Finding the factors affect to FL of the poor in Vietnam rural area, then provide some implications to develop FL of this one

ting in education at educational institutions); or whose income is not earned from rural areas. Viewpoints on poverty: the poor will be the one whose income does not exceed VND 700,000 / person / month or VND 1,000,000 / person / month when lacking 3 of the following 5 criteria: health; education; house; clean water and sanitation; information. Thus, based on the perspectives on financial literacy, poverty and rural areas, in this dissertation, the author conceives that FL is composed of three parts: financial knowledge, financial attitude major and financial behavior. The Financial Literacy of the poor in rural areas is understood as the application of financial knowledge and financial attitudes to the financial behaviors of those who are in the absolute poverty line and have a period of residence in the rural region that ensures two conditions (1) at least half of the current living time are in the countryside and (2) in 1 year, at least 6 months is living in the countryside. 2.2 Financial literacy of the poor in the rural area 2.2.1 Concept of Financial Literacy of the poor in rural area OECD (2013) defines FL as the combination of awareness, knowledge, skills, attitudes, and behaviors needed to make financial decisions and ultimately achieve personal “financial wealth”. Combining from the above studies, the definition of FL is more developed in recent years. Others define FL as a combination of an individual's perceptions, attitudes, and skills of individuals in financial matters. In summary, FL will cover 3 aspects: financial knowledge, financial attitude 7 and financial behavior. 2.2.2 Content of Financial Literacy of the poor in rural area Financial knowledge is the subject's understanding of the concepts of financial terminologies (interest rates, bonds,...) and the mode of operation of financial institutions (banks, credit institutions,...). Thus, financial knowledge will be a prerequisite to forming the financial behavior and attitude of the subject. Financial attitude is the perspective of the subject on the happening of the surrounding financial situation, such as the government's assessment of the changing situation of the economy. The determination of the subject's attitude to the financial and economic situation is a consequence of that person's financial knowledge, creating a premise for the financial behavior of that subject. Financial behavior is understood as the subject's response to the volatility of the surrounding economy. Through the subject's responses to the economy, we can identify the subject's sensitivity to the economy when there is a change. 2.2.3 Methods of measuring financial literacy FILS method This method uses CFA (hypothesis testing method to test the assumption and hypothesis of the model structure by quality factors, thus showing the quality of the model adjustment of the expression variables according to the allocation of specific latent variables). FSA method FSA is a measurement of FL based on 5 key issues: (1) Financial monitoring; (2) Ensure spending; (3) Planning ahead; (4) Select the product; (5) Stay up to date. Questionnaire method This is the method of using questionnaires to measure FL. Based on questions focusing on financial topics such as interest rates, the term of investment. 2.3 The role of financial literacy 2.3.1 Impact on the objects of the economy ● Impact on the financial behavior of low and middle-income earners Previous studies have shown that people with poor FL often have inefficient 8 expenditures and investments that waste capital and affect their income. People and areas with high FL often have a broad understanding of financial issues and investment and savings methods. ● Impact on worker’s productivity A high FL level increases the efficiency and productivity of the work. It will help employees better understand the benefits that the organization brings and improve their satisfaction. Improving FL has a positive impact on people in their personal and professional lives. High FL helps reduce social and psychological pressures and increase welfare for households. The biggest advantage of improving FL is to reduce employees' financial mistakes and make them more responsible for managing their personal finances, which will contribute to increasing the households’ living standard. 2.3.2 Impact on the overall economy ● Protect consumers from financial shortages that cause scams By increasing FL through skills, attitudes, behaviors and finances, it will contribute to enhancing the ability to protect consumer finance - especially those who are difficult to access to formal financial services (often are the poor in rural areas). ● Change the habit of keeping idle funds. A population with better financial knowledge can use idle money as a domestic investment to reduce its dependence on foreign capital and promote economic growth. The microfinance research also showed that when the poor or residents in rural areas are trained in using financial products, they will be able to use their idle money better through the expansion of the saving ratio, thereby aiming to use the loan and towards poverty reduction. 2.3.3 Impact of financial Literacy on income of the poor in rural area a. Knowledge Knowledge is a fundamental part of human capital, so the impact of knowledge on income is clear, especially in the field of human capital research. Studies agree that the number of years of schooling and work experience positively affect their income. Therefore, financial knowledge, an aspect of FL, has a positive effect on the income of the subjects in the economy. b. Attitude Regarding the recent research branch on poverty reduction, especially on 9 sustainable livelihoods and microfinance, the attitude of individuals is believed to influence income. For individuals who are cautious and knowledgeable enough information will spend less when income is high, the trend of savings increases and will use those savings when income decreases. c. Behaviors In the human capital research branch, people who have misguided investment behaviors as well as no financial behaviors would adversely affect income. These behaviors and financial decisions directly affect income. 2.4 Factors affecting Financial Literacy 2.4.1 Education Results of previous studies have shown that education is a positive influence on an individual's FL. The higher the education, the higher the rate of correctly answering financial questions. 2.4.2 Income Income is one of the factors affecting an individual's FL score. People with higher incomes often tend to have higher FL scores and vice versa. However, the above studies also point out the fact that the FL scores and the proportion of people with accurate financial knowledge are still low, even in the highest income group. This implies a need to enhance and improve FL not only among low-income people but also among middle and high-income groups. 2.4.3 Employment The group of employed people, especially in terms of economics and finance, often has more accurate and satisfactory financial knowledge, which leads to higher FL scores than those without a job. 2.4.4 Age Age is one of the factors affecting FL that is mentioned frequently in many research in the world. Although it is not completely agreed, many studies concur with the view that: FL score will be highest in middle age and lower in younger or older ages. 2.4.5 Gender Some viewpoints show that there is a difference in FL scores between women and men. Specifically, women often have lower FL score than men in the majority of cases. Moreover, women provide unspecified answers to financial problems. However, others point out the opposite when it comes to 10 judging that the effect of gender on the FL score is unclear. The study gave an average score of 47.87 for women, 49.02 for men. Thus, the influence of gender on FL is still one factor that has not reached a consensus among the researches on FL in the world. 2.4.6 Race and religion Previous studies have shown that race and religion are the factors that affect the FL. However, the differences in measurement methods and measurement sample division make the results of these studies not consistent and clear. 11 CHAPTER 3: RESEARCH METHODS AND RESULTS 3.1 Research Methods and Research Process This research combines both methods of qualitative research and quantitative research. Based on the synthesis and development of theories from previous studies as well as FL theory, the author has qualitatively analyzed the factors that affect FL and the influence of FL on the income of people in the rural regions. The study combines quantitative methods and modelling survey data about individuals to obtain information on FL and income of the study subjects. The set of quantitative FL measurement indicators will be built based on the questionnaire of OECD (2015), then adjusted to tailor Vietnam. The author intensively interviewed experts in the field of financial literacy and personal finance to adjust the questionnaire to suit Vietnam. This method would clarify further the qualitative relationships between the variables in the study and explain better the quantitative results achieved in this research. 3.2 Research model and hypothesis 3.2.1 Financial Literacy measurement Financial literacy is a combination of financial knowledge, attitudes and behaviors that can make financial decisions and help an individual build a well- being financial. Financial knowledge is understood as the necessary knowledge of theory and practice for an individual to make financial decisions effectively.
H1: FL is reflected in financial knowledge (reflective model) Financial attitude is an individual's thoughts or beliefs about the financial field and financial issues, which in turn influence his or her behaviors and decision making. Financial attitude scores were also measured on Likert's scale, based on the positive financial attitudes of the participants in this study.
H2: FL is expressed through financial attitude (reflective model) Financial behavior is the subject's response to the volatility of the surrounding economy. Through the subject's responses to the economy, the subject's sensitivity to the economy can be identified when there is a change.
H3: FL is expressed through financial behavior (reflective model) 2.6.2 Factors affecting Financial Literacy 12 ● Income Income is one of the factors influencing FL, which is mentioned in numerous researches - including in the human capital research branch, endogenous growth models and the theory of sustainable livelihoods. Income has a positive influence on FL.
H4: Income has a positive effect on FL. ● Education The scale includes 5 levels of education: Incomplete high school, high school graduation, college, university, postgraduate. Previous studies have suggested that education has a positive impact on FL.
H5: Education has a positive effect on FL. • Employment People who have jobs will have higher FL scores than those who are unemployed. Additionally, people who work in finance and state management tend to have higher scores than others.
H6: Jobs have an impact on FL. • Age The opinion on the impact of age on FL is still inconsistent among researches. Within the scope of the study, the author proposes the hypothesis
H7: Age has an impact on FL. • Gender Therefore, gender is a factor affecting FL, which has been discovered in a number of previous studies. Within the scope of the study, the author proposes the hypothesis
H8: Gender has an impact on FL. • Race and Religion The race is one of the influencing factors on FL, but it is inconsistent. Within the scope of the study, the author proposes
H9: Race and religion have an impact on FL. 3.2.3 Impact of Financial Literacy on income Studies on human capital and endogenous growth models mentioned that education, in general, has an impact on income.
H10: FL has an impact on income 13 3.3 Preliminary research 3.3.1 Preliminary qualitative research Qualitative research is determined by the in-depth interview with experts who have experience in the field of FL, personal finance, microfinance and general fields of the Banking-Finance sector. Preliminary qualitative research results Demographic factors include gender, age, education, employment, income. The questionnaire is required to mention the following issues: Firstly, the areas of works of individuals interviewed in rural areas should be divided into the following 9 areas to ensure the comprehensiveness of the professions: (1) Field of Administrative Management (2) Industry (3) Agriculture (4) Technical (5) Scientific and Technological Research (6) Education (7) Health Sector (8) Banking and Finance (9) Others. Secondly, education should be divided into (1) Below elementary (2) Primary/Secondary school (3) High school (4) Intermediate professional education and Vocational training (5) Colleges and Universities (6) Postgraduate. Thirdly, with questions of financial knowledge, the author should revise to become a 5-level Likert scale, then retain the idea of the question. Fourthly, after testing the scale of the reflection factors (Financial Knowledge, Financial Attitude, Financial Behavior), FL will be calculated by averaging the scores of the observed variables having statistical significance in the model. 3.3.2 Experimental quantitative research a. Questionnaire Based on the overview research, research objectives, research model and preliminary in-depth interview results, the author drafted a questionnaire. The questionnaire designed based on international studies was translated into Vietnamese, then adjusted to suit Vietnam. - Questionnaire survey consists of 2 main parts: Part 1: General information includes personal information such as gender, age, education, employment, years of experience, income and access to modern 14 electronic payment applications. Part 2: Measurement of financial knowledge through a 5-level Likert scale with 7 variables. Information collected from this quantitative study will be analyzed on SPSS 22 and AMOS 20 software. - Survey subjects: Subjects selected to participate in the study are aged 18 and above, are poor households, and meet the time conditions: (1) the total time of living in Thai Binh province must be at least ½ of the age number and (2) every year, the living time in the province must be at least 6 months (unnecessary continuous). b. Experimental quantitative research results From the rotation matrix from Exploratory Factor Analysis (EFA), the results show that the variables K6, K2, K7 and A3 are classified into the same factor and combined into factor 3. However, according to the authors of previous studies, these variables have different content. Therefore, in order to obtain a full scale, the author will conduct a second in-depth interview with experts to clarify this issue. At the same time, after the process of experimental quantitative research, the survey subjects gave feedbacks on the wording of the questionnaire. 3.4 Official research 3.4.1 Official qualitative research a. In-depth interview goal The scale and model were tested again through the results of preliminary research, combined with the opinions of microfinance and financial experts. Hence, it is to redefine the appropriateness of the variables, including definitions, hypotheses and impact trends of variables on latent variables in rural areas of Vietnam. In-depth interviewees: In-depth interviews were conducted with 11 experts in the field of finance and education. b. In-depth interview results Firstly, although the objectives and scope of the study were not expressed, it needs to include the measurement of the financial literacy of the poor in rural areas of Vietnam, so they must still cover the same questions as those of the OECD (2013) as a theoretical basis for research. Therefore, the survey still 15 needs some old questions, but when the model is tested, it is possible to remove this group (for variables that need to be removed from the model when experimental research is made). Secondly, when the small factors combine into one large factor, including K1, K3 and K5 (inflation, deposit interest rate and interest rate in case of inflation), there will have an impact relationship by these three factors, which often come together and are among the money-saving factors of the rural poor. The group of factors K6, K2, K7 and A3 relate to the people's plans and ability to use money, so they are still acceptable. The explanation is similar to A2 and A5; A1 and A4. The K4 factor (simple interest rate calculation) is excluded from the model because recently, most loans in the market are either based on compound interest or daily interest. This is an appropriate issue for Vietnam. 3.4.2 Official quantitative research Official research model a. Research sample • Method of survey The method of survey used by the author is to distribute the questionnaire directly to each survey object. After distributing 600 questionnaires, the author received 512 observations matching the study. 16 CHAPTER 4: RESULTS OF THE RESEARCH MODEL 4.1 Current situation of financial literacy in rural areas of Vietnam The number of significant observations remaining is 512 observations. Among these observations, women account for a much higher proportion than men, since at present, the issue of rural migration to urban areas makes women live in rural areas more than men. Therefore, the author's collection of 61.5% of the total votes is female in accordance with reality and previous studies. About the region, the North accounts for 52%; the South accounts for 38%, the rest is Central. Regarding the age group of 26-40 years, accounting for 42% is the largest proportion, followed by the age group from 41-55 years old, accounting for 35.2%. In terms of education, most of which are college and university account for 49.2%, then high school with 20.1%. The main subjects of the survey are the poor living in rural areas, and most of them are working in the field of agriculture and industry, the income is mainly from 3-5 million a month (accounting for 30.7%), and 1- 3 million a month (accounting for 23.4%), the rest is subject to income from 1 million or less. However, most of the interviewed groups are the main labor in the family, the number of dependents is from 1 to 3 people, so they are still the poor households. 4.1.1 Current situation of financial literacy according to the reflection factors The majority of the observed variables of Financial attitude and Financial Behavior have values in the range [3.41; 4.2], which is quite large, showing that most people agree with the opinions from the scale. However, many surveyed people have a neutral opinion about financial attitude, "I have to spend most of the money I have on buying goods and food for the family." (average of 3.24) showing the buying goods attitude of residents. About the Financial knowledge observed variable, all observed variables are also valid in the range [3.65; 4.1]. However, the difference between the average score among the answers is quite large, this can reflect respondents' uncertainties about financial literacy questions. Especially in the question about knowledge of K1 inflation definition, there were 102/152 respondents answered: "I am not sure". The access to financial knowledge such as inflation, interest rates, is quite limited. 17 4.1.2 Current situation of factors affecting financial literacy The FL score for women is 0.0506 points higher than for men. This shows that there is no obvious difference between men and women when measuring FL. The group with the highest average FL score was between 56-70 years old and 41-55 years old, with 4,069 and 3,871 points, respectively. The group aged 18-25 years has the lowest FL score with 2,754 points. 4.2 Assess the reliability of the scale of reflection factors The "Financial Knowledge" scale has a Cronbach's Alpha coefficient of 0.729, and the correlation coefficients are all greater than 0.3. The "Financial Knowledge" scale is satisfactory for the follow-up analysis. The "Financial attitude" scale has a Cronbach's Alpha coefficient of 0.834, and the correlation coefficients are all greater than 0.3. The scale of "Financial attitude" is satisfactory to carry out the next analysis. The "Financial Behavior" scale has a Cronbach's Alpha coefficient of 0.871, and the correlation coefficients are all greater than 0.3. The "Financial Behavior" scale is satisfactory to perform further analyzes. 4.2.1 Exploratory Factor Analysis (EFA) The EFA result of Financial Behavior shows that 9 measurement criteria from B1 to B9 are loaded into one factor with load factors from 0.592 to 0.766 respectively, proving that the original statements are significantly related to the factor. The EFA result of Financial Attitude shows that 5 measurement criteria from A1 to A5 are loaded into a factor with load factors from 0.658 to 0.838, respectively, proving the statements are significantly related to the factor. The EFA result of Financial Knowledge shows that 6 measurement criteria from K1 to K6 are loaded into two separate factors: Factor 1 (Interest rate and inflation factor): including K2, K3, K1, and K5 with load factors from 0.625 to 0.844, respectively, proves that the original statements are significantly related to the factors. Factor 2 (Factor of risk and opportunity cost): including K7, K6 with load factors of 0.883 and 0.855, respectively, proves that the original statements are significantly related to the factors. 18 4.2.2 Confirmatory Factor Analysis (CFA) • CFA model Level 1 measures the reflection factor of FL After CFA analysis, FL scale includes 4 elements (Behavior, Attitude, Knowledge_1, Knowledge_2). CFA analysis results show that the components of the scale all meet the requirements of value and reliability. • CFA model Level 2 measures FL The results of CFA analysis of the criteria to measure the suitability of the model show that Chi-square / df = <3, TLI =, CFI =, NFI = are all greater than 0.9, the coefficient of RMSEA = <0.08, so the model has relevance to the market. P-value results of the observed variables representing the factors are all equal to 0.000. The overall reliability coefficient of the scale reaches a value higher than 0.5, and the extracted variance coefficient is within an acceptable range. It can be affirmed that the scale achieves convergence and unidirectional values. Thus, the research scale for FL has ensured analysis requirements. 4.3 Assess the impact of influencing factors a. Estimate OLS regression model Summary of the official quantitative model Sample R R square Adjusted R Square Standard error of estimation Durbin-Watson 1 .570a .325 .320 .395 1.705 Forecasting set: (constant), education, gender, age, income. Dependent variable: Financial Literacy (Source: Calculation results from SPSS 22 and AMOS 20) From Model Summaryb table, the following results were collected: - Adjusted R Square value reaches 32%. This means that variables including education, gender, age, and income affect 32% the variation of the dependent variable FL, while 68% remaining are due to other variables outside the model and random errors. - The Durbin - Watson value of the model reaches 1.705, which is in the range of 1 to 3, so it is synonymous with a good single linear regression model. 19 Table 4.12. ANOVA official quantitative test Function used F-value Sig Linear regression function 60.980 .000b a. Dependent variable: Financial Literacy b. Forecasting set: Constant, Education, Gender, Age, Income. (Source: Calculation results from SPSS 22 and AMOS 20) Official quantitative coefficients Sample Unstandardized coefficients Beta standardized coefficient Value Sig value VIF value Beta Standard deviation Constant 2.545 0.088 29.037 0.000 Gender 0.019 0.036 0.020 0.537 0.591 1.007 Age 0.021 0.001 0.515 13.874 0.000 1.036 Income 0.038 0.012 0.118 3.138 0.001 1.065 Education 0.036 0.013 0.099 2.647 0.008 1.055 (Source: Calculation results from SPSS 22 and AMOS 20) a. Structural Equation Modeling (SEM) Figure 4.4.St