Covid-19 and the changing face of financial literacy in India : Evidence from Delhi NCR during lockdowns

Abstract

Abstract With a change in global market entanglement and composite retail financial products, financial literacy has gained distinction in the recent past. More importantly, the Covid-19 pandemic has brought attention to the preparation of individuals’ financial budgets for unforeseen losses. As a result, financial literacy has gained immense importance. Literature available on the subject suggests that individuals when faced with a situation of crisis, tend to reduce their risk of not paying the liabilities, by controlling their budget. This research article aims to understand whether or not individuals with a good understanding of financial literacy have better skills in financial management, particularly during lockdowns. Primary data was collected after the second phase of lockdowns in August 2021 from 232 individuals residing in Delhi NCR, using a questionnaire adapted from the OECD study. Besides, a scale was developed to understand their financial behaviour and financial management skills. The results of the study indicate that a good understanding of financial principles helped manage financial risk effectively and avoid any financial pitfalls. It helps individuals avoid financial concerns and enable individuals to regulate their income, even in challenging conditions like the Covid-19 pandemic.