Original Research

Measuring and profiling financial literacy in South Africa

Elizabeth L. Nanziri, Murray Leibbrandt
South African Journal of Economic and Management Sciences | Vol 21, No 1 | a1645 | DOI: https://doi.org/10.4102/sajems.v21i1.1645 | © 2018 Elizabeth L. Nanziri, Murray Leibbrandt | This work is licensed under CC Attribution 4.0
Submitted: 06 August 2016 | Published: 28 May 2018

About the author(s)

Elizabeth L. Nanziri, Southern Africa Labour and Development Research Unit, School of Economics, University of Cape Town, South Africa
Murray Leibbrandt, Southern Africa Labour and Development Research Unit, School of Economics, University of Cape Town, South Africa


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Abstract

Background: Microeconomic theories of financial behaviour tend to assume that consumers possess financial skills necessary to undertake related financial decisions.

 

Aim and setting: We investigated this assumption by exploring the distribution of financial literacy among South Africans.

 

Method: In the absence of a standard measure, a financial literacy index was constructed for the country using data collected on attitudes (towards), access to and use of financial services over the period 2005–2009. In a multivariate regression analysis, we used the index to examine the extent to which differences in financial literacy correlate with demographic and economic characteristics.

 

Results: The index revealed substantial variation in financial literacy by age, education, province and race. Overall, demographic characteristics contributed up to 10% of the financial literacy differences among individuals in South Africa.

 

Conclusion: These results can be used to guide policy makers where to place more emphasis in terms of financial education for South Africans.


Keywords

financial literacy; index; South Africa

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