ProjectClue.com We're Ready, Call Us

(+234) 07030248044

Project Topic:

THE IMPACT OF FINANCIAL LITERACY ON ECONOMIC DEVELOPMENT IN NIGERIA

Project Information:

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 66 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1,553 people found this useful

Project Department:

ECONOMICS UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

Project Body:

CHAPTER ONE

1.1. BACKGROUND TO THE STUDY

Financial literacy remains an interesting issue in both developed and developing economies, and has elicited much interest in the recent past with the rapid change in the finance landscape. OECD (2005), defines financial literacy as the combination of consumers’/investors’ understanding of financial products and concepts and their ability and confidence to appreciate financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being (Miller et al., 2009). Financialliteracy helps in empowering and educating consumers so that they are knowledgeable about finance in a way thatis relevant to their lives and enables them to use this knowledge to evaluate products and make informeddecisions. It is widely expected that greater financial knowledge would help overcome recent difficulties inadvanced credit markets.

Financial literacy prepares consumers for tough financial times, through strategies thatmitigate risk such as accumulating savings, diversifying assets, and purchasing insurance.Financial literacy facilitates the decision making processes such as payment of bills on time, proper debtmanagement which improve the credit worthiness of potential borrowers to support livelihoods, economic growth,sound financial systems, and poverty reduction. It also provides greater control of one’s financial future, moreeffective use of financial products and services, and reduced vulnerability to overzealous retailers or fraudulentschemes. Facing an educated lot, financial regulators are forced to improve the efficiency and quality of financialservices. This is because financially literate consumers create competitive pressures on financial institutions tooffer more appropriately priced and transparent services, by comparing options, asking the right questions, andnegotiating more effectively. Consumers on their part are able to evaluate and compare financial products, such asbank accounts, saving products, credit and loan options, payment instruments, investments, insurance coverage,so as to make optimal decisions.Financial literacy as the name implies occupies a centre-stage in the quest to achieve an overall degree of success in an organization, (Bernheim, 2008). It also enhances to a reasonable degree, a business goal of financial profit. Thus, financial literacy (or lake thereof) has played a key role in the success and failure of our nation’s business for the past centuries. Greenspan (2002) argues that financial literacy helps to inculcate individuals with the financial knowledge necessary to create household budgets, initiate savings plans, and make strategic investment decisions. Proper application of that knowledge helps households to meet their financial obligations through wise planning, and resource allocation so as to derive maximum uitility. (Hilgert, Hogarth, & Beverly, 2003) asserts that financial knowledge appears to be directly correlated with self-beneficial financial behavior. However, Sceptics (Lyons, Palmer, Jayaratne, &Scherpf, 2006) question the effectiveness of financial education in improving financial literacy. Van Rooij, Lusardi, and Alessie, 2007) in a study of Dutch adults, established that households with low levels of financial literacy are more likely than others to base their behavior on financial advice from friends and are less likely to invest in stocks. Mounting evidence shows that those who are less financially literate are likely to face more challenges with regard to debt management, savings and credit, and are less likely to plan for the future. Regulators of financial services, have a responsibility to help consumers of financial services in making informed financial decisions so as to promote consumer protection, public awareness, and maintainance of market confidence. On the other hand, information assymetry between financial service providers (FSPs) and potential users leads to weakened financial markets. It also denies consumers an opportunity to fully appreciate their rights and responsibilities, the financial risks they may be exposed to, and any other information related to the financial products. Financial literacy not only benefits consumers but also FSPs. Finacially literate consumers pose less risk to the financial system due to their responsible use of financial services which help to underpin financial market stability, and contribute to increased savings, wider economic growth and development.

1.2. STATEMENT OF THE PROBLEM

The problem addressed in this article relates to the complexity of the financial literacy phenomenon to act as a mechanism in economic development. This phenomenon can be conceptualised in the following dimensions: firstly, it

involves the haphazard use of the term ‘financial literacy’; secondly, it relates to the perception that financial literacy involves two separate systems (the information system and the human behaviour system), which means that it is not regarded as a single encompassing process; and thirdly, the gap between complex financial and economic information, on the one hand, and the decision-makers’ mental processes, on the other. The research problem focuses specifically on the complexity of the financial literacy construct with regard to its role in economic development. The problem is further exacerbated by the fact that the majority of existing financial literacy programmes focus on financial literacy at consumer level rather than in relation to the economy.

Although it is acknowledged that decision-makers in organisations are also consumers in their personal capacity, it should also be recognised that financial decision making in an economy requires an industry-specific kind of financial literacy. Hence, before financial literacy education for decision-makers in an economy can be contemplated, it is necessary to determine the decision-makers’ perception of the financial literacy construct.

Those who study financial literacy generally agree that many, if not most, consumers lack the financial literacy necessary to make important financial decisions in their own best interests (Perry, 2008). Experts also generally agree that, financial knowledge appears to be directly correlated with selfbeneficial financial behaviour (Hilgert et al., 2003). However, questions exist concerning the effectiveness of financial education in improving financial literacy (Lyons et al., 2006). Thus, a paradox exists between the efficacy of education in improving financial literacy and the impact of education on short-and long-term financial behaviour. How can education which is correlated to financial literacy improve financial behaviour without first improving financial literacy?

1.3. OBJECTIVES OF THE STUDY

The main objective of this study is to empirically examine the impact of financial literacy on economic development in Nigeria economy. The specific objectives of the study are as follows:

  1. To evaluate the contribution of financial literacy in Nigeria.
  2. To examine factors that as hinder financial literacy in Nigeria.
  3. To make policy conclusions and recommendations based on the results of the study.

1.4. RESEARCH QUESTIONS

The research questions, which would guide this study are as follows:

  1. Is there is significant relationship between financial literacy and economic development?
  2. Has financial literacy increased economic development over time?
  3. What are the factors that hinder appropriate financial literacy programmes?

1.5. RESEARCH HYPOTHESIS

The hypothesis that will guide through this research is:

H0:   Financial literacy does not have significant relationship with economic development in Nigeria.

H1:   Financial literacy has significant relationship with economic development in Nigeria.

1.6   SIGNIFICANCE OF THE STUDY

The quality of research work lies on the relevance to the society being studied.  The importance is the ability to draw a relationship between financial literacy and economic development in Nigerian economy, whether financial literacy has significant impact on Nigeria economic development.

Again, this research will be of immense value to the different sectors of the economy (both public and private) most especially individuals.

In conclusion, the study would be of immense help to the government, monetary authority, individuals, economists, students, planners, financial analysts, stock brokers and others who might be interested in researching into the field in the future, by shedding more light into the widely held view about the relationship between financial development and economic development.

1.7   RESEARCH METHODOLOGY

The analysis that will be made in this study shall be based on macroeconomic data in Nigeria economy. Due to the linearity nature of the model formulation, Ordinary Least Square (OLS) estimation method would be employed in obtaining the numerical estimates of the coefficients in the model using Eviews.

Two multiple regression models shall be used in the estimation. The model shall seek to investigate the effect of financial literacy on economic development in Nigeria economy. This is a follow up on the objectives of study stated earlier.

1.8   SCOPE AND LIMITATIONS OF THE STUDY

The economy is a large component with lot of diverse and sometimes complex parts; this research work will only look at a particular part of the economy (the education sector). This work cannot cover all the facets that make up the education sector, but will look at the financial literacy as being used by the government for the stabilization and attaining economic development.

The empirical analysis and estimation covers the period between 1980 and 2013. This restriction is unavoidable because of the non-availability of some data.

The main limitation of this study is time constraint. The time allotted for the completion of this research is not adequate based on recent and contemporary happening with respect to the impact of financial literacy on the development of Nigeria economy.

The data for this study would be obtained mainly from secondary sources; particularly from Central Bank of Nigeria (CBN) publications such as the CBN Statistical Bulletin, CBN Annual Reports and Statements of Accounts, and National Bureau of Statistics publications.

1.9. ORGANISATION OF THE STUDY

This study shall be divided into five chapters. The first chapter provides the background of the subject matter justifying the need for the study. Chapter two presents related literature concerning financial literacy and economic development. The research methodology, which includes the theoretical framework, sources of data, model formulation, estimation techniques etc, are stated in chapter three while data presentation, analysis and interpretation  of regression result were made in chapter four. Concluding comments in chapter five reflects on the summary, conclusion, recommendations and suggestion for further studies based on the findings of the study.

1.10 DEFINITION OF TERMS

Financial Literacy: Financial literacy is the ability to understand basic accounting and finance concepts as well as its        application, the ability to use such knowledge and skills to         manage financial resources effectively for a lifetime of financial   well-being.

Economic Growth: This refers to the increased over time of an economy’s capacity to produce those goods and services needed to improve the well-being of the citizens in increasing number and diversity. It is the study of the process by which productive capacity of the economy is increased over time to bring about rising level in national income.

Economic Development: This is a multi dimensional process involving the provision of basic needs, acceleration of economic growth, reduction of inequality and unemployment, eradication of poverty as well as changes in attitude, constitution and structure in the economy.

 

REFERENCES

Bernheim, B. Douglas. 1998. “Financial Literacy, Education,

and Retirement Saving.” In Living with Defined Contribution Pensions: Remaking Responsibility for Retirement, edited by Olivia S. Mitchell and Sylvester J. Schieber, 38–68. Philadelphia: University of Pennsylvania Press.

Get the complete project »

Instant Share On Social Media:

OTHER SIMILAR ECONOMICS PROJECTS AND MATERIALS

IMPACT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA CHAPTER ONE

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 71 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   2464 engagements

CHAPTER ONE INTRODUCTION 1.1. Background of the study Government Expenditure no doubt is an important instrument for a government to control the economy of a nation. Economists have been well aware...Continue reading »

IMPACT OF MACROECONOMICS VARIABLES ON FIRMS’ PERFORMANCE IN NIGERIA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 59 ::   Attributes: Secondary data, Data Analysis, Abstract  ::   1545 engagements

CHAPTER ONE INTRODUCTION 1.1. Background of the study Every company operates within the internal and external environments of business. The internal environments are within a firm such that the pre...Continue reading »

IMPLICATION OF TREASURY SINGLE ACCOUNT ON BANKING SECTOR OF NIGERIA AND THE ECONOMY AS A WHOLE

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 76 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   3006 engagements

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND TO THE STUDY Treasury Single Account is a public accounting system under which all government revenue, receipts and income and collected into one single acco...Continue reading »

TAXATION AS A TOOL FOR ECONOMIC DEVELOPMENT OF NIGERIA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 71 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1386 engagements

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Nigeria as a nation has the vision of becoming one among the world’s 20 largest economies in the year 2020; this obviously is the brain beh...Continue reading »

THE IMPACT OF COMPANY INCOME TAX REVENUE ON THE DEVELOPING ECONOMIES: THE NIGERIA EXPERIENCE

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 67 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   735 engagements

The article on this topic (impact of company income tax revenue on the developing economies) is an extract from literature review of the project material. The complete project work would be made avail...Continue reading »

THE IMPACT OF TAX ON GOVERNMENT CAPITAL EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 65 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   1182 engagements

The article on this topic (impact of tax on government capital expenditure and economic growth in Nigeria) is an extract from literature review of the project material. The complete project work would...Continue reading »

What are looking for today?

WHAT OUR CUSTOMERS ARE SAYING:
  • 1. Taleeb from Kwara state polytechnic said "I like all topics on this website but anytime i wrote topic to my project supervisor he used to ask where is the case study and case study is not written there . thanks ................".
    Rating: Very Good
  • 2. Donald from ui said "i thank you guys for the good work...i never believe that there are still some Nigerians that are trustworthy until i stumbled upon projectclue. excellent job. great write up. weldone Glory keep up the good job. nice voice.,...i will always recommend projectclue to any Nigerian researchers...God bless.".
    Rating: Very Good
  • 3. Abdoulrasheed Tapheeda from Taraba State University,Jalingo said "The Project Clue owe me a Tribute Respect, because of the nature of their work and delivery system. I recommend this site for any undergraduate due to the quality and fast delivery system of their work. Thanks".
    Rating: Excellent
  • 4. Sam Seyil from Federal Uni Agric. Markudi said "I had a wonderful experience using ProjectClue, they delivered not only on time, but the content had good quality. I recommend ProjectClue for any project research work.".
    Rating: Excellent
  • 5. Eval, Effa A. from University of Calabar (Unical) said "It was a wonderful experience using projectClue, it really helped me in carrying out a Term paper research NGP.".
    Rating: Good
  • 6. Abimbola Bisola from Obafemi Awolowo University said "Thanks a million times for giving me a quality research project. not only have i defended i was commended by my supervisor. You guys are the best; Project clue".
    Rating: Very Good

Leave a comment: