Analysing the relationship between financial literacy and the use of financial products in Namibia
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Date
2022
Authors
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Journal ISSN
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Publisher
University of Namibia
Abstract
This study analyses the relationship between financial literacy and the use of
financial products in Namibia. The objectives of the study were: to examine
the determinants of financial literacy as well as examine the effects of financial
literacy on the use of financial products in Namibia. This study was important
because it provides financial institutions and policy makers with an insight on
how to promote financial literacy and the use of financial products in Namibia.
The data used in this study were sourced from the Namibia Financial Inclusion
Survey of 2017. The study employed the ordinary least squares (OLS) model to
estimate the determinants of financial literacy and the probit model, and an
instrumental variable probit (IV Probit) to examine the impact of financial
literacy on the use of financial products. The study focused on individuals aged
16 years and older, the legal age that allows individuals to own formal financial
products in Namibia. The results suggest that age, gender, location, formal
education, access to television, participation in household financial decisions,
access to mobile phone and being a member of a savings club significantly
influences the level of financial literacy. The study found that a one index point
increase in financial literacy increases the probability of having a savings
account by 96%age points and the probability of having a bank account by
89%age points. For the individual measures of financial literacy, the results
suggest that a unit index point increase in financial attitude, financial
knowledge, and financial awareness increases the probability of having a saving
account by 32, 15 and 55 percentage points and the probability of having a bank
account 21, 41, and 16 percentage points, respectively. Similarly, a one index
increase in financial literacy increases the probability of having access to credit
by 52%age points and the probability of having access to insurance by 89%age
points. For the individual measures of financial literacy, a unit index increase in
financial attitude, financial knowledge, financial confidence, and financial
awareness increases the probability of having access to credit by 17, 20 and 11
percentage points and the probability of having access to insurance by 27, 45
and 15 percentage points, respectively. The study recommended that the
Government of Namibia, in conjunction with the Financial Literacy Initiative as
well as various stakeholders and experts, should work on developing a national
policy on financial literacy.
Description
A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Business Administration (Management Strategy)
Keywords
Financial literacy, Financial products, Financial confidence