Cross-cultural Communication ISSN 1712-8358 Vol.5 No.

4 2009
Canadian Academy of Oriental and Occidental Culture 12/31/2009
Http://www.cscanada.org Http://www.cscanada.net
E-mail: [email protected]; [email protected]

A Study on Financial Literacy of Malaysian

Degree Students
UNE ÉTUDE SUR LES CONNAISSANCES FINANCIÈRES
DES ÉTUDIANTS MALAISIENS

Dahlia Ibrahim1
Rabitah Harun2
Zuraidah Mohamed Isa3

Abstract: Interest in exploring the issues of personal finance, particularly money

management, has tremendously increased in recent years due to the society’s
awareness on its importance. Money management skill is a vital element in
disciplining them to achieve a quality life as working adults because students
spending habits in campus will influence the way they manage money throughout
their lives. Looking at the previous literatures from researches outside of Malaysia
reveals that financial literacy among students is needed to curb any future problems
that may arise due to lack of knowledge on individual financial management. This
research stresses on the importance of financial literacy among students, by looking
into the student’s background, financial attitude, financial knowledge and family. The
data obtained from questionnaires and secondary data were analyzed using SPSS
version 12.0. From the data analysis, majority of students do not practice proper
money management skills. Hence, researchers hope there will be measures taken to
step aside this scenario. The recommendation and limitation were also included to
assist those future researches who are interested to study further on this topic.
Key words: personal finance; financial literacy; Malaysia

Résumé: Ces dernières années, l’intérêt à étudier les questions de financements

personnels, notamment la gestion de l'argent, a énormément augmentégrâce à la
sensibilisation de la société sur son importance. La compétence de gestion de l'argen
est un élément vital pour eux de mener une vie de qualité en tant que des adultes qui
travaillent, car les habitudes de dépenses des élèves dans le campus vont influencer
sur la façon dont ils gèrent l'argent tout au long de leur vie. Les études antérieures de
1
Faculty of Business Management, Universiti Teknologi MARA Kedah. Kampus Sungai Petani, Peti Surat 187,
08400 Merbok, Kedah. E-mail: [email protected]
2
Faculty of Business Management, Universiti Teknologi MARA Kedah. Kampus Sungai Petani, Peti Surat 187,
08400 Merbok, Kedah. E-mail: [email protected]
3
Faculty of Business Management, Universiti Teknologi MARA Kedah. Kampus Sungai Petani, Peti Surat 187,
08400 Merbok, Kedah. E-mail: [email protected]

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Communication Vol.5, No.4, 2009 51-59
recherche à l'extérieur de la Malaisie montrent qu’une certaine connaissance
financière est indispensable chez les étudiants pour enrayer les problèmes futurs qui
pourront se poser en raison d'un manque de connaissance sur la gestion financière
individuelle. Cette recherche souligne l'importance des connaissances financières
auprès des étudiants, en examinant le profile de l'élève, ses attitudes financières, ses
connaissances financières et sa famille. Les données obtenues à partir des
questionnaires et des données secondaires ont été analysées en utilisant SPSS version
12.0. De l'analyse des données, on peut constater que la majorité des élèves ne
possèdenet pas de leurs propres outils de gestion financière. Par conséquent, les
chercheurs espèrent qu’il y aura des mesures prises pour changer cette situation. La
recommandation et la limitation ont également été incluses pour aider les recherches
ultérieures intéressées par une étude plus approfondie sur ce sujet.
Mots-cles: financement personnel; connaissances financières; Malaisie

1. INTRODUCTION

Categorized as one of the developed countries, Malaysia is not missed being one of the regions whereby
financial literacy level is at the bottom end. Prior to millennium era, percentage of society knowledge on
issues such as budgeting, saving, investing and insuring were minimal. Of course, in this millennium era,
topics and subjects on financial management are fast growing in our society. There are so many books,
seminars and institutions that provide information on basic financial management catering to those who
want to improve their financial standing. In fact, financial institutions are actively promoting their range
of services which include investment consultation and other areas attached with proper financial
management. However, those who do read on the subject matter or seeking for professional advise are
normally professionals, semiprofessionals or those who are familiar with money management. There are
almost no programs or seminars targeting those of children and young adults. As a consequence, the
familiarity level on finance among these young groups is very limited except for what they learned thru
experience, family or even peers.

1.1 Problem Statement

In Malaysia, topics on personal finance are still considered minimal. If there are programs or activities
on it, they were never addressed directly to young consumers specifically those in between aged 21 to 24
years: the need to improve financial literacy of individuals, specifically, students at university level so
they can have positive cash management attitudes before they enter the job market. This positive attitude
will help them to practice proper personal financial management as working adults.

1.2 Research Objective

The study aims to assess the level of financial literacy among degree students in UiTM Kedah campus.
Specifically, it will have the following objectives; a) researchers investigate the personal financial
literacy (knowledge, attitudes and family) of a sample of UiTM Kedah students by gender, programs and
parts b) researchers examine parental influences on the level of financial literacy of UiTM Kedah
students and c) researchers examine the relationship between UiTM Kedah students’ financial
knowledge and attitudes, and their financial literacy level.

1.3 LITERATURE REVIEW

Students who lack financial knowledge have increased financial difficulties that continue into later years.
Chen and Volpe (1998) found that students with less financial knowledge had more negative opinions

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about finances and made more incorrect financial decisions. They pointed out that having a low level of
financial knowledge limits student’s ability to make informed decisions.
Many students do not know how to manage their income. Once they have abundance of money, they
simply use it out on necessary expenses and some which are not necessary. This spending pattern clearly
shows the lacking of financial literacy among students which need to be changed. We must improve the
financial knowledge of our students. There is a need to start the training from high schools and
comprehensively in colleges and universities (Davidson, 2006, p. 22).
Students like to use credit cards and those students who owned credit cards were more likely to hold
favorable behavioral attitudes toward credit card usage than students who did not own credit cards (Xiao
et al., 1995 as cited in Borden et al., 2007, p.25) Finally, more frequent use of credit cards was associated
with more favorable overall and affective attitudes toward credit card use.
Consumer and Financial Literacy [CFL] Treasury Taskforce (2004) reported that financial literacy
level among university students and young adults were poor and lead to various financial situations
which include more students working part-time job, increase cost of financing higher education and
other. To explain further, those aged 18-24 lack of financial literacy is linked to lack of financial
education offered to them after graduation ( Sharma, 2004, Introduction Section).
Older children have little knowledge to be financially independent contrary to what most parents
expected. Danes and Hira (1987) indicated that college students only knew general not specific facts on
money management topics that explained their low levels of knowledge in insurance, credit cards, and
overall financial management areas. It is a wondrous how parents transferred their money management
knowledge and attitudes about money to children within families. There is scarcity about the financial
socialization of children or the transfer of financial attitudes, values, standards, or behaviors within the
context of the family (Danes, 1994, p.127).

1.4 RESEARCH METHODOLOGY

The population involved in this research will be all degree students in UiTM Kedah. These students are
currently pursuing degree program in UiTM Kedah. The programs are Bachelor in Marketing, Bachelor
in Islamic Banking, Bachelor in Administration Science and Bachelor in Information Service. The
population will include all programs and parts.
The goal for this project was to recruit a sample size of 200 UiTM Kedah students. Out of 200
students participated, 160 total students completed the survey with 133 usable entries, giving a 66.5%
response/completion rate. All data collected were analyzed using SPSS Windows (Version 12.0). The
researches conducted descriptive analysis for easy interpretation of data. The researches used
cross-tabulation technique to study the relationship between variables. In all, the analysis used basic
frequency, percentage calculation, mean, and standard deviation, Cronbach’s Alpha, T-test, ANOVA,
Pearson’s Correlation and Chi-Square to achieve the objectives of the study.

1.5 SUMMARY OF FINDINGS

Out of 200 students participated, 160 total students completed the survey with 133 usable entries,
giving a 66.5% response/completion rate. Sixty-seven percent of the respondents (n=90) identified
themselves as female. Another thirty-three percent of the respondents (n=43) were male. A majority of
respondents, 59% (n=79) were between ages of 22-23. Other age ranges and participant percentages
were: 25.6% (n=34) between the ages of 20-21, 12.8% (n=17) between 24-25, and 2.3% (n=3) others.
This sample is representative of the overall degree students at UiTM Kedah.

2. RESULT REPORTED BY RESEARCH QUESTION

Question One: Are there differences in financial knowledge based on gender, programs and parts?

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Communication Vol.5, No.4, 2009 51-59
Question one was analyzed using a T-test to look at the differences between the dichotomous
personal characteristic of gender and continuous financial knowledge sum score. ANOVA was used to
look at the differences between the categorical personal characteristics of programs and parts and the
continuous financial knowledge sum score.
Based on the above table, no differences were found in the level of financial knowledge between
males and females students. Programs also do not have any significant with financial knowledge since
the p-value for the programs at 0.073. No differences were found in level of financial knowledge
between parts (semester).
Question Two: Are there differences in financial attitudes based on gender, programs and parts?
Question two was analyzed using a T-test to look at the differences between the dichotomous
personal characteristic of gender and continuous financial attitude mean score. ANOVA was used to look
at the differences between the categorical personal characteristics of programs and parts and the
continuous financial attitude mean score.
Differences were found in level of financial attitudes between males and females with significant at
the p<0.05 level. No differences were found in the level of financial attitude between degree programs.
Same as programs, no differences were found in level of financial attitudes between parts.
Question Three: Are there differences in family influence based on gender, programs and parts?
Question three was analyzed using a T-test to look at the differences between the dichotomous
personal characteristic of gender and continuous family influences attitude mean score. ANOVA was
used to look at the differences between the categorical personal characteristics of programs and parts and
the continuous family influence attitude mean score.
Based on the above table, no differences were found in the level of family influences between males
and females. Programs also do not have any significant with family influence with the p-value for the
programs at 0.10. No differences were found in level of family influences between parts (semester).
Question Four: Are there differences in financial knowledge, attitudes, and family based on
education level of parents?
Question four was analyzed using a T-test to find the relationship between the dichotomous
independents variables of education level of parents and the continuous dependent variables of financial
knowledge, attitudes, and family scores.
Differences were found in financial knowledge (P<0.05) based on mother’s education level. Students
who reported they learned some or a lot about managing their money from their mothers had higher
financial knowledge than students who reported learning about managing their money from their father’s.
Differences were not found in financial attitude, family influences based on their parent’s education
level.
Question Five: Are UiTM Kedah students financial literacy correlated with their financial
knowledge and attitudes?
Question five was analyzed using Pearson’s Correlation with the continuous variables of knowledge
mean score, attitude mean score, and family influence mean score. Pearson’s Correlation was used to
determine if students with a higher knowledge score or a higher attitude score had a higher financial
literacy.
A correlation was found between financial literacy and financial attitude. Degree students who had
higher financial attitude had higher level of financial literacy. Each variable was correlated at p<.01
significant level. The result reported in this chapter show students having high level of financial literacy
which is influenced by gender and mother’s education background but not programs and parts
(semester).

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3. CHI –SQUARE TEST.
Research Question Six: Is there any significant relationship between financial Literacy and Degree
Course.
This test was carried out at a significant level of 0.05 to determine whether there is any significance
relationship between financial literacy and University Course.
Chi square test was performed to answer Research Question 6 at significant level of 0.05. From Table
4.17, it is noted that there is no significant relationship between most of the items in the Financial
Attitude and Degree Courses. There is only a significant relationship between Financial Attitude and
Degree Courses such as ask family members for money and maintaining savings account balance all the
time. There is a significant relationship between 3 items in financial knowledge and degree Courses,
such as how would u describe how finances were handled in your family, do your parents have monthly
budgeting plan and how would you describe the allowance u received when growing up. As for Financial
Knowledge, there were 2 items shows significant with Degree Courses which are where did u most learn
managing money and which classes have u had.

4. CONCLUSION

In this study on degree students in UiTM Kedah campus, it was founded that our degree students in
Kedah campus are very much lacking in their financial knowledge and hence their money management
skill are very weak. The time this study was done, the campus may have offered seminars on financial
matters but the number of students participated are very low. Most of the time, financial related seminars
conducted were normally targeted for business/finance students or finance lectures. This is much so
because of the budget constraint that would not allow every student to attend these kinds of seminars.
In Malaysia, studies on financial literacy among the age group 18-24 year are very limited, let alone
those in the age group below than 18 years old. Therefore, it is prudent to suggest that future research
should be concentrating on this age group below than 18 years to improve their financial knowledge and
subsequently prepare them with money management skill before embarking on their college life.

REFERENCES
Borden, L.M., Lee, S., Serido, J. & Collins, D. (2007). Changing Collge Students’ Financial Knowledge,
Attitude and Behavior through Seminar Participation. J Fam Econ Iss. 29, p.24-40. Retrieved from
http://www.springerlink.com/content/f69v62227391vr43/
Chen, H. & Volpe, R.P. (1998). An Analysis of Personal Financial Literacy among College Students.
Financial Services Review: 7(2). Retrieved from
www.westga.edu/~bquest/2005/workplace.pdf
Danes, S.M. & Hira, T. (1987). Money Management Knowledge of College Students. Journal of Student
Financial Aid:17 (1), p.4-16. Retrieved from
www.extension.umn.edu/capacity/yfd/components/finlityouth_concept.html
Danes, S.M . (1994). Parental Perceptions of Children’s Financial Socialization. AFCPE: p.127).
Retrieved from www.afcpe.org/doc/Vol 58.pdf
Davidson, I. B. (2006). Financial Literacy Important to Future. Montana Business Quarterly: 44(3), p.22.
Retrieved from
http://www.accessmylibrary.com/coms2/summary_0286-33521732_ITM

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Communication Vol.5, No.4, 2009 51-59
Sharma, G. (2004). Financial Literacy: A Student and Young Adult Perspective. Retrieved from
cfltaskforce.treasury.gov.au/.../_download/submissions/sharma_g.pdf

TABLES
Table 1.0: Differences in financial knowledge based on gender, programs and parts (N=133)

Characteristic
N Mean s.d df F P
Gender 1 3.72 0.075
Male 43 0.79 0.70
Female 90 0.59 0.54
Programs 3 2.38 0.073

BBA (H) Marketing 37 0.80 0.73

BBA (H) Islamic Banking 43 0.52 0.43
Bachelor in Admin Science (H) 46 0.62 0.59
Bachelor of Information Studies(H) 7 1.00 0.67

Parts 5 1.22 0.30

part 01 9 0.37 0.35
part 02 26 0.76 0.74
part 03 35 0.77 0.69
part 04 31 0.53 0.49
part 05 11 0.55 0.45
part 06 21 0.71 0.50
*p<0.005

Table 1.1: Differences in financial attitudes based on gender, programs and parts (N=133)

Characteristic
N Mean s.d df F P
Gender 1 5.87 0.02*
Male 43 1.8 0.77
Female 90 1.5 0.62

Programs 3 0.29 0.83

BBA (H) Marketing 37 1.69 0.58
BBA (H) Islamic Banking 43 1.57 0.58
Bachelor in Admin Science (H) 46 1.56 0.84
Bachelor of Information Studies(H) 7 1.54 0.65

Parts 5 0.67 0.65

part 01 9 1.47 0.77
part 02 26 1.68 0.73
part 03 35 1.64 0.61
part 04 31 1.57 0.83
part 05 11 1.29 0.45
part 06 21 1.68 0.56
*p<0.05

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Table 1.2: Differences in family influence based on gender, programs and parts (N=133)

Characteristic
N Mean s.d df F P
Gender 1 0.61 0.43
Male 43 1.34 0.75
Female 90 1.24 0.58

Programs 3 2.15 0.10

BBA (H) Marketing 37 1.43 0.728
BBA (H) Islamic Banking 43 1.30 0.490
Bachelor in Admin Science (H) 46 1.10 0.647
Bachelor of Information Studies(H) 7 1.43 0.732

Parts 5 0.78 0.56

part 01 9 1.39 0.70
part 02 26 1.25 0.64
part 03 35 1.29 0.70
part 04 31 1.15 0.70
part 05 11 1.18 0.46
part 06 21 1.48 0.49

Table 1.3: Differences in financial knowledge, attitudes, and family based on education level of
parents (N=133)

Characteristic
N Mean s.d df F p
Father’s education level 133
Financial attitude 0.48 0.68 6 1.05 0.40

Family 0.62 0.64 6 1.56 0.16

Knowledge 0.20 0.69 6 0.42 0.87

Mother’s education level 133

Financial attitude 0.81 0.68 6 1.83 0.10

Family 0.19 0.64 6 0.47 0.83

Knowledge 1.31 0.69 6 3.01 0.01*

*P<0.05

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Table 1.4: Are UiTM Kedah students financial literacy correlated with their financial knowledge
and attitudes?

Correlations
FINANCIAL
LITERACY FINANCIAL ATTITUDE KNOWLEDGE FAMILY
Financial Literacy 0.197* 0.042 0.073
0.023 0.627 0.402
FINANCIAL
ATTITUDE 0.197* -0.074 -0.009
0.023 0.399 0.922

KNOWLEDGE 0.042 -0.074 0.169

0.627 0.399 0.052

FAMILY 0.073 -0.009 0.169

0.402 0.922 0.052

Table 1.5: Chi –Square result for determining any significant relationship between Financial
Literacy and Degree Course

Items Degree Course

Value Asymp. Sig
Financial Attitudes
How sure do u feel about your ability to manage your own finances 7.704a .808
How interested are u in increasing financial knowledge 18.795 .094
Would u take a personal finance course if offered 6.909 .075
Neglect your academic work 10.884 .539
drop out or consider dropping out of college 9.729 .640
Reduce class load(drop) 8.534 .742
Ask family members for money 24.784 .016
Take out or considered taking out debt consolidating loan 3.718 .988
How much u maintain in your savings account balance at all time 29.591 .003
Do u have an ATM car 5.628 .153
How often u withdraw cash using your ATM card 14.303 .112
Do u ever borrow money to buy something .315 .957
Significant level=0.05

Items Degree Course

Value Asymp. Sig
Family Influence
How often did your parents discuss money matters with u or in front of u 15.929 0.68
How would u describe how finances were handled in your family 35.781 .003
Comparing yourself to your parents, would u say that u are 7.890 .794
What is your father highest level of schooling 17.485 .490
What is your mother highest level of schooling 20.394 .311
Do your parents have monthly budgeting plan 16.458 .011
How would you describe the allowance u received when growing up 19.867 .019
Significant level=0.05

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Items Degree Course

Value Asymp. Sig
Knowledge
I read to increase my financial knowledge 17.729 .124
I compare prices when shopping for purchases 17.101 .146
I budget spending 9.613 .650
I track spending 8.249 .765
Where did u most learn managing money 16.984 .049
Who most influenced you on finances 8.963 .706
Which classes have u had 29.016 .001
What you learn about in your home while u grow up 11.904 .453
Compared with other people at your age, how much do you feel you know 7.504 .823
about managing your money
Significant level=0.05

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