The Analysis of Degree and Impact of Demographic Factors on Financial Literacy in a Non-University Higher Education Institution in Sri Lanka

Financial literacy has again come into spotlight and has become a hot issue with the recent economic development in Sri Lanka. This study makes an attempt to assess the degree of financial literacy and determine the impact of demographic factors on the financial literacy level of students of non-university higher educational institute in Sri Lanka. 319 students were surveyed during April and May 2015 for these purposes. In order to assess the degree of financial literacy, based on the correct answers provided, a main financial literacy index and four related sub-indices on general financial knowledge, savings and borrowings, insurance and investments were constructed. The results indicated that the degree of financial literacy among the students, measured in terms of main financial literacy index is 64%. The other sub-indices ranged from 52% (investment sub-index) to 71%(savings and borrowings sub-index). Based on the logistic regression result that examined the impact of demographic factors on the financial literacy indicated that non-business management majors (i.e., English and Information Technology) are more likely to be less knowledgeable on financial literacy (in overall and in general knowledge and savings and borrowings sub-dimensions) than business majors (i.e., Accounting and Business Management).These results are expected to have significant educational policy implications that includes introduction of subjects related to financial literacy for all students in their formative stages as well as introducing course components related to accounting and finance in the curriculums of non-business majors