ISSN (Online) - 2349-8846
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Deciphering Financial Literacy in India

Evidence from States

Manuela Kristin Günther ( is at the Overseas Development Institute, London, United Kingdom. Saibal Ghosh (saibal is at the Qatar Central Bank, Doha, Qatar.

Utilising a nationally representative data set, an index of financial literacy consisting of financial knowledge, behaviour, and attitude is constructed. The findings suggest significant variation in financial literacy across states with an over 60 percentage point difference between the state with the highest financial literacy and that with the lowest. Multivariate regressions show that there exist large and statistically significant gender-, location-, employment-, education-, technology-, and debt-driven differences in financial literacy. Much of the observed regional divergence persists even after we control for cohort effects.

A significant part of the work was done when Manuela Kristin Günther was a research visitor at the Centre for Advanced Financial Research and Learning, Mumbai, where Saibal Ghosh was then deputy research adviser. Earlier drafts of the paper were presented at the Brown Bag seminar at Reserve Bank of India, Mumbai and at the South African Reserve Bank. The authors thank the participants for their comments and insights. The authors would also like to thank the anonymous referee for the incisive comments on an earlier draft. The views expressed and the approach pursued in the paper strictly refl ect the personal opinion of the authors.

Updated On : 4th Apr, 2018


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