The effect of financial literacy on financial planning of employees: a case of Mumias sugar company in Kenya
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Date
2015-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Daystar University, School of Business and Economics
Abstract
The main thrust of this study was to establish the effect of financial literacy on financial planning of employees. The three key objectives were determining the effect of financial numeracy and financial knowledge on employees’ financial planning and establishing the nature of relationship between financial literacy and financial planning. The study employed a descriptive survey design targeting all employees of Mumias Sugar Company and proportionate stratified random sampling was used to obtain a representative sample of 125 employees to study the relationship under investigation. Test-retest method and content validity were done to ensure reliability and validity. Using factor analysis, cross tabulation and correlation analysis, the study noted the following findings; level of financial literacy -that encompasses financial knowledge and financial numeracy- had a significant positive impact on financial planning aspects such as investment, saving and retirement; financial literacy had a strong positive correlation with the three financial planning aspects under investigation with the greatest magnitude being with savings plan. This confirmed the long held economic tradition that savings represent the key factor explaining investments and other financial planning aspects that drive economic development. However, the level of financial numeracy, savings and stock market participation was found to be low. The study recommended designing and implementing various target-specific financial education programs to be administered across various employee age-groups in order to address the disparity in saving plans. It was also recommended that further research be carried out to parse out the separate impact of behavioural biases on financial planning.
Description
Master of Business Administration in Finance
Keywords
Mumias sugar company, financial planning of employees, The effect of financial literacy
Citation
Otieno, D. S, (2015), The effect of financial literacy on financial planning of employees: a case of Mumias sugar company in Kenya: Daystar University, School of Business and Economics, Nairobi