Analysing the financial literacy between the working and non-working women in Sri Lanka using the Blinder Oaxaca decomposition

Abstract

Financial literacy is a crucial attribute of making day-to-day financial reasoning. (Lisa & Bilal, 2016) Claim that low financial literacy occurs regardless of the level of the country's economic situation. Poor financial literacy leads to critical financial conditions for any considered economy, and recently the attention towards the level of financial literacy of individuals, by governments, regulators, institutions, and academics has grown. Many researchers argued that the variety of barricades makes it difficult for women to steer and partake equally in the financial world. This paper explores the gap between a random sample of 440 working and non-working women’s financial literacy using a modified version of the famous (Lusardi & Olivia, n.d.) financial literacy questionnaires in Sri Lanka. Descriptive statistics emphasized that the majority of the respondents were aged between 250-35 and 45% of respondents were financially literate. Two T-square tests indicated that the mean of nonworking women laborers’ financial knowledge and financial attitude is less than the mean of working women laborers. Finally, Blinder Oaxaca's Decomposition analyzed that on average, non-working women possess slightly less financial knowledge and less attitude toward financial matters compared to working women. Income and age variables are insignificant in explaining the financial literacy gap. These results shed insight into the urge for tailored financial literacy programs for nonworking women and more prominent to empower their employment and involvement in financial reasoning. This study contributes to the broader discourse on women’s contribution to economic empowerment, offering evidence-based recommendations for bridging the financial literacy gap and underscoring the policy interventions to enhance the financial knowledge of women from their younger ages.