Using Multivariate Statistical Methods for Analysing Financial Literacy, as a Possible Appearance of Social Innovation

Financial literacy is an interesting research area. In this paper my aim is to answer three important questions about financial literacy with help of statistical methods. Can it be predicted whether a country has an appropriate level of financial literacy? Can homogenous groups be identified among the observed countries? Does the income group influence the level of financial literacy? For the prediction of financial literacy I used membership logistic regression. The two independent variables were the Human Development Index and Government expenditure on education (GDP%). I was able to achieve a classification accuracy of 88.5%. To answer my second question I created clusters and used Ward’s method to create five homogeneous groups. I identified one group with an extremely low level of financial literacy. To answer my third question I used the Chi-square test for Independence. During the analysis I came to the conclusion that financial literacy and income group are not independent of each other.