Financial Literacy and Financial Inclusion: A Case Study of Punjab

Abstract

The successful inclusion of the financial services to the people of the country requires good level of financial literacy among them.By looking the strong relationship between financial literacy and financial inclusion, the present study aims to identify the main factors affecting the level of financial literacy in India with special reference to Punjab State.The study is based on the primary data collected from three main districts (Amritsar, Jalandhar, & Ludhiana),one each from all threeregions of Punjab namely, Majha, Doaba, and Malwa. Data have been collected from both rural and urban areas of each districts and comparative analysis has been conducted to show the differences in level of financial literacy within the district and between the districts. Chi-square test has been utilized to check the association between respondents’ characteristics and their existing level of financial knowledge. The whole analysis reveals that there exist differences in the level of financial literacy between male and female respondents and it is less in female respondents. These differences are also lies between urban and rural respondents. The level of financial literacy is higher in urban areas than in rural areas. Finally, the respondent’s qualification and its parental qualification also affect the level of financial knowledge in Punjab. On the basis of results, the study recommends the adoption of policies related to the women empowerment in both urban and rural areas which may help in reducing the gap between financial literacy among two areas and improve the overall level of financial literacy. The improvement in the level of financial literacy will further enhance financial inclusion as per the linkage between two.