Management Practice Insights
DOI: 10.59571/mpi.v3si1.7
Year: 2025, Volume: 3, Issue: Special Issue 1, Pages: 38-44
Original Article
Ashish Desai 1
1 Associate Professor in the Information Management and Analytics department at SPJIMR.
Correspondence
Received Date:10 September 2024, Accepted Date:23 May 2025, Published Date:30 June 2025
While digital innovations are transforming financial services, making them available, accessible, and affordable, they can also lead to irresponsible consumer borrowing. India witnessed significant growth in unsecured personal loans, which pose a systemic risk to the financial system but could also impact borrowers' financial well-being. RBI responded by increasing risk weightage for unsecured personal loans to curtail unsecured personal loan growth. Interest rate change is a supply-side intervention that yields immediate effects. However, have you wondered if any long-term sustainable intervention can mitigate systemic risk in the financial system? Since financial well-being results from financial resources and appropriate capacity/ skills, i.e. financial literacy, to manage those resources, enhancing financial literacy may provide an alternative mechanism to ensure responsible borrowing.1 In today's digital context, financial literacy must be supplemented with digital skills, which is termed digital financial literacy (DFL). A recent research paper articulates what digital financial literacy is and analyses its components.2 This essay unpacks the elements of digital financial literacy and explores the policy implications in the Indian context, which is relevant to policymakers, financial institutions and NGOs working in the area of financial literacy.
1 Ashish Dattaram Desai, Sensarma ,Rudra, and Ashok and Thomas, “Roles of Financial Literacy and Entrepreneurial Orientation in Economic Empowerment of Rural Women Entrepreneurs,” Oxford Development Studies 52, no. 3 (July 2, 2024): 243–60, https://doi.org/10.1080/13600818.2024.2403066.
2 Tiina Koskelainen et al., “Financial Literacy in the Digital Age—A Research Agenda,” Journal of Consumer Affairs 57, no. 1 (2023): 507–28, https://doi.org/10.1111/joca.12510.
3 World Bank, “The Global Findex Database,” Text/HTML, accessed June 13, 2025, https://www.worldbank.org/en/publication/globalfindex/Data.
4 Naila Kabeer, “Resources, Agency, Achievements: Reflections on the Measurement of Women's Empowerment,” Development and Change 30, no. 3 (December 16, 2002): 435–64, https://doi.org/10.1111/1467-7660.00125.
5 Amartya Sen, Development as Freedom (Oxford University Press, 1999).
6 Judy L Postmus, “Economic Empowerment of Domestic Violence Survivors,” VAWnet, a Project of the National Resource Center on Domestic Violence, October 2010, https://vawnet.org/material/economic-empowermentdomestic-violence-survivors.
7 Desai and and Thomas, “Roles of Financial Literacy and Entrepreneurial Orientation in Economic Empowerment of Rural Women Entrepreneurs.”
8 Kabeer, “Resources, Agency, Achievements: Reflections on the Measurement of Women's Empowerment.”
9 Koskelainen et al., “Financial Literacy in the Digital Age—A Research Agenda.”
10 Ashish Desai et al., “Public Value Creation Through Combined Consumption of Multiple Public Services – Case of India Stack,” International Journal of Public Administration 47, no. 9 (July 3, 2024): 600–611, https://doi.org/10.1080/01900692.2023.2243401.
11 Koskelainen et al., “Financial Literacy in the Digital Age—A Research Agenda.”
12 Kabeer, “Resources, Agency, Achievements: Reflections on the Measurement of Women's Empowerment.”
13 Angela A Hung, Andrew M Parker, and Joanne Yoong, “Defining and Measuring Financial Literacy,” Working Paper (RAND Corporation, September 23, 2009).
14 Koskelainen et al., “Financial Literacy in the Digital Age—A Research Agenda.”
15 Sandra J. Huston, “Measuring Financial Literacy,” Journal of Consumer Affairs 44, no. 2 (2010): 296–316, https://doi.org/10.1111/j.1745-6606.2010.01170.x.
16 David L. Remund, “Financial Literacy Explicated: The Case for a Clearer Definition in an Increasingly Complex Economy,” Journal of Consumer Affairs 44, no. 2 (June 1, 2010): 276–95, https://doi.org/10.1111/j.1745-6606.2010.01169.x.
17 Dee Warmath and David Zimmerman, “Financial Literacy as More than Knowledge: The Development of a Formative Scale through the Lens of Bloom's Domains of Knowledge,” Journal of Consumer Affairs 53, no. 4 (September 30, 2019): 1602–29, https://doi.org/10.1111/joca.12286.
18 Marilyn E. Gist and Terence R. Mitchell, “Self-Efficacy: A Theoretical Analysis of Its Determinants and Malleability,” The Academy of Management Review 17, no. 2 (1992): 183–211, https://doi.org/10.2307/258770.
19 Jean M Lown, “Development and Validation of a Financial Self-Efficacy Scale,” Journal of Financial Conceling and Planning 22, no. 2 (2011), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2006665.
20 Koskelainen et al., “Financial Literacy in the Digital Age—A Research Agenda.”
21 Angela C. Lyons and Josephine Kass-Hanna, “A Methodological Overview to Defining and Measuring 'Digital' Financial Literacy,” Financial Planning Review 4, no. 2 (June 9, 2021): e1113, https://doi.org/10.1002/cfp2.1113.
22 Josephine Kass-Hanna, Angela C. Lyons, and Fan Liu, “Building Financial Resilience through Financial and Digital Literacy in South Asia and Sub-Saharan Africa,” Emerging Markets Review 51, no. Part A (June 1, 2022): 100846, https://doi.org/10.1016/j.ememar.2021.100846.
23 Koskelainen et al., “Financial Literacy in the Digital Age—A Research Agenda.”
24 Lyons and Kass-Hanna, “A Methodological Overview to Defining and Measuring 'Digital' Financial Literacy.”
25 Kass-Hanna, Lyons, and Liu, “Building Financial Resilience through Financial and Digital Literacy in South Asia and Sub-Saharan Africa.”
26 Kass-Hanna, Lyons, and Liu.
27 Koskelainen et al., “Financial Literacy in the Digital Age—A Research Agenda.”
28 Desai and and Thomas, “Roles of Financial Literacy and Entrepreneurial Orientation in Economic Empowerment of Rural Women Entrepreneurs.”
29 CEIC, “India Private Consumption: % of GDP, 1996-2024,” accessed June 13, 2025, https://www.ceicdata.com/en/indicator/india/privateconsumption--of-nominal-gdp.
30 Desai et al., “Public Value Creation Through Combined Consumption of Multiple Public Services – Case of India Stack.”
31 Sonja Kelly Ferenzy Allyse McGrath, Dennis, “How Financial Institutions and Fintechs Are Partnering for Inclusion: Lessons from the Frontlines,” July 30, 2017, https://www.centerforfinancialinclusion.org/how-financialinstitutions-and-fintechs-are-partnering-for-inclusion-lessonsfrom-the-frontlines-2/.
32 David Mhlanga, “Financial Inclusion in Emerging Economies: The Application of Machine Learning and Artificial Intelligence in Credit Risk Assessment,” International Journal of Financial Studies 9, no. 3 (September 2021): 39, https://doi.org/10.3390/ijfs9030039.
33 Reserve Bank of India, “Annual Report 2023-24” (Mumbai, India, May 29, 2024), https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/0ANNUALREPORT202324_FULLDF549205FA214F62A2441C5320D64A29.PDF.
34 Reserve Bank of India.
35 PWC, “The Indian Payments Handbook - 2024-29,” August 2024, https://www.pwc.in/assets/pdfs/indianpayment_handbook-2024.pdf.
36 “RBI's Non-Interest Rate Interventions To Balance Growth With Risk,” Forbes India, accessed June 13, 2025, https://www.forbesindia.com/article/bharatiya-vidyabhavan039s-spjimr/rbis-noninterest-rate-interventions-tobalance-growth-with-risk/94472/1.
37 Desai and and Thomas, “Roles of Financial Literacy and Entrepreneurial Orientation in Economic Empowerment of Rural Women Entrepreneurs.”
38 Annamaria Lusardi and Olivia S. Mitchell, “Financial Literacy and Retirement Planning: New Evidence from the Rand American Life Panel,” Michigan Retirement Research Center University of Michigan, WP 2007-157, 2007, https://doi.org/10.2139/ssrn.1095869.
39 Annamaria Lusardi, “Numeracy, Financial Literacy, and Financial Decision-Making,” Working Paper Series, February 2012, https://doi.org/10.3386/w17821.
40 Desai and and Thomas, “Roles of Financial Literacy and Entrepreneurial Orientation in Economic Empowerment of Rural Women Entrepreneurs.”
41 Services Working Group (DFSWG), Consumer, and Empowerment and Market Conduct Working Group (CEMCWG), “Digital Financial Literacy” (Alliance for Financial Inclusion, Kuala Lumpur, Malaysia, May 19, 2021), https://www.afiglobal.org/publication/digital-financial-literacy/.
© 2025 Published by SPJIMR. This is an open-access article under the CC BY license (https://creativecommons.org/licenses/by/4.0/)
Subscribe now for latest articles and news.
