Financial literacy and gender gap: a study of Punjab state of India

Financial literacy helps individuals to make sound financial decisions by improving their level of financial knowledge, attitude and skills, hence leading to effective financial management. It promotes financial inclusion by improving access to financial products and services. This paper examines the level of financial literacy among the people of rural areas of Punjab. The study is based on primary data and a multi-stage stratified proportional random sampling method has been used to collect the data from the respondents of different districts of Punjab. The main focus of the study is to find the level of financial literacy and to analyse the gender gap in financial literacy in rural areas of Punjab. Four main components of financial literacy have been identified and a financial literacy index is formed. OECD/INFE and NCFE methodologies for measuring financial literacy have also been used. The results of the study show a lower level of financial literacy and a significant gender gap in financial literacy among the respondents of rural Punjab. It is found that 28.3% of the males and just 9.8% of the females are financially literate. The study also highlights the impact of different socio-economic and demographic parameters on the level of financial literacy of male and female respondents.