ARMSTRONG OPOKU

77 Pages·2015·0.55 MB·English

FINANCIAL LITERACY AMONG SENIOR HIGH SCHOOL STUDENTS

EVIDENCE FROM GHANA

BY
ARMSTRONG OPOKU
(BA ECONOMICS AND GEOGRAPHY)

A THESIS SUBMITTED TO DEPARTMENT OF ACCOUNTING AND
FINANCE, KWAME NKRUMAH UNIVERSITY OF SCIENCE AND
TECHNOLOGY IN PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE DEGREE OF

MASTERS IN BUSINESS ADMINISTRATION
(FINANCE)

SCHOOL OF BUSINESS, COLLEGE OF ARTS AND SOCIAL SCIENCES

2015
DECLARATION
I hereby declare that this submission is my own effort towards the attainment of
Masters of Business Administration and as a result contains no material which has
been published by another person nor material which has been accepted for the award
of any other degree of the University, except where due acknowledgement has been
made in the text.

ARMSTRONG OPOKU ………………………… …………………
(PG 9623813) Signature Date

Certified by:
DR.KWAME MIREKU ………………………… ………………….
(Supervisor) Signature Date

Certified by:
DR. K. O. APPIAH ………………………… …………………..
(H.O.D of Accounting and Finance) Signature Date

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ABSTRACT
The study assesses the level of financial literacy of Senior High School students in the
Kumasi Metropolis. The study surveyed 320 students to investigate their level of
financial literacy through the administration of questionnaires. Findings from the
study reveal that students need to improve their personal finance knowledge. The
results show that the students answered about 48.7% of the questions correctly. The
results also reveal that many of the students are seen to be familiar with issues relating
to simple interest, compounding and loan guarantee. In contrast, the students are less
knowledgeable and inexperienced with issues concerning personal financial planning,
budgeting and overdraft. The incompetency exhibited by the senior high school
students therefore limits their ability to make sound financial decisions and hence
more likely to have financial related issues in the real world. The low level of
financial literacy could also make small financial issues become overwhelming which
could turn into financial stress and consequently affects the other aspects of live such
as personal relationships or performance at work. The low level of financial literacy
and its consequences then shows the need for stakeholders in educational system to
put policies in place to ensure that the level of financial literacy among senior high
students in Ghana is improved since financial literacy has essential implication for
future behavior. It is recommended that personal finance literacy course is well
elaborated in the academic curriculum of senior high schools. Also, the national
financial literacy week should be extended to school as workshops to encourage
student‟s participation in financial literacy.

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ACKNOWLEDGEMENT
Many people deserve recognition for their support to this work. DR. kwame Mireku,
my supervisor and a lecturer at Kwame Nkrumah University of Science and
Technology has been exceptionally supportive to me. I appreciate his wealth of
experience and the rich knowledge in thesis writing and also thank him for his
encouragement he constantly made available to me.
I am also deeply grateful to my course mates, more especially Mr. Daniel Baku, Mr.
Eric Nkrumah, Mr.Daniel Tierre and Mrs. Morgan Akua Tiwaah whose contributions,
resourcefulness and ideas to me were incomparable. Finally, I am very much
appreciative to the lord almighty for his loving kindness and tender mercies offered
unto me. I could not have embarked on this journey without the lord almighty.
I THANK GOD FOR EVERYTHING.

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DEDICATION
I dedicate this work to my wife, Mrs. Ellen Opoku and my daughter Michelle Opoku
for their persistence support and encouragement they gave to me in the course of
writing this thesis. Finally, to my grandfather Mr. I.K Amanfo who also supported
me, encouraged and gave me various advices during my university education at
university of cape coast.

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TABLE OF CONTENTS
TITLE PAGE
DECLARATION.......................................................................................................... ii
ABSTRACT .................................................................................................................iii
ACKNOWLEDGEMENT .......................................................................................... iv
DEDICATION.............................................................................................................. v
TABLE OF CONTENTS ........................................................................................... vi
LIST OF TABLES ...................................................................................................... ix
LIST OF ABBRIVIATION ......................................................................................... x

CHAPTER ONE .......................................................................................................... 1
INTRODUCTION........................................................................................................ 1
1.0 BACKGROUND OF THE STUDY ........................................................................ 1
1.1STATEMENT OF THE PROBLEM ........................................................................ 3
1.2 OBJECTIVES OF THE STUDY ............................................................................. 4
1.3 RESEARCH QUESTIONS ..................................................................................... 4
1.4JUSTIFICATION OF THE STUDY ........................................................................ 4
1.5 SCOPE ANDLIMITATION OF THE STUDY ....................................................... 5
1.6 ORGANISATION OF THE STUDY ...................................................................... 6

CHAPTER TWO ......................................................................................................... 7
LITERATURE REVIEW ........................................................................................... 7
2.0 INTRODUCTION ................................................................................................... 7
2.1 MEANING OF KEY CONCEPTS .......................................................................... 7
2.1.1Financial literacy .................................................................................................... 7
2.1.2 Financial Education .............................................................................................. 9
2.1.3 Financial behavior ................................................................................................. 9
2.1.4 Financial wellbeing and financial wellness .......................................................... 9
2.1.5 Money management ............................................................................................ 10
2.1.6 Savings ................................................................................................................ 10
2.1.7 Borrowing and spending habit ............................................................................ 11
2.2 IMPORTANCE OF FINANCIAL LITERACY .................................................... 11
2.3 DETERMINANTS OF FINANCIAL LITERACY ............................................... 12
2.4 FINANCIALLITERACY IN GHANA.................................................................. 14
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2.5 FINANCIALLITERACY AMONG HIGH SCHOOL AND COLLEGE
STUDENTS ........................................................................................................ 16
2.6 FINANCIAL LITERACY AMONG ADULTS .................................................... 16
2.7 FINANCIAL LITERACY AND FINANCIAL BEHAVIOR ............................... 17
2.8 FINANCIALEDUCATION AND FINANCIAL BEHAVIOR ............................. 17
2.9 COST OF FINANCIALIGNORANCE ................................................................. 18

CHAPTER THREE ................................................................................................... 19
METHODOLOGY .................................................................................................... 19
3.0 INTRODUCTION ................................................................................................. 19
3.1 RESEARCH DESIGN ........................................................................................... 19
3.2 POPULATIONOF THE STUDY .......................................................................... 20
3.3SAMPLE SIZE AND SAMPLE TECHNIQUE ..................................................... 20
3.4 DATACOLLECTION ........................................................................................... 22
3.5 DATA ANALYSIS ................................................................................................ 24
3.6 VALIDITY AND RELIABILITY ......................................................................... 25

CHAPTER FOUR ...................................................................................................... 27
RESULTS AND ANALYSIS .................................................................................... 27
4.0 INTRODUCTION ................................................................................................. 27
4.1 DESCRIPTIVE STATISTICS ............................................................................... 27
4.1.1 Educational characteristics .................................................................................. 27
4.1.2 Demographic characteristics ............................................................................... 28
4.1.3 Exposure to financial issues ................................................................................ 28
4.2 PERCENTAGE RESPONSES OF PARTICIPANTS‟ KNOWLEDGE IN
FINANCE ........................................................................................................... 31
4.3 GENERAL FINANCE KNOWLEDGE ................................................................ 32
4.4 SAVINGS AND BORROWING KNOWLEDGE ................................................ 32
4.5 OVERALL FINANCIAL LITERACY.................................................................. 33
4.6 RELATIVE KNOWLEDGE OF SENIOR HIGH SCHOOL STUDENTS IN
FINANCE USING ANOVA............................................................................... 33
4.6.1 Educational background of participants.............................................................. 35
4.6.2 Demographic characteristics ............................................................................... 35
4.6.3 Exposure Variables ............................................................................................. 36
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4.7 RELATIVE KNOWLEDGE OF SENIOR HIGH STUDENTS IN FINANCIAL
MANAGEMENT ................................................................................................ 36
4.7.1 Students‟ relative knowledge in General Financial Knowledge ......................... 38
4.7.2 Students‟ relative knowledge in Savings and Borrowings ................................. 40
4.7.3 Students‟ overall financial literacy level............................................................. 41
4.8 THE IMPACT OF STUDENTS‟FINANCIAL KNOWLEDGE ON THEIR
OPINIONS, DECISIONS AND PRACTICE ..................................................... 42
4.8.1 Students maintaining adequate financial records ................................................ 42
4.8.2 Students spending less than their income ........................................................... 43
4.8.3 Students planning and implementing regular investment program .................... 44
4.8.4Setting aside money each month for Savings ...................................................... 45
4.8.5 Students employ spending plan or budget .......................................................... 45
4.8.6 Students keep track of expenditure and income ................................................. 46
4.9 WHERE STUDENTS‟ WANT TO IMPROVE THEIR FINANCIAL
KNOWLEDGE ................................................................................................... 47

CHAPTER FIVE ....................................................................................................... 48
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION ..... 48
5.0 INTRODUCTION ................................................................................................. 48
5.1 SUMMARY OF FINDINGS ................................................................................. 48
5.2 CONCLUSION ...................................................................................................... 50
5.3 RECOMMENDATIONS ....................................................................................... 50

REFERENCES ........................................................................................................... 52
APPENDIX ................................................................................................................. 59

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LIST OF TABLES
Table 4.1 Descriptive statistics of the sample .............................................................. 30
Table 4.2: Descriptive findings on Knowledge in Finance (in percentages) ............... 31
Table 4.3: Mean Percentage of Correct Responses to each section by characteristics of
sample and results of ANOVA .......................................................................... 34
Table 4.4: Results of Logit Analysis for General Knowledge in Finance Management
........................................................................................................................... 38
Table 5a: Maintaining adequate financial records ....................................................... 42
Table 5b: Spending less than your income .................................................................. 43
Table 5c: Students planning and implementing regular investment program ............. 44
Table 5d: Students setting aside money each month for savings................................. 45
Table 5e: Spending plan or budget .............................................................................. 45
Table 5f: Keeping track of expenditure and income .................................................... 46
Table 7: Where students expect to learn financial knowledge .................................... 47

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LIST OF ABBRIVIATION
ANOVA Analysis of variance
SPSS Statistical Package of Social Scientist
OECD Organization for Economic Co-Operation and Development
HOD Head of Department

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