Thailand’s Financial Literacy and Informal Debt Formation in 2016
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Abstract
The objectives of this study were to examine, first, the association between financial literacy and informal debt formation and, second, the internal association among the three factors of financial literacy, namely financial knowledge, financial behavior, and financial attitude. These three factors influence in turn the following three factors of informal debt, namely the amount of informal debt, the average amount of informal debt per person, and the number of people with informal debt. Using a quantitative research approach to gather secondary data from the Bank of Thailand’s 2016 Financial Literacy Survey Report and the Ministry of Finance’s 2016 State Welfare Registration Program, this study concluded that the factors of financial literacy were not correlated with the factors of informal debt. Financial knowledge was found to have an internal relationship with financial behavior, indicating that provinces with a high financial knowledge level will also have a high financial behavior level. Concerning the internal relationships among the three informal debt factors, the number of people with informal debt was correlated with the amount of informal debt and the average amount of informal debt per person. This correlation suggests that provinces with a higher number of people with informal debt will also have a high amount of informal debt and a high average amount of informal debt per person.
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