FINANCIAL LITERACY - CONCEPTUAL DEFINITION AND PROPOSED APPROACH FOR A MEASUREMENT INSTRUMENT

The financial education of a country (in terms of knowledge, abilities and behaviors) can be crucial for a healthy economic life, at individual, macro or multi-nation level. It can contribute to a decrease of financial exclusion risks, to an increase of informed decisions and even to an increased liquidity on the financial markets. The concept designed to encompass different facets of this financial education is labeled "financial literacy". A large number of concepts are used within the umbrella of financial literacy, and quite different measurement instruments exist, more or less sound. This conceptual and operational heterogeneity makes things complicated and does not allow comparisons and concrete actions. In order to improve people's financial literacy we first need to define the concept and then find the best ways to measure one's degree of financial literacy. Through our study we synthesized the definitions and instruments previously used and we suggest a comprehensive approach for obtaining a measurement instrument for this latent variable financial literacy. We propose using separate scales for measuring the main dimensions of financial literacy financial knowledge, financial abilities (capability to use financial information in order to take decisions), financial communication, financial behavior and financial confidence. As methodology we used a documentary study and a didactic experiment on Master degree students in finance.