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Journal of Education & Social Sciences - Volume 4, Issue 2 2016
By Shama Ghaffar, Saqib Sharif
10.20547/jess0421604204
Keywords: Financial literacy, savings rate, Pakistan, personal financial management, household choice
This study examines the level of financial literacy in Pakistan. Financial literacy (or financial knowledge) is characteristically an input to assess the requirement for financial education and explain changes in financial outcomes. The study reveals that the individuals, who have the more financial knowledge, usually save more. It is inevitable for investors and the general public that they possess sufficient knowledge and awareness about how financial institutions and markets work; types of risks and expected return, that subsequently is fruitful for the growth of the economy. The results show that 1) middle-aged and older people are careful in spending their money; 2) male respondents usually have better saving habits; 3) people with higher qualification and bigger family size advises their peers about managing the finances; and 4) respondents earning high salaries agree that financial literacy does help in leading a financially secure life. Further, based on evidence, this paper suggests that it is important for policymakers and financial regulators of Pakistan to increase the financial literacy of the masses in general, and especially the female population, in order to minimize the problem of adverse selection and moral hazard.