Impact of financial literacy and financial confidence on the savings behaviour of the farmers: the Indian scene

Abstract

Purpose The study aims to explore the savings behaviour of Indian farmers. An attempt is also made to inspect the effect of financial literacy (FL) and financial confidence (FC) on the savings behaviour of the farmers in India. Design/methodology/approach This study used secondary data on 10,263 Indian farmers from Financial Inclusion Insights, 2017 database. Relevant statistical techniques and ordered probit regression were used to unfold the effect of FL and FC on the savings behaviour of farmers. Findings The outcome of the study revealed that the majority of the Indian farmers exhibited poor levels of FL and FC. Of the total, 42.99% were found to save regularly. FL and FC were observed to play instrumental roles in steering the savings behaviour of the Indian farmers. Household size, financial shocks, gender, farm ownership, income, household financial decision-making process, religion and educational attainment have emerged to be significant predictors of the savings behaviour of Indian farmers. Originality/value The present study makes an original contribution to the extant literature by unfolding the savings behaviour of Indian farmers and the effect of FL and FC on such behaviour using a rich sample of 10,263 farmers for the first time.