An Examination into the Link between Financial Inclusion, Financial Literacy and Investment Patterns

A sound financial system is considered as the backbone of an economy. This holds true especially in a country like India where still a majority of the population is unbanked or “financially excluded”. Research worldwide has pointed out that financial illiteracy is one of the major contributors of financial exclusion. The financially illiterate investor is unable to navigate the contemporary complex financial markets with ease. The financial environment in the world has undergone a tremendous change shifting much of the responsibility on the individuals to manage their finances and plan future well-being. Hence, the importance of acquiring financial literacy skills has grown manifolds. Due to this, financial literacy and financial inclusion has elicited much interest in the recent past in both developed and developing countries of the world. In this paper, an attempt has been made to identify level of financial literacy of the investors in Delhi. An investigation of the investment pattern of investors has also been done. Further, a nexus between financial literacy, financial inclusion and economic growth has also been investigated. In addition, the various efforts undertaken by the government of India and various other parties has also been discussed in detail.