Factors Affecting Financial Literacy Among University Undergraduates In Sri Lanka:An Evidence from University of Vavuniya

Abstract

Financial literacy is an important thing since all people have to make decisions that are related to financial matters like day-to-day economic activities and investment activities. The main purpose of this study is to identify the factors affecting the financial literacy of university undergraduates in University of Vavuniya. A sample of 301 undergraduates who are following their degrees in three faculties namely applied science, business studies and technological studies in Vavuniya university were selected as the samples for the research. Primary data were collected using a questionnaire and gender, year of study, faculty of study, parents' monthly income, parents’ education and financial behavior were evaluated against the financial literacy which is taken as the dependent variable. Among the all these variables, only financial literacy and financial behavior were measured using 5 – point Likert scale questionnaire where 1 for strongly disagree to 5 for strongly agree. Other independent variables were coded using nominal and categorical values. The data were analyzed using frequency, correlation between the variables, and multiple linear regression model. The findings of the correlation analysis show that financial literacy of undergraduates has a significant positive relationship between income of the parents, education of the parents and financial behavior. However, there is no relationship between the gender, year of study, faculty of study on the financial literacy of university undergraduates in the university. Further, the study found that, year of study, income of the parents, education of the parents and financial behavior are the main determinants and they are positively and significantly influencing the financial literacy of university undergraduates. On the other hand, gender, year of study, and faculty of study are not the significant factors for the determinants of financial literacy. The outcomes of this study will be useful to the undergraduates, academics, and policy makers to understand the main determinants of financial literacy and according that they can decide their financial decisions in the future.