Financial Literacy and Co-Operatives Sustainability: A Study among the Executive Members of the Co-Operatives (Published)
Nepal is an agriculture economy with majority population illiterate, the question of financial literacy is still beyond the context. Agri-cooperatives have been the strength for these rural population and these cooperatives are mostly assisted by the not for profit organizations. However, as these organizations withdraw their technical assistance will the cooperatives be sustainable given the fact that most of it’s executive members are financial illiterate or have low financial literacy. Financial literacy is important to understand the basic economic concepts needed to make saving and investment decisions. It is more important to executive members of the cooperatives because they have to make the complex financial decisions besides the day to day household management. This study has been conducted using the descriptive statistics to analyze basic level of knowledge the executive members of the agro based cooperative, technically assisted by nonprofit organizations, have in their day to day financial matters and also, identifying their weakness in financial information and understanding. This study demonstrates that executive members still rely over traditional financial decision making process; ignorance of cash flow statement and budgetary analysis. They did not have any idea about the new banking products like debit card, credit card and online banking, were ignorant to financial planning. Moreover, the age group, education level and gender had significant effect on the analysis of interest rate and cost effectiveness, exposing them to inflation and interest rate risk. This shows that it might be hard for the executive members to sustain the co-operative functions when nonprofit organization discontinues its technical assistance. This study has revealed the need for the financial literacy education program and the need for the nonprofit organization to take an integrated approach in local institution building. It shall not only focus on establishing the institution but also transfer the technology along with basic financial knowledge which leads to better financial behavior and financial outcomes. This research is unique in the context of Nepal and will be useful in similar contexts. These findings will be useful in designing the programs by the cooperatives and also the not for profit organizations.