Finance, Financial Literacy, and Financial Inclusion

To understanding the financial literacy and challenges in Bangladesh

Goals:
To develop a real-life case study in financial literacy

Section-A: Company Profile

Name of the Company1

Address:

Location:

Owner/Manager of the Company:

Type of the Company2:

Nature of Business3:

Types of Financing4:

Section-B: Understanding of Financial Literacy

1) Tell Something about the Finance Manager5:

2) Does the owner/manager have an understanding of Risk Diversification?6

1
You must choose a company that has at least 20 employees and was established at least 5 years ago.
2
Like sole proprietorship, partnership, and so on.
3
Explain details about the company’s nature of business, such as the products or services it produces and offers.
4
Explain details on internal or external, short-term or long-term
5
Who maintains Finance & Accounts (F&A)? Describe the educational background of the F&A manager, such as
whether they are a finance graduate and years experiences.
6
Risk Diversification: Suppose you have some money. Is it safer to put your money into one business or investment,
or to put your money into multiple businesses or investments? [one business or investment; multiple businesses or
investments; don’t know; refused to answer]
 3) Does the owner/manager have an understanding of Inflation (time value of money)7?

4) Does the owner/manager have an understanding of Numeracy (Interest)8?

5) Does the owner/manager have an understanding of Compound Interest?9

7
Inflation: Suppose over the next 10 years the prices of the things you buy double. If your income also doubles, will
you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today? [less;
the same; more; don’t know; refused to answer]
8
Numeracy (Interest): Suppose you need to borrow 100 US dollars. Which is the lower amount to pay back: 105 US
dollars or 100 US dollars plus three percent? [105 US dollars; 100 US dollars plus three percent; don’t know; refused
to answer]
9
Compound Interest: Suppose you put money in the bank for two years and the bank agrees to add 15 percent per
year to your account. Will the bank add more money to your account the second year than it did the first year, or will
it add the same amount of money both years? [more; the same; don’t know; refused to answer]. For example, suppose
you had 100 US dollars in a savings account and the bank adds 10 percent per year to the account. How much money
would you have in the account after five years if you did not remove any money from the account? [more than 150
dollars; exactly 150 dollars; less than 150 dollars; don’t know; refused to answer].
Section-C: Identification of Financial Challenges10

1.

2.

3.

4.

5.

Section-D: Overcoming Pathway of Financial Challenges

Does the owner/manager believe that the digitalization of banking or financial transactions helps make their
business easier and will help overcome many financial challenges?

10
Ask them what finance and banking-related problems (see the last page) they are facing.
 Common Financial Challenges in Bangladesh

Businesses and individuals often face a variety of finance and banking-related problems. Here are some
common challenges:

For Businesses:

1. Access to Capital: Difficulty obtaining loans or credit, especially for small and medium-sized
enterprises (SMEs).

2. High Interest Rates: Expensive borrowing costs can strain financial resources and hinder growth.

3. Cash Flow Management: Maintaining a steady cash flow is challenging due to delayed payments
from clients or seasonal fluctuations.

4. Complex Loan Requirements: Banks often impose stringent conditions for loans, making it
harder for businesses to qualify.

5. Currency Fluctuations: For businesses dealing with international transactions, exchange rate
volatility can lead to financial instability.

6. Limited Digital Banking Adoption: Some businesses struggle to adopt digital solutions for
payments, affecting efficiency and competitiveness.

7. Cybersecurity Threats: Increased digitalization exposes businesses to risks such as fraud,

hacking, or data breaches.

8. Banking Fees: High transaction or service fees can reduce profitability.

9. Regulatory Compliance: Navigating complex banking regulations can be time-consuming and

costly.

10. Financial Literacy: Lack of understanding of advanced financial tools and services can prevent
businesses from optimizing their financial operations.

For Individuals:

1. Limited Access to Banking: Especially in rural or underdeveloped areas, people may face
difficulties accessing formal banking services.

2. Credit Issues: Difficulty in getting loans due to poor credit scores or lack of credit history.
 3. High Transaction Costs: Excessive fees for banking services like transfers, withdrawals, or
maintenance.

4. Digital Exclusion: Some individuals may lack the skills or resources to engage in digital banking.

5. Fraud and Scams: Increasing cases of financial fraud, including identity theft and phishing attacks,
which compromise personal banking security.

6. Debt Management: Struggling to manage personal debts, including credit card debt, mortgages,
or student loans.

7. Inflation: Rising inflation rates eroding the value of savings and increasing the cost of living.

8. Lack of Financial Planning: Poor personal financial planning or budgeting can lead to issues such
as insufficient savings or retirement funds.

9. Overdraft and Penalty Fees: Unnecessary costs due to overdraft charges or late payment fees.

10. Unstable Income: Freelancers or gig workers may have trouble maintaining stable financial
accounts due to irregular income.

These challenges can vary depending on the region, economic environment, and the scale of the business
or individual’s financial situation.