Abstract:
This paper explores the existing pattern and the levels of disparity of the functional financial literacy in the
Sri Lankan context. The study, mainly using quantitative data, selected the sample representing the three main
settlement types: urban, rural and estate sector using multi-stage sampling technique related to cluster sampling. The
analysis generated five ‘domains’ of financial literacy scores that capture respondent’s relative skills using factor
analysis. Tobit regression analysis and cluster analysis were used for testing the determinants and disparity of
financial literacy among the respondents. Moreover, descriptive statistics and other statistical techniques such as key
driver analysis and correlation analysis were also appropriately applied. The study found that the socio-economicdemographic
characteristics have a very strong association with the financial literacy of individuals. The results of
the study highlights that the majority of the respondents demonstrate a modest financial knowledge and can be
categorized as a literate (bankable) group. The functional financial literacy was quite diverse across respondents
depending on the levels of education, income, gender, age, etc. Moreover, the study unveils the characteristics of the
individuals with different levels of financial literacy for those who need it for policy actions. Furthermore, the study
identified the target group for emphasizing in the provision of financial education to minimize inequalities with an
increase in the financial inclusion of the country.
