FINANCIAL LITERACY AND BANKRUPTCY AMONG YOUTH IN MALAYSIA: INSIGHTS FROM LITERATURE FOR CONCEPTUAL FRAMEWORK DEVELOPMENT

Abstract

As the number of bankruptcy cases in Malaysia continues to rise, the awareness of financial literacy is crucial to be addressed at the national level. According to Insolvency Department, 26% of bankruptcy cases in Malaysia are those below the age of 34. Numerous studies have been done on financial literacy and financial behaviour to uncover the reasons for bankruptcy. Most studies found that financial literacy varies according to the respondents’ knowledge and skills in basic finance and the bankruptcy cases were primarily due to inability to make payments on financial obligations such as instalment purchases, personal loans, and credit card debt. This shows that different types of financial education (TFE) are needed for the varying level of financial literacy and financial behaviour. This paper attempts to discover preliminary themes from existing studies to conceptualize a framework for the purpose of examining the types of financial education needed to address the varying level of financial literacy and financial behaviours. Review from existing literature on studies related to financial literacy on youth from available secondary data sources are summarized into two major themes from findings and conclusions derived from them. The first theme is level of financial literacy (LFL) in which the level varies according to answers given for basic financial understanding. The second theme that indicate financial behaviour that is chosen for this study is attitude towards money (ATM). A conceptual framework is presented based on these two themes for future direction to examine the relationship between the LFL and TFE needed to improve the financial knowledge, and the relationship between ATM and TFE needed to improve the financial knowledge to solve the bankruptcy cases among youth in Malaysia using the Cumurovic-Lusardi measure ("CL") and the ATM dimensions derived from Rieger (2020), Almeida et al. (2021) and Fünfgeld & Wang (2009).