INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 8, ISSUE 12, DECEMBER 2019 ISSN 2277-8616

Family Economic Education, Financial Literacy

And Financial Inclusion Among University
Students In Indonesia
Setya Ayu Rahmawati, Bagus Shandy Narmaditya, Agus Wibowo, Dwi Wulandari, Prih Hardinto, Putra Hilmi Prayitno,
Sugeng Hadi Utomo

Abstract: This study aims to analyze financial literacy among students in several universities in Indonesia. In addition, the paper is conducted to
determine the level both financial literacy and financial inclusion of students and the relationship between family economic education toward financial
literacy. This research applied a quantitative method by using path analysis. The data were gathered from the questionnaires. The data were also
collected through focus group discussion with Stakeholders, Bank Indonesia and Students. Path analysis is applied in order to analysis the role of
financial literacy in achieving financial inclusion of students. The findings showed that the level of students’ financial literacy is categorized sufficient
literate, whilst the level of financial inclusion classified as high inclusion. The results also provided information that family economic education has a
positive relationship to both financial literacy and financial inclusion. Further more, financial literacy plays role as intervening variable in improving
students’ financial inclusion. Lastly, an attempt to enhance financial inclusion of students, it should provide greater financial literacy.

Keywords: Financial Literacy; Financial Inclusion; Family Economic Education; University Students
——————————  ——————————

1 INTRODUCTION knowledge of young people. In the other hand, Firli (2017)

Financial inclusion has involved government attention in many mentioned that variables may affect to financial literacy
nations including in Indonesia. The government would like to including personal demographic characteristics, financial
provide greater financial services particularly to unbanked knowledge, financial behavior, financial attitude and financial
people including low-income household, rural people, and training. In Indonesia, a study related to financial literacy index
small firms. Financial inclusion proposes a more affordable which is conducted by OJK (Financial Services Authority)
price in financial services, more convenient in transaction and showed a gradually changes. In the beginning, it was about
appropriate financial products. The greater financial inclusion 21.8 per cent in 2013 and rose slightly to 29.66 per cent in
will affect to better financial stability. It has remarked by 2016 (OJK, 2016). It remarked that by the time people more
numerous studies by Khan (2011); Aduda & Kalunda (2012); aware about basic concepts of financial. However, previous
Dienillah & Anggraeni (2016) who stated that financial studies gathered remarked that the level of financial literacy of
inclusion expeditiously prevents financial instability. Financial female are lower than male (Lusardi & Mitchell, 2011).
inclusion has become importance timetable both in Numerous studies provided the relationship between family
international and national level. In international context, it is economic education and financial literacy (Romadhoni, 2015;
discussed in forum such as G20, OECD, APEC, and ASEAN, Theodora & Marti’ah (2016). Another studies have shown the
while in the national level, financial inclusion program focuses results that conducted in senior high school level but few
on increasing the economic growth undergo income inequality, focuses on university students and it comparison to several
reducing poverty, and financial system stability. In Indonesia, universities student. For majority of university student, entering
the National framework of financial inclusion is divided into six college not only gives them new experience in their study, but
pillars namely financial education, public financial facilities, they also need to manage their financial. They probably face
mapping of financial information, support policy program, new issues and should adapt with new circumstance which far
intermediation and distribution facility and consumer protection from their parent. The condition forces university students to
(Bank Indonesia, 2017). An acquaintance with financial manage well their finance and make good financial decision. A
inclusion, financial literacy plays critical role in supporting the problem that usually occurred in the university students related
financial inclusion. Financial literacy is knowledge, awareness to their consumptive berhaviour. Actually, it is reasonable for
and skill to manage their own finances to achieve financial youth because at the time they have looked for their identity,
welfare (Lusardi & Mitchell, 2011; 2014). Financially literate personality and actualization. However, when the issue is not
people tends to aware about the financial products, financial immediately solved, it will lead a bigger problem in the future.
information and make a decision based on their knowledge. Therefore, the research related to the phenomenon should be
However, financially illiterate people will affect the difficulties to conducted particularly in subjecting university students. This
meet their need in the future such as having a better housing, study empirically addresses the factors affecting financial
pension financing, and education funding. Moreover, the lack literacy of university students and its relationship with financial
of financial literacy leads to individual household well-being. inclusion.
The understanding of basic concepts of financial is an
important factor in determining how people manage their 2 METHOD
money. Numerous studies related to the topic focuses on This paper applied a quantitative research using path analysis.
factors that affecting financial literacy (Firli, 2017; Luksander et The research addresses to provide comprehensively the
al., 2012; Potrich et al., 2015; Skagerland et al., 2018; causality phenomena in social studies perspectives. Moreover,
Wulandari & Narmaditya, 2018). In more detail, Luksander et this research aims at capturing the level of financial literacy of
al. (2012) provided that the financial-knowledge acquire in university students, the level of students’ financial inclusion
higher education has a beneficial impact on the financial and how they relate each other. Variables used in this
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 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 8, ISSUE 12, DECEMBER 2019 ISSN 2277-8616

research are financial literacy, financial inclusion, and family categorized as moderate inclusion. Further, as much as 36 per
economic education. In addition, demographic variable cent of students categorized high inclusion while the rest is low
includes gender, socio economic also examined in OECD inclusion. Financial literacy refers to individual knowledge,
(2018) and OJK (2017) (Financial Services Authority of behavior and attitude toward financial product. It is measured
Indonesia). The unit analysis was students who voluntarily using instrument from OECD (2018) which consist of three
agree to fill the questionnaire and willingly to be interviewed main components related. Individual knowledge is shown by
from several universities in Indonesia. In this research, their understanding on impact of inflation on spending power,
approximately 195 questionnaires were given to the identifying of interest and risk diversification, while financial
respondents but about seven questionnaires can not be used attitude and behaviour are seen by their behavior related to
for further analysis due to respondents did not fill the budgeting, active saving, avoiding borrowing to meet their
questionnaires properly. Further this paper applied path wants, choosing product, striving to achieve goals and paying
analysis to understand the role of financial literacy, family bills on time. The findings of the research are explained in the
economic education and its relation with financial inclusion. In Figure 2.
more detail, the framework of research is shown in figure 1.

X β Z
1
3
β β
2 Y 3

Figure 1. Research Framework

X = Family Economic Education

Y = Financial Literacy
Z = Financial Inclusion Figure 2. The Students level of Financial Literacy
β1 = path analysis X to Z
β2 = path analysis X to Y Figure 2 provides the level of students’ financial literacy in
β3 = path analysis Y to Z Indonesia. Overall, students are categorized well-literate even
3 RESULTS & DISCUSSION though more than quarter percentages of students are
categorized as sufficient literate. In the other word, students
3.1 The Level of Family Economic Education, Financial have knowledge related to knowledge, attitude and behavior
Literacy and Financial Inclusion toward financial products. However, the finding of the research
resulted slightly higher than 20 per cent of students are
Table 1. The financial Inclusion of University Students categorized as less literate. In the other hand, family economic
education as the first and the main education for people
No Indicators Percentage showed the high categorized. Family economic education was
1. Saving products 100% measured by three main concerns in behaviour, attitude and
2. Insurance (BPJS) 85% values giving by their parents related to financial education.
3. Insurance 15%
5. Pawn 10%
Specifically, family economic education covered activities
6. Stock market 3% taught and conducted through activities namely giving
7. Saving investment 10% exemplary, verbal explanation, demanding of relevant
8. Leasing 7% behaviours and discussing of relevant cases (Theodora &
Marti’ah, 2016). Based on findings of the research, the level of
Table 1 shows information about the university students’ have family economic education showed approximately 43 per cent
related to financial products. In general, all students have of students having high rates of family economic education.
saving products and only small number that having stock However, more than a half percentages of students are
market account. In more detail, as much as 85 per cent categorized as medium and low categorized which are 47 per
students hold insurance by the government (BPJS), while the cent, and 10 per cent, respectively.
small percentages for general insurance. The indifference
result occurs on possessing of saving investment and leasing Table 2. The Summary Data of Analysis Results.
for university students. While the students’ awareness of
financial product, most of them mentioned that they generally Relationship
Direct Indirect Total
understand about saving products, insurance, saving Between T Significance
Effect Effect Effect
Variables
investment and stock market. However, only small number
XZ 0.372 0.358 0.730 0.039
who have owned the other financial products except saving XY 0.504 - 0.504 0.003
product. They used it for their daily purposes such as withdraw YZ 0.618 - 0.618 0.051
money and transfer their money. Overall, the financial
inclusion of students is categorized as moderate inclusion, 3.2 Family Economic Education and Financial Literacy
while small number categorized as high and low inclusion. Table 2 illustrates the relationship among variables in the
Specifically, approximately 52 per cent of students are research. In more detail, family economic education has a
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 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 8, ISSUE 12, DECEMBER 2019 ISSN 2277-8616

significant positive influence toward financial literacy. The the total effect was about 0.730. The result of the research
finding accepted the hypothesis in the research mentioned revealed that in order to reach high point of financial literacy,
that family economic education affects to the financial literacy people should consider financial literacy. The greater financial
among university students. This remarked that the coefficient inclusion has highly affect to macroeconomics variable such
test was approximately 0.0372 and the t-sig score was 0.039 < as income inequality and economic growth (Kim, 2015).
0.05. This indicated the people who have in acquaintance with Based on the findings, we can conclude that in order to
family economic education which shown by several activities improving, it needed to consider financial literacy factors.
namely giving exemplary, verbal explanation, demanding of However, education in economic play critical role in providing
relevant behaviours and discussing of relevant cases tend to financial literacy. Therefore, the understanding about finance
have better financial literacy. This finding of the research is in should be provided by parents since financial education play
line with Theodora & Marti’ah (2016); Widayati (2014) which important issues in improving financial literacy and financial
mentioned that parents play critical role in improving children inclusion.
understanding about financial products. Moreover, students
tend to do based on what their watch and experienced from 4. CONCLUSION
their parents. This is understandable because family is the Financial literacy and financial inclusion act big role in
most and the main factors in socializing children related to complex economic world. It has widely affect both individually
financial issues. Education in a family enhance children ability in making good decision and aggregately in increasing
in managing their finance until they grow up. The common economic growth and equality. Based on the findings, it can
things that children can learn from their parents is based on be concluded that family economic education greatly affects to
what they see, what they do and what they experience. financial literacy and financial inclusion. By educating simple
Romadhoni (2015) added that children’s knowledge and thing like how parent providing the use of money, how to make
attitude is developed by observing people behaviour especially good decision, how to treat children to save their money
public figures in their daily lives. trough family it will remarkably influence to children behaviour
. primarily on their economic activities. Furthermore, the result
3.3 Financial Literacy and Financial Inclusion of the study provided that indirectly through financial literacy, it
The findings of the study showed that financial literacy gives the higher contribution to financial inclusion. Therefore,
significantly affect to the level of financial inclusion. The study financial literacy variable definitely plays a critical role in
provided that the coefficient test score was about 0.618 or 61 enhancing students behaviour and the wider affect to the
per cent (See Table 2). The finding accepted the previous economy.
hypothesis that financial literacy has a positive relationship to
financial inclusion. Financial literacy in this term is showed by
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