Impact of Economic and Financial Literacy on the Spending Behaviour of Selected Public Servants in Lagos State Nigeria

Abstract

:Low level of financial literacy among the young workforce has remained a lingering problem,especially in developing countries. This has been pointed out as one of the causes of poor personal financialmanagement practice. This problem has hampered the efforts of various governments and institutions inthis region geared towards financial inclusion and the overall economic wellbeing of the citizens. Moststudies in this area focused on the financial literacy level of people rather than the effect on their behaviour.This study is an attempt examine the effect of financial literacy level on spending behaviour of 30 youngadults from public sector organizations. The study employed the standard questions for assessing theknowledge level of respondents. The questions test their understanding of simple and compoundinterest,inflation and portfolio diversification. For the spending behaviour, thePlanned Behaviour Theory(PBT) proposed by Icek Ajzen (1985) as a theoretical framework for measuring spending behaviour usingthe respondents preparation of budget and personal pre-retirement savings account as proxies. Data wascollected using a structured questionnaire . Descriptive statistics and multiple regression was used toanalyze thedata. The result showed that there is a positive correlation between the level of financial literacyand the spending behaviour of therespondents. The less the knowledge of financial management the peoplehave, the higher the risk of poor spendingbehaviour. The conclusion was drawn to say that more work isneeded to equip the youth especially on the art of financial management.

Impact of financial literacy on consumer financial behavior: A systematic review and research agenda using TCCM framework

“…Several investigations, including those by Danila et al (2019), Khalisharani et al (2022), and Arifin (2017), have employed Multiple Regression Analysis (MRA) to empirically examine the interaction between financial literacy and its application in financial decision‐making. Researchers such as Bellofatto et al (2018), Mireku et al (2023), and Omakhanlen et al (2021) have also investigated this analytical avenue. Notably, a limited number of studies (2) have explored alternative methodologies, such as MANCOVA (Birkenmaier & Fu, 2016) and ANOVA, to uncover the effects of financial literacy.…”

“…Yong et al (2018) discovered that financial education has a positive impact on financial knowledge, which, in turn, significantly predicts both financial attitude and behavior. Omakhanlen et al (2021) have utilized the Planned Behavior Theory (PBT) as a theoretical framework to measure spending behavior, employing the respondents' preparation of budgets and personal pre‐retirement savings accounts as proxies.…”

“…Quantitative Cross-sectional study (surveys/questionnairebased) 63 80 (Arifin, 2017;Bellofatto et al, 2018;Danila et al, 2019;Khalisharani et al, 2022;Mireku et al, 2023;Omakhanlen et al, 2021) Experimental study 2 2.5 (Bhutoria & Vignoles, 2018;Sayinzoga et al, 2016) Meta-analysis 2 2.5 (Fernandes et al, 2014;Hwang & Park, 2023) Total 67 86…”

“…Theory of planned behavior 8 10 (Adil et al, 2022a(Adil et al, , 2022bAdil et al, 2023;Indapurkar & Raj, 2017;Mudzingiri et al, 2018;Omakhanlen et al, 2021;Robb, 2011;Yong et al, 2018) Life-cycle theory of consumption and savings 3 4 (Adam et al, 2017;Landerretche & Martínez, 2013;Xiao & Porto, 2017) Prospect theory 5 6 (Adam et al, 2017;Jonsson et al, 2017;Rasool & Ullah, 2020) Behavioral finance theory 3 4 (Khandelwal et al, 2022;Youssef et al, 2021;Zhang et al, 2023) Modern portfolio theory 4 5 (Markowitz, 1999;Mouna & Anis, 2017;Murendo & Mutsonziwa, 2017;Rasool & Ullah, 2020) Economic theory 4 5 (Gaudecker, 2015;Grohmann, 2018;Wagner & Walstad, 2019) Efficient market/capital market theory 3 4 (Adil et al, 2022a(Adil et al, , 2022bAdil et al, 2023;Rasool & Ullah, 2020) Other theories 8 10 ( Awais et al, 2016;Kim et al, 2019;Mireku et al, 2023;Shih & Ke, 2014) No guiding theory 41 52 financial education has a positive impact on financial knowledge, which, in turn, significantly predicts both financial attitude and behavior. Omakhanlen et al (2021) have utilized the Planned Behavior Theory (PBT) as a theoretical framework to measure spending behavior, employing the respondents' preparation of budgets and personal preretirement savings accounts as proxies.…”

“…provides an overview of the industries examined in the impact of financial literacy on consumer financial behavior studies. The study we conducted reveals that the majority of research is predominantly concentrated within the realms of the Financial Market(Arora & Chakraborty, 2023;Banthia & Dey, 2022;Bellofatto et al, 2018;Omakhanlen et al, 2021;Prasad et al, 2021), Stock Market (Akhtar &T A B L E 2 ;Khalisharani et al, 2022;Marinov, 2023;Mireku et al, 2023;Morris et al, 2022;Mudzingiri et al, 2018;Susan & Djajadikerta, 2017;Widyastuti et al, 2020) Industry not explicitly stated 47 59(Jonsson et al, 2017;Landerretche & Martínez, 2013;Rasool & Ullah, 2020;Xiao & Porto, 2017, and others).…”