Determinants and impact of financial literacy on savings behaviours among households in Malawi

Abstract

This paper empirically investigates the determinants of financial literacy and its impact on saving behaviors among Malawian households. The study uses data from the 2018 Malawi Financial Literacy and Consumer Protection Household Survey, commissioned by the Reserve Bank of Malawi in 2018. The empirical results show that location, gender, occupation, marital status, income level, financial education and ownership of bank account are statistically significant factors that influence the level of financial literacy in Malawi. Furthermore, the Probit regression results reveal a significant positive relationship between the level of financial literacy scores and household’s saving behavior. The findings of this research call for enhanced efforts on the part of relevant policymakers to increase financial literacy as that is expected to improve saving level in a given country. In a Malawian point of view, it is recommended that the Ministry of Finance should expedite the launching of the National Financial Literacy Strategy, which is still in a draft stage but will have to guide the implementation of financial education programs in the country.