FINANCIAL_LITERACY

© 2020 IJRAR March 2020, Volume 7, Issue 1 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138) FINANCIAL LITERACY LEVELOF SERVICE CLASSAND BUSINESS CLASS PEOPLE: AN EMPIRICAL STUDYOF SOUTHERN RAJASTHAN Mrs. Shilpi Parikh1, Dr. Rajni Arora2 Research Scholar1, Head, Bachelor of Business Administration (research guide)2 Faculty of Commerce & Management Bhupal Nobles University, Udaipur, India Abstract: Financial literacy is a combination of awareness, knowledge, skill, attitude, and behavior necessary to make sound Investment decision and ultimately achieve individual financing wellbeing or in other words financial literacy as the familiarity with the most basic economic concepts needed to make sensible saving and investment decisions. The objective of this paper is to study the financial literacy level of service and business class people. The data has been collected with the help of semi structured questionnaire and it has been concluded that service class and business class people have average level of financial knowledge. Index Terms: Financial Awareness, Service Class, Business Class 1. INTRODUCTION India, with a rich demographic dividend is making excellent growth in all sectors. The GDP growth rate is 8.2% and per capita income grew to Rs 1,12,835 during the fiscal year ended March 2018. Increase in income leads to increase in consumer spending. Consumer Spending in India averaged 10738.61 INR Billion from 2004 until 2018, reaching an all time high of 19190.11 INR Billion in the fourth quarter of 2017. This matrix of income and spending is a positive correlation. However, comparing this matrix with Indian household investments/savings reflects a sad affair. India’s overall savings rate has declined to 30% from 34.6% over five years, ending FY 2016-17. The worst drop is in the household sector, the largest contributor to savings in the economy, dropping to 16.3% from 23.6% over the period. Savings are crucial indicator of investment in the country as more savings with main stream investment channels imply proper circulation of money for the country’s development. This decline in savings indicates the low level of financial literacy among the investors.In market numbers of financial products are available, therefore financial knowledge is crucially important to differentiate between the broad range of providers, products and services as means to achieve financial freedom. In other words it can be said that the person should be financial literate. Financial literacy makes individuals aware about financial aspect like importance of insurance, PPF contribution to retirement planning. Individuals especially who are young should be educated about benefits of tax planning from beginning of financial year, must be educated about various investment avenues, importance of taking term policy early, etc. The major objective of this research is to study the financial literacy of the business and service class people, so that measures can be taken to improvise the financial literacy of respondents. 2. LITERATURE REVIEW Prof. V.V. Subramanya Sarma, Dr. G. Surendar, (2018)1, (International journal of pure and applied mathematics), presented research on financial literacy and financial planning among teacher of higher education on critical factor of selected variable. The study found that the level of financial literacy among the teacher of higher education is satisfactory. The majority of teachers have high level of financial literacy, aware of various aspects of personal financial planning and able to plan on their own irrespective subject. Analysis was carried out and found critical quality factors in Financial Literacy and Personal Financial Planning. Anurag Banergee, Kamlesh Kumar, Dennis Philips (2017)2 studied on financial literacy, financial Awareness and Inclusion. It analyzed the relation between financial literacy, financial Awareness and financial inclusion in an emerging financial market context Data. Adopted from large sample of Indian households provide us with the rich set of information to take the opportunity to closely investigate the effect of financial awareness on financial literacy. Researchers were interested in the question of whether financial literacy always directly and positively affects households’ participation in emerging financial markets. Study suggested that the concept of time value of money and risk and return are the most important concept in the functional knowledge of finance. The channel sets financial awareness as the intermediate step and then shows that the effect of financial literacy on inclusion behavior is actually from the effect of financial literacy on financial awareness. Financial literacy is a modest predictor for financial ownership but a strong predictor of financial awareness in emerging markets. Study concludes that financial literacy empowers households to make informed decisions about ownership, about management and about financial knowledge. IJRAR2002024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 149

© 2020 IJRAR March 2020, Volume 7, Issue 1 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138) Sandeep Pandey (2017)3, studied on awareness of working woman regarding financial literacy and financial planning. Objective of the study was examine the fact of literacy, kind of financial literacy input required by woman, problem faced by woman and measure to develop right kind of financial literacy model for woman. Study took the whole concept of financial education and literacy for woman that is economical, geographical, culture issue, political issue, Government Issue, physiological issue and other. Sample size was taken of 100 clerical and 100 management women. Data collected in bifocal manner. Study found that lacking of energetic contribution from the woman in nationalized activity, the communal, the financial sluggish. Study found that women were equally capable. Sangeeta Gupta (2017)4 studied Dimensions of Financial Literacy and its Relationship with household savings and investment. Research objective was asses the level of literacy, determine the level of literacy, relation between financial literacy and household or investment. Study took 450 respondents to check the financial literacy level based on age, gender, marital status, education through questionnaire. It was observed that 52.67% people were considered as individuals with high level of financial literacy and 43.33% with low level of financial literacy. Study found that males possessed high level of financial literacy than females and respondent felt they knew about financial matter and took their own decision. The research suggested innovation of financial product and services increase attraction of domestic financial market, changing financial structure and gain attraction of educators and community groups and provided financial education to individuals and advised policy makers and regulatory authorities to encourage financial literacy. Jamie Frances wager (Lincoln Nebraska)5 2015, Analyses the effect of financial education on financial behavior and financial literacy. Data used for this study came from 2012 (NFCS) which is represent survey of people’s financial knowledge, behavior and attitude. Objective of the research was to evaluate key measurement with demographical and attitudinal characteristic, providing data and public policy of financial capability. Reacher found that financial education has a positive result with person’s financial literacy. Sample based on education and income result. Study suggest that there were benefits of financial education but extended of benefits may depend on the time horizon for changing financial behavior. It has most positive relation with financial literacy and long term behavior (age, gender, income, education) and mixed relation with short term behaviors. This research is valuable for policy maker and financial educators to help them in sound and effective financial education programs. Study suggested that financial literacy Satisfactory related to five long term financial model than short term. Some people who have made regular financial decision find some trouble. Research suggested studying other financial behavior for future study. 3. OBJECTIVE The purpose of this research paper is to study and compare the financial literacy level of service class and business class people of southern Rajasthan. 4. HYPOTHESIS H0: There is no significant difference in financial literacy level of service class and business class people H1: There is a significant difference in financial literacy level of service class and business class people 5. RESEARCH METHODOLOGY (a) Research Design: - To have a better understanding about the issue descriptive research design was used. To get the primary data close ended questionnaire was administrated. (b) Sample Design: - 510 respondents were selected through stratified purposive sampling. In a sample 285 respondents were from service class and 225 respondents were from business class. (c) Analysis: - The data collected was analyzed with the help of Arithmetic mean and t-test. IJRAR2002024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 150

© 2020 IJRAR March 2020, Volume 7, Issue 1 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138) 6. ANALYSIS AND INTERPRETATION To access the financial literacy respondents were asked to answer some multiple choice questions related to the financial products. In total 18 questions were asked and the list of questions along with the correct & incorrect answers is presented in table 1 Table 1: Questions Asked to Measure Financial Knowledge of Respondents S. Questions for Financial Literacy Correct Incorrect Answers No. Answer 1 Savings Account is opened in Post office & Only Post office, Only Bank, LIC, Banks No idea 2 Current approximate Interest rates on Bank Saving 4% p.a. 3% p.a., 5% p.a., 6% p.a., Can’t say Account 3 Life Insurance is for All Only Saving, Only Investment, Only Risk Cover, No Idea 4 Nominations is valid in case of All Only Saving account, Only PPF, Only life insurance, No idea 5 Income Tax Benefit in Fixed Deposit Are Are not Applicable, No Idea Applicable 6 Do you know about Public Provident Fund Yes No 7 From where National Savings Certificate can be Post Office Bank, Share Market broking firms purchased Are Are not Applicable, Can't Say 8 Tax Benefit in NSC Applicable 8 Years, 15 Years, 12 Years, Can't Say 9 Maturity period of NSC 5 Years No 10 Opening a D-Mat account is compulsory to invest in Yes No share market 11 Heard about SENSEX/National Stock Yes Exchange/Bombay Stock Exchange 12 Which one is the least risky avenue of Investment SIP Shares, Mutual Funds 13 Banks calculate interest in loan by using which Compound Simple Interest, Both method Interest Decreases Increases, Remains Same, Don't 14 When investor invests money in different avenues, Know then his risk of losing money Decreases Increases, Remains Same, Don't Know 15 If inflation rate increase then the value of rupee 16 Which of these is a most liquid asset Cash Land, Car, Fixed Deposit 17 When a bank returns a cheque on account of Dishonor of Cancelling of Cheque, Drawing of shortage of funds in the account, it is called Cheque Cheque 18 Normally, which asset displays the highest Equity Saving Account, Mutual Funds fluctuations over time Shares To access the financial literacy the correct answers given by each respondent was counted and on the basis of scores respondents were segregated into 3 categories i.e. High (More than 12 correct answers), average (7 to 12 correct answers) and low (up to 6 correct answers). Table 2 is representing the data related to the financial literacy of the respondents. It can be seen that majority of respondents (N=240, Percentage=47.06) were having high level of financial literacy whereas 41.76% respondents (N=213) were in the average level of financial literacy category. Rest of the respondents (N=57, Percentage=11.18) were financially illiterate of having the low level of financial literacy. Table 2: Financial Literacy level of Respondents N Percentage Financial Literacy Level Low 57 11.18 151 Average 213 41.76 High 240 47.06 Total 510 100 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org IJRAR2002024

© 2020 IJRAR March 2020, Volume 7, Issue 1 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138) Table 3 is presenting the financial literacy level of service class and business class respondents. It can be seen that in both the categories majority of respondents carries high level of financial literacy however as per mean scores business class people were found to be more financial literate than the service class people. Table 3: Financial Literacy level of Respondents according to their Occupation Financial Literacy Level Service Class Business Class N Percentage N Percentage Low 31 10.88 26 11.56 Average 126 44.21 87 38.67 High 128 44.91 112 49.78 Total 285 100 225 100 Mean Score 11.53 11.94 Level Average Average To measure the significant difference in the financial literacy level of service and business class people following hypothesis has been taken H0: There is no significant difference in financial literacy level of service class and business class people H1: There is a significant difference in financial literacy level of service class and business class people To test the significant difference in the financial literacy level of service class and business class people t-test was used and results received are presented in table 4. Table 4: t-Test Results to Measure significant difference in the financial literacy level of service class and business class people Factor Respondents Mean S.D. t-value p-value Result 11.53 3.129 1.387 0.166 Not Significant Financial Service Class 11.94 3.637 Literacy Business Class Level of Significance = 5% At 5% level of significance the t-statistic is not significant which leads to the acceptance of hypothesis so it can be concluded that there is no significant difference in the financial literacy level of service class and business class respondents. Both types of sample respondents have similar level of financial knowledge. 7. CONCLUSION From this research it has been concluded that service class and business class people have average level of financial knowledge. As per results business class people were found to be more financial literate than the service class people however this difference was not significant. 8. REFERENCES 1. Prof. V.V. Subramanya Sarma, Dr. G. Surendar, (2018), International Journal of Pure and Applied Mathematics Volume 118 No. 18 2018, 1627-1649 ISSN: 1311-8080 (printed version); ISSN: 1314-3395 (on-line version) 2.Anurag Banergee, Kamlesh Kumar, Dennis Philips (2017) ∗Durham University Business School, Mill Hill Lane, Durham DH1 3LB, UK; Emails: [email protected], [email protected], pp112e 3. Sandeep Pandey studied on awareness of working woman regarding financial literacy and financial planning.2017 4. Sangeeta Gupta(2017), To measure the levels of financial literacy among individuals of Delhi, Parapet- Indian journal of research, Volume no.6, issue1, pg. no- 62-66. 5. Jamie Frances wager (Lincoln Nebraska)5 2015Analysed the effect of financial education on financial behavior and financial literacy, volume no5 College of at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Dissertations, Theses, and Student Research from the College of Business by an authorized administrator of DigitalCommons@University of Nebraska – Lincoln (may 2015) IJRAR2002024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 152