Financial Literacy Survey reveals mixed results among Bhutanese adults


A survey on access to finance, demand side survey 2022 by the Royal Monetary Authority (RMA) sheds light on the level of knowledge and understanding among the adult Bhutanese population.

The survey included three questions, and the average score was two out of three.

It states that urban adults outperformed their rural counterparts, with 82.9 percent of urban adults answering correctly compared to 74.1 percent of rural adults.

Additionally, adult males exhibited a higher level of financial literacy than adult females, with 81.5 percent of males answering correctly compared to 73.9 percent of females.

On the question of inflation and its impact on purchasing power, one-third of the respondents accounting for 35 percent answered correctly. This indicates a low level of knowledge regarding inflation and the depreciation of the value of money.

Once again, adult males and urban adults demonstrated a higher level of inflation knowledge than their counterparts.

In contrast, the majority of the adult population accounting for 93.6 percent demonstrated a good understanding of simple interest. When asked about a scenario where they lend Nu 500 to a friend or acquaintance and the friend returns Nu 500 the next day, respondents correctly identified that no interest was paid on the loan.

This finding highlights the need for enhanced financial literacy education in Bhutan. While there is a basic understanding of certain concepts like division and simple interest, there is a clear lack of knowledge regarding inflation and its impact on purchasing power.

Efforts should be made to bridge this gap by providing accessible and comprehensive financial literacy programs to empower individuals to make informed financial decisions.

Improving financial literacy among Bhutanese adults will not only benefit individuals in managing their finances but also contribute to the overall economic well-being of the country.

It is crucial to equip individuals with the necessary knowledge and skills to navigate the complexities of the financial world and make sound financial choices.

This survey serves as a valuable benchmark to identify areas where financial literacy education can be strengthened. By addressing these gaps and promoting financial literacy.

The adult population in Bhutan has some level of awareness of at least six types of financial products, with saving accounts being the most well-known.

Other relatively familiar financial products include loan mortgages, bank loans secured on property, mobile phone payment accounts, pension funds, and internet banking.

However, some financial products are not as widely known, such as investment accounts like unit trusts, prepaid payment cards, and microfinance loan insurance. This suggests that there is room for improvement in increasing knowledge about these less familiar financial products.

Regarding disaggregation by sex, adult males generally exhibit higher awareness levels of financial products compared to adult females, except for mobile phone payment accounts, which have similar levels of awareness among both genders.

Similarly, there are some differences in awareness between urban and rural adults. Urban adults tend to have higher awareness levels of certain financial products, like saving accounts, while rural adults are more aware of others, such as mortgages.

While many banked adults in Bhutan are aware of various financial products, the actual ownership of these products is relatively low, except for savings accounts.

Saving accounts are the most commonly owned financial product, with 80.8 percent of adults having them.

The ownership rates for other products like mobile phone payment accounts accounting for 31.4 percent are significantly lower.

Bhutan can empower its citizens to achieve financial security and contribute to the nation’s sustainable economic growth.

There is a relatively high level of financial literacy in this specific area. The survey results indicate that both adults’ males and females, as well as urban and rural adults, have a similar grasp of the concept of simple interest.

This shows that a significant portion of the adult population possesses basic knowledge of financial concepts related to simple interest. However, there is still room for improvement in financial literacy, particularly regarding inflation and its effects on purchasing power.

The survey finally states that by addressing these areas, we can further enhance the financial knowledge and understanding of the surveyed population.

In the country, adult males and females have almost equal ownership rates of savings accounts. Urban adults have higher ownership rates of savings accounts and mobile phone payment accounts compared to rural adults.

The survey results indicate a positive perception of digital financial services in Bhutan, with mobile banking and e-money platforms being widely used and appreciated.

The majority of respondents find digital finance beneficial, making their lives easier which accounts for 95.3 percent.

Similarly, mobile banking apps are highly popular, with 92.0 percent of respondents using them for transactions.

Additionally, 85.1 percent of respondents feel comfortable using various mobile apps, showing confidence in adopting digital tools. Of most users, 66.2 percent reported being able to use all features available on mobile banking apps.

There is a significant impact of friends and family on the financial decisions of the adult population in Bhutan, with 46.7 percent relying on their recommendations. Bank staff also play a role, influencing around 10 percent of financial decisions.

The influence of friends and family is consistent across demographics, including sex and area of residence.

A higher level of financial literacy on an understanding of division and interest rate, and low literacy is observed for inflation.

Most respondents correctly understood the concept of division accounting for 77.2 percent, while only one-third understood inflation’s impact on purchasing power which accounts for 35 percent.

Urban adults and males demonstrated higher financial literacy compared to rural adults and females.

The study reveals that the knowledge of financial terms is notably low among the adult population in Bhutan. Terms like treasury bills and mutual funds are particularly unfamiliar to the majority of adults.

Other financial terms such as microfinance loans, shares, inflation, retirement savings, and exchange rates are also not widely understood.

In contrast, slightly more adults are familiar with terms like ‘tax’ and ‘insurance’, but overall, there is a need for significant improvement in financial literacy across the population.

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