Abstract:
Financial literacy can develop an individual’s ability of using financial resources effectively
and efficiently. As a result, an individual's economic wellbeing and of the social welfare is
optimized. As is the case with like many developing countries, in Sri Lanka also financial
literacy is in a considerably lower level. This study analyzed and assessed the financial literacy
of the rural sector in the country by collecting data from 250 individuals in the Kurunegala
district. On the basis of the observations made by the analysis it was found that the socioeconomic
status, components of income and expenditures, level of awareness, factors
influencing investment behavior and perception towards the financial services are significantly
related to the financial literacy level. Financial literacy is positively correlated with income,
education, usage of banking products and knowledge of simple economic concepts. It was
recognized that there is a higher financial literacy among the males when compared to the level
of education and profession were the most significant factors that determine the level of
financial literacy of a rural individual. These results suggested that knowledge and practice of
the basic financial literacy should be included in the formal education syllabus and popularizing
financial knowledge through various programs is a must to improve the prevailing conditions.
Further formal financial institutions can introduce financial products that suit the reclaiments
of each sectors of the country.
