Financial literacy, financial self-efficacy and financial account ownership behavior in Pakistan

Figures & data

Table 1. Financial inclusion across South Asian countries (Percentage of adults)

Financial Inclusion	Pakistan%	Bangladesh%	India%	Sri Lanka%	South Asia(%)
Account ownership	13	31	53.1	82.7	46.4
Financial institution account	8.7	29.1	52.8	82.7	45.5
Mobile account	5.8	2.7	2.4	0.1	2.6
Saved at a financial institution	3.3	7.4	14.4	14.4	12.7
Borrow from a financial institute	1.5	9.9	6.4	6.4	6.4

Source: (World Bank, 2015)

Table 2. Barriers to financial inclusion in Pakistan

Reasons for unbanked		% of adults in Pakistan
Requirement for becoming a customer	Lack of documentation	53.8
	Lack of money
Personal reasons	Lack of financial literacy	50.7
	Lack of self-confidence
	No need of an account
Accessibility issues	Too far away	4.9
	Too expensive
Socio-cultural reasons	Lack of trust	8.5
	Religious reasons

Source: (Nenova & Niang, 2009)

Figure 1. Research framework.

Table 3. Measurements of variables

Construct	Code	Items
Financial inclusion (account ownership)	Account	Do you have an account in bank?
Financial literacy	FLL1	Know about savings
	FLL2	Know about loans
	FLL3	Know about remittances
	FLL4	Knowledge about current account
	FLL5	Knowledge about savings/PLS account
	FLL6	Knowledge about ATM
	FLL7	Know in what way to open an account.
	FLL8	Know in what way to draw or deposit cash in an account.
Financial self-efficacy	FSS1	Confident about managing personal finances
	FSS2	Can expend below my income
	FSS3	Can develop a spending plan to see where I need to make changes
	FSS4	Set financial goals regarding my future wellbeing.
	FSS5	Can develop a strategy to achieve my financial goals
	FSS6	Have resources to utilize financial services for goals
	FSS7	Can deposit cash in bank confidently
	FSS8	Confident to choose the right financial product according to my needs

Source: Survey Questionnaire

Table 4. Reliability analysis

Sr. No.	Variables	No. of Items	Cronbach’s Alpha Score	Composite Reliability Score
1	Financial literacy	8	0.907	0.901
2	Financial self-efficacy	8	0.904	0.908

Source: Survey results & Authors Estimates

Table 5. Variables specification and measurement

Variable Name	Notation	Specification
Financial inclusion	Yi	0 = not having an account; 1 = having an account
Financial literacy	X1	1 = strongly disagree; 2 = disagree; 3 = neutral; 4 = agree; 5 = strongly agree
Financial self-efficacy	X2	1 = strongly disagree; 2 = disagree; 3 = neutral; 4 = agree; 5 = strongly agree
Gender	X3	1 = male; 2 = female
Marital status	X4	1 = married;2 = unmarried
Education	X5	1 = less educated; 2 = educated; 3 = highly educated
Occupation	X6	1 = Formal employed; 2 = Informal employed; 3 = Unemployed; 4 = Student
Income	X7	1 = 0–30,000; 2 = 31,000–60,000; 3 = 61,000 & above

Table 6. Financial inclusion and exclusion across socio-demographic group

Socio-demographic Group		Frequency	Financially included (%)	Financially Excluded (%)
Gender	Male	322	63.7	36.3
	Female	242	42.1	57.9
Marital status	Married	311	55.3	44.7
	Unmarried	253	53.4	46.6
Residence	Rural	263	50.2	49.8
	Urban	301	58.1	41.9
Age	20–30	303	49.5	50.5
	31–40	204	57.4	42.6
	41–50	46	63	37
	51-above	11	100	0
Education	Less educated	111	16.2	83.8
	Educated	180	48.9	51.1
	Highly educated	273	73.6	26.4
Occupation	Formal Employed	233	78.5	21.5
	Informal employed	142	45.1	54.9
	Unemployed	120	23.3	76.7
	Student	69	46.4	53.6
Income	0–30,000	367	40.3	59.7
	31,000–60,000	134	76.1	23.9
	61,000-above	63	90.5	9.5
All respondents		564	54.4	45.6

Source: Authors Estimates

Table 7. Descriptive statistics and data normality results

Variable	N	Mean	Std. Dev	Skewness		Kurtosis
				Statistics	Std. Error	Statistics	Std. Error
Financial inclusion	564	0.54	0.49	−0.178	0.103	−1.975	0.205
Financial literacy	564	3.98	0.98	−0.980	0.103	0.294	0.205
Financial self-efficacy	564	4.08	0.78	−1.035	0.103	0.602	0.205

Source: Authors calculations

Table 8. Correlation analysis

	Financial Account Ownership	Financial literacy	Financial self-efficacy
Financial Account Ownership	1	.575***	.298***
Financial literacy		1	.475***
Financial self-efficacy			1

***denotes statistical significance of the results at 1% level of significance.

Table 9. Dependent variable (financial inclusion in terms of account ownership)

Variables	βis	S.E.	Wald	d.f.	Sig.	Odd Ratio (eβi)
Financial literacy	1.499	.192	60.900	1	.000***	4.478
Financial self-efficacy	.182	.176	1.065	1	.302	1.199
Gender (male)	.828	.282	8.594	1	.003**	2.288
Marital status (married)	.600	.280	4.590	1	.032**	1.822
Education			7.114	2	.029***
Educated	.221	.400	.305	1	.581	1.247
Highly educated	.951	.453	4.406	1	.036**	2.588
Occupation			18.073	3	.000***
Formal employed	1.131	.366	9.546	1	.002***	3.100
Informal employed	−.100	.500	.040	1	.841	.905
Unemployed	.378	.459	.678	1	.410	1.459
Income (000)			12.790	2	.002***
31,000–60,000	.861	.316	7.409	1	.006***	2.366
60,000 and above	1.727	.587	8.671	1	.003***	5.626
Constant	−8.754	1.017	74.043	1	.000***	.000

Note:Cox and Snell’s (R2) is 0.43 and Nagelkerke R-square (R2) is 0.578; it implies that 43 to 57% variation in the individual’s account ownership behavior are explained by the estimated model. Model chi-square statistic is also significant at 5 % of significance, showing that overall model fit is good in explaining the variation in the model.

Table 10. Dependent variable (financial self-efficacy)

Variables	β	S.E	t	p value	95 % CI for B
					Lower	Upper
Constant	2.587	.12	21.48	.000***	2.35	2.82
Financial literacy	.376	.029	12.79	.000***	.32	.43

Source: Author calculations.

Table 11. Mediation impact of financial self- efficacy on financial literacy and financial inclusion relationship

Variables	Mediating Variable	Indirect effect	Direct effect	Total Effect	Result
Financial literacy and financial inclusion	Financial self-efficacy	0.07	1.499***	1.566	Reject H4

Source: Author calculations.

Figure 2. Purpose of having financial accounts in Sahiwal division (Source: Author’s survey).

World Bank. (2015). The little data book on financial inclusion 2015. The little data book on financial inclusion 2015. The World Bank. https://doi.org/10.1596/978-1-4648-0552-3

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Nenova, T., & Niang, C. T. (2009). Bringing finance to Pakistan’s Poor. The World Bank. https://doi.org/10.1596/978-0-8213-8030-7.

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