The Role of Financial Literacy on Savings Behavior among Employed Graduates in Bangladesh

Abstract

In this study, we explore financial literacy and the role of financial literacy in the savings behavior of employed graduates in Bangladesh. Additionally, we explore existing policies and landscape components which help people engage in savings activities and what retirement savings policies are being employed in countries around the world. Automatic enrollment has been found to have visible impact on the participation in savings activities by employees. Financial literacy however, appears to have very strong influence on the decision making process. The study is modelled after existing research on the subject matter and conducts an assessment in accordance with internationally comparable surveys on financial literacy. The findings suggest that financial literacy has a strong relationship with active savings behavior as well as being strongly influenced itself, by the field of education and gender of the respondent. How the respondents perceive themselves and their savings behavior also has a strong impact on their actual savings behavior. Highly motivated savers are likely to actively seek out savings opportunities, but relaxed savers are not likely to go out looking but are likely to be receptive to opportunities presented to them such as AE. Female participants tend to score poorly in financial literacy despite having comparable education and employment.