Financial Literacy: Determinants and Effects on Over-Indebtedness of Muslim Households in Southern Border Provinces of Thailand

Abstract

This study is a survey research project aimed at analyzing the financial literacy of households and the impact of financial literacy on over-indebtedness of Muslim households in the southern border provinces of Thailand. The data were collected using a structured questionnaire from a sample of 825 Muslim households. The effects of financial literacy on the over-indebtedness of the households were studied using appropriate descriptive statistics and logistic regression analysis.

The study found that Muslim households in the southern border provinces had moderate financial literacy, while their financial knowledge and financial attitude scores were relatively low. Financial literacy had no significant influence on a household's over-indebtedness behavior, according to the study. However, it found that households' increased financial knowledge and financial attitudes increased their likelihood of over-indebtedness. On the other hand, having better financial behavior will significantly reduce the possibility of over-indebtedness households. It also found that other factors such as age, gender, level of education, and level of income influenced household over-indebtedness. According to the findings, the older the head of the household is and the higher his level of education, the more likely a household is to incur excess indebtedness. Meanwhile, women-headed households and high-income households significantly reduce their households' chances of incurring excessive debt.

The findings suggest that good financial behavior can significantly reduce household over-indebtedness. Therefore, policymakers should take action to promote household financial literacy to an appropriate level that will create financial discipline for households, leading to balanced financial management.