Long term training improves financial literacy among rural women: IIM-A study

While training is effective in improving financial literacy in the long-term (18 months), the effectiveness varies across the three dimensions of financial literacy viz., financial knowledge, financial behaviour and financial attitude, says a study by the Indian Institute of Management, Ahmedabad (IIM-A). The study states that while the effectiveness of training is high for financial knowledge and financial behavior, it is only marginal for financial attitude. The study confirms the value of training for the most disadvantaged segment. Women with low level of family income and low level of education benefit significantly from the training imparted.

Titled 'Effectiveness of Financial Literacy Interventions in Improving Financial Literacy among Rural Women in North India', the study has been conducted by four IIM-A faculty members including Sobhesh Kumar Agarwalla, Samir K. Barua, Joshy Jacob, and Jayanth R. Varma, with financial support from Citi Foundation.

"Training is effective in improving financial literacy in the long-term (18 months). However, the effectiveness varies across the three dimensions of financial literacy. While the effectiveness is high for financial knowledge and financial behavior, it is only marginal for financial attitude. Training is effective in improving financial literacy in the short-term (1-3 months). The effectiveness is the highest for financial knowledge and the least for financial attitude," the study stated while adding that there is a significant decline in financial knowledge and financial behavior over time.

In case of financial attitude, the long term retention of learning is not statistically significant. The decline over time of financial literacy points to the need for refresher courses to enhance retention of learning in the long-term. Such courses ought to be based on sharing of experiences of participants in applying some of the learning from the programs.

Other findings of the study included that the use of alternate techniques such as movies and games in the training programs does not have a significant impact on financial literacy. This is because the positive influence of games on financial behavior and financial knowledge is accompanied with negative influence on financial attitude.