Financial literacy and informal debt in Thailand

Abstract

The objectives of this research were 1) to study the relationships between financial literacy and informal debt, 2) to investigate the relationships between financial inclusion and informal debt, and 3) to propose policies and guidelines for solving informal debt problems in addition to promoting financial literacy that are appropriate for the Thai context. This research employed a quantitative research design using secondary data analysis to analyze data obtained from the Bank of Thailand’s 2016 and 2018 financial literacy survey reports, Thailand’s 2016 and 2018 financial inclusion maps, and the Ministry of Finance’s 2016 and 2018 state welfare registration programs. The findings are as follows: 1) Financial knowledge was correlated with financial behavior in the same direction. 2) Financial knowledge was correlated with the average amount of informal debt per person in 2018 in the same direction, indicating that a province with a high financial literacy score will have a higher average amount of informal debt per person. 3) Financial inclusion was correlated with the average amount of informal debt per person and the number of people with informal debt in the same direction. This suggests that a province with a high financial inclusion level will have a high average amount of informal debt per person and a high number of people with informal debt. 4) Regarding internal relationships between informal debt factors, it was found that the number of people with informal debt was correlated with the amount of informal debt and the average amount of informal debt per person.