Measuring financial literacy in Asia: Experiences from Thailand

OECD Seminar on Financial Inclusion and Financial Literacy in Asia Bangkok, Thailand

16 December 2014

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Topics

1 • Survey overview

2 • Coverage and methodology

3 • Questionnaire content

4 • Survey results

5 • Policy recommendations and next steps

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Survey overview

Objectives • To measure financial literacy levels • To develop evidence-based

financial literacy strategy • To monitor development in financial

literacy level

Type of survey • A part of the National household

survey • Conducted once every three years • In collaboration with the National

Statistical Office of Thailand (NSO)

Questionnaire content • Based on OECD’s core

questionnaire with a few modifications

• Consists of 3 main components: • Financial knowledge • Financial behaviour • Financial attitude

Preparation for fieldwork • Internal focus group – to test

comprehensibility and applicability • Seminars for interviewers – to provide

survey background and clarification • Prepared documents for fieldwork – to

assist interviewer such as showcards

• Land area 513,120 sq.km • Population (2013 estimate) 66.7 million people • 77 provinces

• Stratified two-stage sampling (77 strata)

- Primary sampling units: Proportional Selection of blocks/villages

- Secondary sampling units: Systematical selection of private sampled households

• Nationwide fieldwork in Q1/2013 • Sample size of 10,627 participants • Face-to-face interviews with household head or other members

Source : Bank of Thailand, National Statistical Office and Department of Provincial Administration, Ministry of Interior

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Coverage and Methodology Thailand at a glance

Sampling methodology

Data collection

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Questionnaire Content Modifications on knowledge and attitude questions. • Knowledge

o excluded questions: risk and return, inflation, diversification o additional questions : credit record and deposit protection policy

• Attitude – only one question retained

Knowledge (total 7 questions – 8 marks)

Behaviour (total 8 questions – 9 marks)

Attitude (total 1 question – 5 marks)

Division Time value of money Interest paid on loan

Simple interest Compound interest

Risk & Return Inflation

Diversification Credit record

Deposit protection

Considered purchase Timely bill payment

Keeping watch of financial affairs

Long term financial goal setting

Responsible and has a household budget

Active saving Choosing products

Borrowing to make ends meet

I find it more satisfying to spend money than to save

it for the LT I tend to live for

today and let tomorrow take care

of itself

Money is there to be spent

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Survey Results

Financial Knowledge Avg. 46.8%

Areas for further improvement: - Compound interest -Deposit protection policy

-Time value of money

Financial Behaviour Avg. 65.6%

Financial Attitude

Avg. 64.5%

Total FL score - Avg. 58.5%

Areas for further improvement: -Household financing and budgeting

-Choosing financial products

-Making ends meet without borrowing

Having positive attitude towards saving for the future

Relationship analysis

- Positive relationship - Implication: Financial behaviour can be improved through financial knowledge enhancement.

Knowledge & Behaviour

- No significant relationship found - However, this analysis is only based on 1 question (variable) - More variables might be added for further analysis

Knowledge & Attitude

Main Findings: Financial literacy score & Relationship analysis

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Survey Results

Most of the findings are in line with OECD’s Main Findings: Variation by Socio-Demographics

Gender Age Income Education

Financial knowledge

Financial behaviour and

attitude

>

=

Low financial literacy in youth

and elderly

>

Financial literacy

>

Financial literacy

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Policy recommendations and next steps

• Financial education program should aim at: o Priority targets: Low income and low education groups o Topics:- Financial knowledge: compound interest, deposit protection policy, time value of money

-Financial behaviour: responsible finances and budgeting, choosing financial products, not to borrow discipline

• Long-term policy on financial education needs collaboration from government, financial regulators, and private sector to articulate sustainable financial education

Policy recommendations

• Survey improvement: o Exclusive survey on financial literacy – convenient for questionnaire content and survey length specification o Sustainable platform for the survey – such as web-based survey. • Consumer insight survey: oGather information on various aspects – such as attitudes, lifestyle, media consumption, needs and wants in financial education oDevelop a communication strategy – for a better reach to each target group.

Next steps