through digital platform. wise analysis shows that maximum respondents were graduate and service oriented respectively. Frequency The hypotheses H , H and H were related to 05 07 09 of use of digital platforms of financial activities was awareness about digital platform. The hypotheses named as Digital Financial Frequency Index (DFFI) and related with gender and occupation was rejected at 5 Composite score of Awareness was named as Digital percent level of significance. The mean score of male Financial Awareness Index (DFAI). participants was higher as compared to females. It may be due to the fact that females particularly of matured It was found that the education level is an important age have less exposure to digital platform. Therefore, determinant for awareness about the digital platform awareness programs for female households regarding and its use. The mean score of up to school educated digital platforms need to be undertaken. The statistically respondents was very less. However, very less difference significant difference in awareness about digital was found in graduate and professional category platforms exists in service and non-service category. The respondents. Therefore, the governments, banks and awareness means score of non-service category was less other institutions must focus their awareness programs to as compared to service category. this category of respondents. The government should also develop easy to use applications which are accessible and The non-service category has less mean score of awareness usable by even illiterate persons. It was also found that as well as utilization of digital financial platforms (DFFI the statistical difference in use of digital platforms exist and DFAI). Therefore, it may also be inferred that non in service and non-service class of occupation. The mean service respondents do not use digital platform due to score of service class was found more. It may be due to non-awareness. Thus awareness programs for such non the fact that service class people have disclosed money service class people must be arranged. thus they do not hesitate in doing transaction through 5. Conclusion digital platform. Therefore, it may also be inferred that The study aims was to map digital financial literacy non service respondents do not use digital platform due among the house holds of Udaipur city of Rajasthan state to non-awareness. Thus awareness programs for such of India. The study has employed descriptive survey non service class people must be arranged. The mean research design. A questionnaire consisting of instrument score of male participants was higher as compared to to map the frequency of use of digital platform for females. It may be due to the fact that females particularly financial transactions in form of 11 statements related to of matured age have less exposure to digital platform. variety of expenditures and investments was developed. Therefore, awareness programs for female households Similarly one more instrument mapping the awareness regarding digital platforms need to be undertaken about availability of digital platforms was inserted. The Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 References Aggarwal, D., & Gupta, D. (2014). Awareness of Financial Lusardi, A., & Mitchell, O. S. (2013). The Economic Literacy Among College Students. Journal of Importance of Financial Literacy: Theory and Management Sciences and Technology, 2(1), Evidence. Journal of Economic Literature, 52(1), 1-13. 5-44. Ambarkhane, D., Venkataramani, B., & Singh, A. S. M, S., & M, G. (2015 ). A Study on Financial Literacy (2015). 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Financial Inclusion A Regulatory Economics, 40(1), 1-39. Key to Micro Finance. Indian Journal of Appled Reasarch, 5(11), 134-136. Digital Financial Literacy: A Study of Households of Udaipur http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business and Management Unpaywall

Digital Financial Literacy: A Study of Households of Udaipur

Journal of Business and ManagementDec 1, 2018

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2350-8868
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10.3126/jbm.v5i0.27385
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Abstract

Financial literacy has been center of discussion world over. Financial literacy can be generally defined as a person’s ability to understand, analyze, manage, and communicate personal finance matters. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances. It is the ability to make informed judgments and take effective decision regarding the use and management of money. Now the trend is change financial literacy become old wine people are moving towards digital financial literacy. The interesting side of digital financial literacy is more people are going of digital payments, the value of internet banking, debit card & credit card, mobile banking are going high. Indian Government is also promoting Digital India recently they have launched many schemes like are Pradhan Mantri Jan Dhan Yojna, Jeevan Jyoti Bima Yojna, Suraksha Bima, MUDRA Bank Yojna, BHIM. The Vittiya Saksharta Abhiyan (VISAKA) also been launched by Ministry of Human Resource. The prime objective of the research is to know the digital financial literacy among the households of Udaipur city. The awareness about various digital platforms and their frequency of use is taken as digital financial literacy. The study further aims to diagnose the impact of personal characteristics on digital financial literacy. The sample of the study is taken from Udaipur city of Rajasthan state of India. A sample of 268 households was selected randomly. A well-structured questionnaire was used to survey and generate digital financial literacy data. The results of study will be a useful direction for both digital platform providers and government to promote citizen for digital transactions. The study also suggests that a wave of awareness campaign is required for bringing more people in the umbrella of digital transaction. Further, a cash transaction oriented economy like India needs to have dual edged sword, where in one hand it needs to bring more policies for lesser use of cash and on the other greater use of digital cash. Keywords: Digital Financial Literacy, Digital Financial Transactions, Financial Inclusion Financial Literacy 1. Introduction to make informed judgments and take effective decision 1.1 Digital Financial Literacy regarding the use and management of money. The digital Digital financial literacy has become present need of mode of all of this comes in digital financial literacy. India. Financial literacy can be generally defined as Digital financial literacy is directly link or knowledge a person’s ability to understand, analyze, manage, and of online purchasing, online payment through different communicate personal finance matters. More specifically, modes, and online banking system. Digital and cash less it refers to the set of skills and knowledge that allows India is the mission of present India. The importance an individual to make informed and effective decisions of this mission is being felt, especially after the through their understanding of finances. It is the ability demonetization rollout by Govt. of India Present prime Professor, Faculty of Management, MLSU, India Research Scholar, Faculty of Management, MLSU, India Research Scholar, Faculty of Management, MLSU, India 23 BM The Journal of Business and Management Volume V | Issue I | December 2018 th minister of India has announced on 8 November 2016, account, linking Mobile to Aadhaar card and all other the demonetisation of all Rs.500 and Rs.1, 000 banknotes required information for digital financial literacy for of the Mahatma Gandhi Series. Mahajan and Singla transforming cash society to less cash society. They (2017) Indian government adopted demonetization will be imparted training in Aadhaar based payment to tackle with black money and make India a cashless system, pre-paid card, Unified Payments Interface (UPI), digital economy. The demonetization promotes cash-less Mobile wallet, Unstructured Supplementary Service economy and increase in use of digital financial services. Data (USSD). As per news publised in The New Indian th The e-wallet companies have seen a rapid surge in the Express on 13 Dec 2016, National Bank for Agriculture number of transactions and traffic on their web and app and Rural Development (NABARD) to launch digital based platforms which are mostly driven by urban and financial literacy programmes in Odisha. This kind of metropolitan parts of the country. Ganiger & B, (2017) activities and schemes are launched to increase digital India’s present experience of demonetization has revealed financial literacy of people. India’s present experience of the austere digital financial divide of the nation. Millions demonetization has revealed the austere digital financial of people are crowding the banks and queuing outside divide of the nation. Millions of people are crowding the ATM centers to deposit their cash before the deadline, banks and queuing outside ATM centers to deposit their revealing that India has a long way to go before it fully cash before the deadline, revealing that India has a long transitions into a digital financial economy. In spite of way to go before it fully transitions into a digital financial expanded digital access to bank accounts, a very small economy. In spite of expanded digital access to bank percentage of the population has been able to operate accounts, a very small percentage of the population has without withdrawing cash or visiting the bank regularly. been able to operate without withdrawing cash or visiting This is in part due to lower levels of digital Financial the bank regularly. This is in part due to lower levels of literacy. Thus, this makes people to learn the banking digital financial literacy. Thus, this makes people to learn mechanisms which not only boosts banking sector but the banking mechanisms which not only boosts banking also there can be growth of more literates. sector but also there can be growth of more literates. The However, recently the Government of India and Reserve high cost of building and operating bricks and mortar Bank of India has been pushing the concept and idea of bank branches has been a major obstacles for extending promoting Digital financial Literacy through the help of financial services to poor section of society or rural many campaign. based areas where such facilities cannot been provided. Physical branches are expensive to maintain in far flung Recently the Digital Saksharta Abhiyan (DISHA) project communities while traveling to urban areas is costly for sanctioned under the ministry of Electronics and IT, many rural customers. However, unbanked individual are which is being implemented by common service center increasingly gaining access to financial services through (CSC), will provide digital financial literacy training and digital channels. Digital finance holds an enormous facilitate access to such instruments for one core rural opportunity for greater financial inclusion and expansion citizens . of basic services with the use of mobile phones. The Vittiya Saksharta Abhiyan (VISAKA) also been 1.2 Financial Literacy launched by Ministry of Human Resource. More than Financial literacy is become a prominent item on the 1 lakh students of higher educational institutions have public agenda worldwide, with its relevance very much volunteered to be associated with the campaign. The underlined by the high-profile role played by consumer Training will be given to this students and during the finance in global credit crises from 2007 onwards training module, students will be trained about the (Williams & Satchell, 2011). Finances are important part opening of account, linking Aadhaar card with Bank Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 of everyday life and financial literacy is the best way to in the country. In this context a project called “Project prevent over-indebtedness of citizens. Tomaskova et.al financial literacy “has already been implemented. (Nash, (2011) financially literate citizens are well versed in 2012) Financial literacy in India is on the positive side issues of money and prices, and are able to manage their now. The survey conducted by The Financial Express personal budget responsibly. Financial literacy helps shows that India has made rapid progress in the field of individuals to improve their level of understanding of financial education among the ten leading nations of the financial matters which enables them to process financial world. information and make apprised decisions about personal rd India also has been ranked 23 out of 28 markets in Visa finance. 2012 Global Financial literacy barometer. Financial Financial markets around the world have become literacy has gained the attention of a wide range of major increasingly accessible to the ‘small investor,’ as new banking companies, government agencies, grass-roots consumer and community interest groups, and other products and financial services grow widespread (Lusardi organizations. In effective money management can also & Mitchell, 2013). result in behaviors that make consumers open to severe Michael et.al (2010) financial literacy is important to financial crises. Improved financial literacy can benefit understand the basic financial issues that most individuals individuals and families by giving them more control and families must deal with in our modern society. over their money and helping them make better financial Even if an individual has a defined benefit plan that decisions. (Subha & Priya , 2014) will hopefully meet most of the financial needs of one’s The Government of India and Reserve bank of India retirement years, that person still will spend a lifetime have taken initiatives to spread banking services such as dealing with issues related to mortgages, insurance expanding the number of rural bank branches, allowing (including automobile, home, life, and health), personal the banking correspondent model and adoption of CBS credit management, income taxes, and all of the other technology. While in implementing financial inclusion in financial considerations that are part of modern life in a diversified country like India, Financial Literacy plays our society. a pivotal role in the success of this great social initiative One of the causes of Financial Crisis is identified as opportunity (Shetty & Thomas, 2015). lack of Financial Literacy. India is a developing country 1.3 Financial Inclusion and we are entering into second phase of Financial Financial Inclusion has been center of discussion world Sector Reforms. Integration of our economy with world over. I.S.T. (2016), even after 60 years of independence, a economy will increase further and so the risk of world large section of Indian population still remain unbanked. crisis impacting Indian economy. In India there is large This malaise has led generation of financial instability unorganized sector and the Government is withdrawing and pauperism among the lower income group who do from pension schemes even in organized sector. In not have access to financial products and services. absence of any social security scheme, our economy may be in, for a major instability after demographic dividend The reach of basic financial services to every citizen is starts waning after 20 to 25 years. Thus improvement of known as financial inclusion. The concept of financial financial literacy in the country is inclusion is mostly applicable for that section of society who still does not have access to basic financial services. imperative for financial wellbeing of individuals as well as Thard & Singh (2015), Indian government has done for the economy (Ambarkhane et.al, 2015), The Reserve many efforts for financial inclusion. Few among them bank of India, which is the central bank, has been actively are Pradhan Mantri Jan Dhan Yojna, Jeevan Jyoti Bima participating in the field of eradicating financial literacy Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 Yojna, Suraksha Bima, MUDRA Bank Yojna, which was are provided by mobile network operators, either introduced recently. individually or in collaboration with commercial banks. The study found that DFS uptake is hindered by agents’ Guha (2015), hon’ble Prime Minister Mr. Narendra Modi lack of liquidity and the implicit costs that agents impose launched programme Pradhan Mantri Jan Dhan Yojana on consumers. In addition, consumers tend to fully spend (PMJDY) which was launched on 28 August 2014 with a the funds received through mobile money, but fail to mission of ensuring access to easy financial services for the use their mobile phones for saving purposes. Ghaffar & excluded section i.e. weaker section and the low income Sharif (2016) examined the level of financial literacy in group. As per the scheme one could open an account in Pakistan. The study revealed that the persons, who have any bank branch or Business correspondent outlet with more financial knowledge, usually save money. It was zero balance. The process of opening an account has found in the study that middle-aged and older people were been made easier. It was an approach to bring about careful in spending their money and male respondents comprehensive financial inclusion of all households in usually have better saving habits. Further it was also the country. The aim of the scheme is access to banking found that respondents earning high salaries agree that facilities, financial literacy, and access to credit, insurance financial literacy do help in leading a financially secure and pension facility. Moreover, the beneficiaries would life. get RuPay Debit card having inbuilt accident insurance Aggarwal and Gupta (2016) identified the linkage between covers of Rs. 1 lakh. The plan also envisages channeling all Government benefits to the beneficiaries’ accounts the gender gap in stock market participation and financial literacy while controlling for two major externalities of and pushing the Direct Benefits Transfer Scheme of the union Government. The technological issues like poor education level and wealth. It was found that female teachers participate less in stock market to an extent connectivity, on-line transactions will be addressed. Mobile transactions through telecom operators and their of 16.7% as compared to male. Results of corroborate the view that non-participation in stock markets was a established centers as cash outpoints are also planned to be used for financial Inclusion under the scheme. common response to deficiencies in advanced financial literacy and lack of risk attitudes. 1.4 Importance of Digital Financial Literacy Totenhagen et.al (2015) has identified the key Digital financial literacy is very important in present time as we know that now all financial services and products considerations and promising delivery methods which may inform positive changes in financial literacy and are available in digital form and present government is also focusing on cash less India and digital India. The behavior among youth. Study also has conducted a comprehensive review of the current literature on youth importance of digital financial literacy comes in light especially after demonetization. The global revaluation financial literacy education and identified characteristics of financial education programs which influence positive in mobile communication, along with rapid advances in Digital payment system is creating opportunities changes. to connect poor households to affordable and reliable Hospido et.al (2015) has measured the impact of financial financial tool through mobile phone and other digital literacy training in compulsory education in Spain. Study interface. Today the unbanked can make use of services used a matched sample of students and teachers in Madrid that were previously out of rang or not accessible to them. and two different estimation strategies. It was found in 2. Literature Review the study that students of private schools did not increase their knowledge much, possibly due to a less intensive Finau et.al (2016) examined rural dwellers’ perceptions of digital ªfinancial services (DFS) to identify which implementation of the program. Study also analyzed the bias that arises because the set of schools that participate factors may enhance or impede their adoption. DFS Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 in financial literacy programs was not random. Shih and Ke (2014) has discussed consumer money attitudes, financial literacy regarding financial decisions, Arif (2015) examined the relationship between financial and financial behavior. Study suggested that consumers literacy and the influence of the factors that affect the who have retention planning and achievement-esteem investment decision. The data was collected from 154 attitudes toward money make high-risk financial respondents through modified questionnaire containing decisions; anxiety toward money tends to exist mainly questions related to demography of the investors, in low-risk investors. Financial literacy affects consumer factors affecting the investment decisions and financial financial behaviors, and demographic variables play literacy level of the individual investors at Karachi Stock segmentation roles. Exchange. Study concluded that the financial literacy level of the investors was below average. Significant Park (2011) examined the impact of three dimensions difference in financial literacy was found between the of digital literacy on privacy-related online behaviors: respondents regarding age, gender, work activity and (a) familiarity with technical aspects of the Internet, (b) marital status of the respondents. awareness of common institutional practices, and (c) understanding of current privacy policy. Hierarchical Morris and Koffi (2015) has studied the relationship regression models analyzed data from a national sample between financial literacy level of Canadian university of 419 adult Internet users. The analyses showed strong students and their prior education on the subject. The predictive powers of user knowledge, as indicated by the results revealed that education on financial topics three discrete dimensions, on privacy control behavior. improved financial literacy level. However, the improvement was almost insignificant for courses taken Way & Wong (2010) state that the development and use at the secondary level. The results also showed that of technology-based tools for financial literacy education financial literacy was influenced by socio demographic has grown rapidly in recent years, often based on the variables as well. presumption that digital media will enhance past practice. The studies present an ecological model for technology- Potrich et.al (2015) has study the individual financial based financial literacy education intervention and level through socioeconomic variables. 1400 sample propose an action agenda for practice and further were collected and data analysis was performed by using research. descriptive statistics and multivariate analysis techniques. Following variable were considered to measure 3. Data and Methodology the financial literacy; dependent family members, The study aims to map digital financial literacy among occupation, educational level, father’s educational level, the house holds of Udaipur city of Rajasthan state mother’s educational level, individual income and family of India. The study has employed descriptive survey income. Results of study were indicating that men who research design. A questionnaire consisting of instrument do not have dependent family members and have higher to map the frequency of use of digital platform for educational and both individual income and family financial transactions in form of 11 statements related to income levels are those who are more likely to belong to variety of expenditures and investments was developed. the group with high financial literacy levels. Similarly one more instrument mapping the awareness about availability of digital platforms was inserted. M and M (2015) has examined the financial literacy and its determinants among Gen Y employees in coimbatore After a pilot survey and incorporating suggestions city. The study found that gender, education, income of a penal of experts to establish content validity, the and age impact the level of financial literacy. Study also questionnaire was administered on 300 households of concluded that financial literacy level is low among Gen Udaipur (Rajasthan), out of which 32 responses were Y employees in Coimbatore city. excluded due insufficient information. Finally, the 268 Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 responses were used to analyze the data using SPSS. by male member of the family and while making choice it was considered that those involved in making payment 4. Empirical Analysis of financial activities must be included in study. That The responses were collected from a well-developed may be the reason that male participants were more in the questionnaire designed to measure frequency of use of study. Similarly, the age wise distribution was categorized digital financial platforms as well as awareness about such in two category viz. youth and matured. The respondents platforms. The respondents were asked to rate on three of age 35and below were categorized as youth and above point rating scale, the frequency of use of digital financial 35 as matured. Similarly, education and profession wise platforms in form of 11 statements related to payments analysis shows that maximum respondents were graduate made for various type of financial activities. These and service oriented respectively. ratings were given scores 0-2. Similarly, awareness about digital financial platforms was mapped by asking ratings 4.1 Relationship between Use and Awareness of on four point rating scale. There ratings were assigned Digital Platforms scores ranging from 1 to 4. The reliability of instruments As it has been mentioned that the instruments inserted was estimated by calculating Cronbach’s alpha. Overall to map frequency of use and awareness was assigned reliability for the instrument was .808. These values are numerical score. The numerical score of all statements above threshold limits of 0.75 of Cronbach alpha values. in each instrument was added. The composite score of Frequency of use of digital platforms of financial Table I : Reliability Statistics for Frequency of Use and Awareness about Digital Platform for activities was named as Digital Financial Frequency Financial Activities Index (DFFI) and Composite score of Awareness was Cronbach’s Alpha Cronbach’s named as Digital Financial Awareness Index (DFAI). To Based on Standardized No. of Items Alpha Items examine the relationship between awareness level and .859 .822 11 frequency of use following hypothesis was framed. .795 .792 6 H : There is no relationship between awareness about Demographic Profile of the Respondents: financial digital platforms (DFAI) and frequency of use The initial part of the questionnaire was designed to of digital platform (DFFI). generate the demographic information. The summarized The above hypothesis was tested using Pearson responses are presented in the table below. correlations test using SPSS. The output of SPSS Table II :Frequency Descriptive correlations test is summarized below. Variables Groups Frequency Percent Table III : Relationship between Awareness and Use Male 180 67.2 Gender of Digital Platform for Financial Payments Female 88 32.8 Correlations Youth 116 43.3 Age DFFI DFAI Matured 152 56.7 DFFI Pearson ** 1 .595 Schoolers 12 4.5 Correlation Education Graduate 160 59.7 Sig. (2-tailed) .000 Professional 96 35.8 N 268 268 ** Profession Service 168 62.7 Correlation is significant at the 0.01 level (2-tailed). Non Service 100 37.3 The above null hypothesis is rejected at 1 percent level of significance and as it can be seen that a positive correlation As it can be seen from the above table that male respondent in the study just double of female respondents. It is evident of .595 was found. Thus it can be said that awareness about digital platforms for financial transactions results that most of the households, financial decisions are taken Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 in its actual use for various day today transactions. The post hoc analysis shows that the statistically significant awareness campaign about use of digital platforms may difference exists between schoolers (upto school prove to be boon for the prime objective of less cash educated) category of respondents and graduate & economy of Indian government. professionally qualified. The mean score of up to school educated respondents was very less. However, very 4.2 Influence of Education Level on Awareness and less difference was found in graduate and professional Use of digital platform for financial transactions category respondents. Therefore, the governments, It is general notion that highly educated person will banks and other institutions must focus their awareness acquire knowledge about any emerging trend. Therefore, programs to this category of respondents. The government researcher inserted question about the education level should also develop easy to use applications which are of respondents with intention to examine the impact of accessible and usable by even illiterate persons. education level on frequency of use and awareness about digital platform for financial transaction. To examine 4.3 Impact of Personal Characteristics on Awareness and these following hypotheses were formed. Use of Digital Platform for Financial Transactions: The personal characteristics like gender, age, occupation H : There is no difference among the educational level etc. also affects the use of digital platform for financial with regards to Digital Financial Frequency Index transactions. Therefore, respondents were asked to (DFFI). specify these. To examine the impact of personal H : The education level of the respondent has no relation 03 characteristics on awareness and use of digital platform with regards to Digital Financial Awareness Index following hypotheses were developed. (DFAI). H : There is no difference in the male and female respondents with regards to Aggregate score of Digital To test these hypotheses, F ANOVA was applied. The Financial Frequency Index . results are analyzed in the table below: H : The Digital Financial Awareness Index of male and Table IV: Influence of Education Level on Awareness female respondents do not differ significantly. and Use of Digital Financial Platforms Similarly, hypotheses H , H , H and H were 06 07 08 09 Sum of df F Sig. developed for age and occupation with regards to DFFI Squares and DFAI. *** DFFI Between 846.681 2 18.773 .000 Groups To test theses hypotheses test for difference between means (t-test) was calculated using SPSS. The results are Within 5975.767 265 Groups summarized in below table. Total 6822.448 267 Table V: Impact of Personal Characteristics on *** DFAI Between 575.557 2 25.110 .000 Awareness and Use of Digital Platform Groups Hypotheses T Sig. df Result Within 3037.100 265 H 4.333 .572 266 Failed to reject Groups H 5.200 .039 266 Rejected Total 3612.657 267 05 H 5.581 .503 266 Failed to Reject *** Means the test statistics is significant at 1% level H 2.964 .682 266 Failed to Reject The results exhibits that both of these hypotheses were rejected at 1percent level of significance. This means H 3.272 .000 266 Rejected that the education level is an important determinant for H 2.608 .012 266 Rejected awareness about the digital platform and its use. The It can be seen from the table that the hypotheses H , Digital Financial Literacy: A Study of Households of Udaipur BM The Journal of Business and Management Volume V | Issue I | December 2018 H , H were related to DFFI (frequency of use). The questionnaire was administered on 300 households of 06 08 hypothesis related with occupation H was rejected at Udaipur (Rajasthan). Out of which 32 responses were one percent level of significance while the test failed excluded due insufficient information. From the findings to reject the rest two hypotheses related with age and of the research it can be said that male of households were gender. Which means that statistical difference in use of more familiar with digital financial platforms and more digital platforms exist in service and non-service class of aware. Similarly, the age wise distribution was categorized occupation. The mean score of service class was found in two category viz. youth and matured. The respondents more. It may be due to the fact that service class people of age 35and below were categorized as youth and above have disclosed money thus they do not hesitate in doing 35 as matured. Similarly, education and profession transaction through digital platform. wise analysis shows that maximum respondents were graduate and service oriented respectively. Frequency The hypotheses H , H and H were related to 05 07 09 of use of digital platforms of financial activities was awareness about digital platform. The hypotheses named as Digital Financial Frequency Index (DFFI) and related with gender and occupation was rejected at 5 Composite score of Awareness was named as Digital percent level of significance. The mean score of male Financial Awareness Index (DFAI). participants was higher as compared to females. It may be due to the fact that females particularly of matured It was found that the education level is an important age have less exposure to digital platform. Therefore, determinant for awareness about the digital platform awareness programs for female households regarding and its use. The mean score of up to school educated digital platforms need to be undertaken. The statistically respondents was very less. However, very less difference significant difference in awareness about digital was found in graduate and professional category platforms exists in service and non-service category. The respondents. Therefore, the governments, banks and awareness means score of non-service category was less other institutions must focus their awareness programs to as compared to service category. this category of respondents. The government should also develop easy to use applications which are accessible and The non-service category has less mean score of awareness usable by even illiterate persons. It was also found that as well as utilization of digital financial platforms (DFFI the statistical difference in use of digital platforms exist and DFAI). Therefore, it may also be inferred that non in service and non-service class of occupation. The mean service respondents do not use digital platform due to score of service class was found more. It may be due to non-awareness. Thus awareness programs for such non the fact that service class people have disclosed money service class people must be arranged. thus they do not hesitate in doing transaction through 5. Conclusion digital platform. Therefore, it may also be inferred that The study aims was to map digital financial literacy non service respondents do not use digital platform due among the house holds of Udaipur city of Rajasthan state to non-awareness. Thus awareness programs for such of India. The study has employed descriptive survey non service class people must be arranged. The mean research design. A questionnaire consisting of instrument score of male participants was higher as compared to to map the frequency of use of digital platform for females. 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