Barriers of Access to Finance in Nepal (Published)
Access to finance has several meanings, reasons and consequences. Normally, access to finance has two facets, i.e. at household or individual level and business firm level (Beck and Kunt, 2008; World Bank, 2009) to reach in financial institutions to consume financial services. Many policies are formulated and practiced in Nepal to increase access to finance, still the situation is poor. Number of financial intermediaries are increased since the decades, however a larger segment of people are out of financial mainstream. Still, the people do not know about financial services, about service centers and doing business; i.e. financial literacy is poor. From this, a consistent and sustainable access of them to financial services is questionable. Access of people in financial services or access of service providers to people is a ‘double barrel’ question. Similarly, why the poor access among the efforts to increase it since some decades in Nepal is a big question. The paper presents some of the reasons for the poor access of people in financial services. The paper is based on analytical design with some secondary data.
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.
The Role of Financial Literacy on Loan Repayment among Small and Medium Entrepreneurs in Rwanda Case Study: Urwego Opportunity Bank (Published)
The purpose of this research was to examine the impact of financial literacy on loan repayment in Rwanda because previous research suggests that many people lack the skills needed to calculate expected returns or present discounted values, which may cause them to make suboptimal financial decision and yet financial literacy skills enable individuals to navigate the financial world, make informed decisions about their money and minimize their chances of being misled on financial matters. The research was focused on small and medium entrepreneurs in Urwego Opportunity Bank. The researcwh was significant in various ways to individuals/bank clients, investors. Financial literacy therefore is regarded as one of the strategies used by bankers to provide knowledge and skills needed to change attitude and attract more potential users of agent banking. Financial literacy levels amongst SMEs are far too low to deal with the complexities of the matter. The quality of financial information available for financing institutions is rather poor. Credits decisions become difficult and collateral requirements as well as interest rates are high, substantially aggravating access to credit. Controlling the Loan Book is equally difficult. Indeed, banks in Rwanda are increasingly facing non-performing-loans particularly from SMEs. The impacts on the Rwandan economy – almost 90% of all enterprises in Rwanda are micro-enterprises, according to a recent PSF business. The combinations of smaller en¬terprises without access to cash to grow their business and banks, which are increasingly reluctant to lend to smaller clients, hamper much needed economic and social development
FINANCIAL LITERACY EDUCATION: KEY TO POVERTY ALLEVIATION AND NATIONAL DEVELOPMENT IN NIGERIA (Published)
Ensuring that all societies’ young people become financially capable is now widely seen as a necessary key pillar in helping Governments build economic stability in the future. The ability to read, analyze, manage, and communicate about the personal financial conditions that affect material wellbeing is of utmost importance. Being able to manage money, keep track of personal finances, plan ahead, choose financial products and stay informed about financial matters enable the avoidance of financial disaster. This research constitutes an essential component of the theory of the strategy of financial literacy framework which articulates a strategic direction for the delivery of financial education in Nigeria. Financial literacy education is very important because the journey to obtain independence and achieve financial success cannot just be prioritized by having good educational experiences, a sound résumé and a career with a nice salary. Rather, the financial freedom road requires development of good financial habits, practice and discipline. This work adopts a secondary data approach which critically examines Nigeria’s financial literacy education framework, the significance of financial literacy education, steps for best practices in financial education and awareness, and the challenges to building sustainable financial literacy education systems. It finds that promoting financial literacy among Nigerians provides them with the essential knowledge and financial responsibility to make decisions that will better their lives and ultimately grow the economy. This is because as financial markets become increasingly sophisticated and as households assume more of the responsibility and risk for financial decisions, financial education is increasingly necessary for individuals, not only to ensure their own financial well-being but also to ensure the smooth functioning of financial markets and the economy. The paper therefore strongly recommends, amongst others, the involvement of all tiers of government as well as key institutions and the private sector in the design and implementation of financial literacy programmes across all segments and sectors of the economy.