CHAPTER 2

REVIEW OF RELATED LITERATURE

This chapter provides the review of related literature and studies that is used to
highlight the Financial Literacy of Grade 11 students in making smart Financial Decisions. It
also includes synthesis of the research for a better understanding about Financial Literacy and
its connection to the following review of related literature (RRL) and review of related
studies (RRS).

Review of Related Studies

Financial Literacy of Microbusiness Owners

According to related study of Zach Gonzalvo & Ernie C. Avila (2019). In a fast-
changing competitive business environment, entrepreneurs face numerous problems. But just
like any other industry, as Camposano specified in a report titled “ASEAN Economic
Community SME Development: Narrowing Development Gap Measure, “the micro, small
and medium enterprises (MSMEs) sector is not without challenges. One facet that critically
affects the effective managing and maintaining the businesses is the ability and capacity of
the manager and owner in financial and monetary issues. The report further identified that
access and handling of financial aspect are still one of the most crucial factors that affect the
competitiveness of MSMEs.

In other words, Financial Literacy is positively related to microbusinesses and is one

of the major factors that could cause issues in the business. Various studies supported that
financial literacy is important for business success. A low financial skill leads to an adverse
impact in the future of the business.

Covid-19 Teaching Model of Financial Literacy Integration in the K to 12

According to a study of Inocian et. al, (2021). Financial literacy is the capability of an
individual to effectively manage their finances daily. This definition concerns with the basics
of saving and spending in the development of this paper and the engagement of a
contextualized COVID-19 Model of Teaching, as a deconstructive version of COVID-19
pandemic–a response to flexible learning in the ‘new normal’ situations. This situation leads
them to a problem of spending for the essential goods and services, especially during trying
times. Warren Buffett, an American businessman once said, “Do not save what is left after
spending; instead, spend what is left after saving”. Saving is simply the act of keeping
monetary and other resources for future purposes.

Having the knowledge of Financial Literacy will make an individual a responsible

citizen that is knowledgeable on how to spend and save effectively in order to remain
sustainable and resilient more especially in densely populated cities, and during these trying
times of a pandemic.

According to a related study of Feliece I Yeban and Joselito G Florendo (2020). The
Philippine Kto12 Curriculum for Social Studies and Mathematics and the PISA Financial
Literacy Framework were reviewed to find out their degree of alignment or non-alignment.
Through document analysis and curriculum mapping, the study found out that the Social
Studies and Mathematics competencies for Grades 7 to 10 are not aligned with the PISA
Financial Literacy Framework. The study recommends a serious revision of the Social
Studies curriculum and an enhancement of the Mathematics curriculum because simple
infusion of financial literacy concepts will not be enough to develop financially proficient
Filipinos. Along with the curriculum revision and enhancement, the implementation of a
national financial literacy program targeting the parents and the larger community is
recommended because mere classroom exposure to financial literacy may not be efficient.

The study of Yeban & Florendo and the study of Financial Literacy both connects and
highlights the need for a significant improvements for students to have financial literacy
education, but not only on within curriculum but also on broader community.

Financial Inclusion

According to a related study of Jared Martin U. Desello & Mary Grace R. Agner
(2023). Financial inclusion is increasingly seen as a key enabler of various development
objectives. While not explicitly one of the UN Sustainable Development Goals (SDGs),
financial inclusion is recognized as an important enabler for them. The Philippine central
bank—the Bangko Sentral ng Pilipinas (BSP) has even identified financial inclusion as a
national development agenda‖ that requires a conscious effort by various sectors to accelerate
and enable its societal benefits. This paper studies the relationship between financial literacy
and financial inclusion in the Philippines using data gathered from the 2019 Financial
Inclusion Survey (FIS).

Financial Inclusion and Financial Literacy is one of the instruments to attain a

sustainable and equitable development in the Philippines. This highlights the importance of
having the skills and knowledge about Financial Literacy because it helps the Philippines in
its development process.

Impulsive Buying

According to Jabar (2021). Impulse buying can be attributed to a number of

predisposing internal and external factors. At the individual level, this behavior can be
facilitated by personality traits (see the study of Sofi and Nikka, 2017), individual motives,
and personal financial resources. Externally, individuals may be enticed to engage in impulse
buying as a result of appealing market stimuli (Iyer et al., 2020). Most studies looking into
impulse buying are heavily focused on individual psychological related factors and financial
assets including ownership of credit cards. However, impulse buying is also related to
financial literacy. The study of Anisa et al. (2017), participated in by 733 student
respondents, reveals that there is a negative relationship between financial literacy and
impulse buying. This means that financial literacy can reduce the likelihood of impulse
buying.

Jabar’s study suggest that impulsive buying is influenced by internal personal trait
and market stimuli but he also suggest that enhancing financial literacy will serve as a
protective factor against impulsive buying behavior of individuals. This means that by
improving their financial knowledge, individuals can manage their spending habits and make
a more deliberate purchasing decisions rather than impulsive ones.

Financial Literacy among Professional Teachers and Pre-service teachers

According to a study of Imelda CM et. al, (2017). This study examines the level of
financial literacy among pre-service teachers and professional teachers in terms of numeracy,
compound interest, inflation, time value of money, money illusion and risk diversification.
Evidence-based findings of the study will be a basis for recommendation in addressing the
need of pre-service teachers to include financial education as part of the national education
curriculum, and the need of professional teachers for the right training to provide financial
education. This study examined the level of financial literacy of public and private pre-
service teachers and professional teachers in the Philippines. Specifically, it sought to
measure their understanding on the basic financial concepts in terms of numeracy, compound
interest, inflation, time value of money, money illusion and functions of stock market. It also
sought to measure their understanding on sophisticated financial knowledge on mutual funds,
interest rates, stocks, bonds, mutual funds, long period return of money, fluctuations and risk
diversifications.

The study of Imelda CM et. al, addresses the importance of having financial literacy
not just on students but also on professional teachers and pre-services teachers for them to
teach the students that knowledge they have about financial literacy.

Academically Ability and Parental Guidance

According to a study of DR. Allan A. Lalosa (2020). Financial related proficiency is

currently recognized globally identifying components for stable monetary and budgetary
advancement. For individuals or society, financial literacy centers around the particular
learning and ideas purchasers need to deal with their cash and construct riches, depending
upon a person's circumstance. It is the use of information about figuring out how to make and
oversee family unit spending plans, figuring out how to contribute cash for retirement as per
Lusardi and Mitchell, (2011). It is additionally a capacity to comprehend the money related
setting to enhance the monetary prosperity of people and society. It can likewise be a general
technique for bringing salaried individuals or families to increment monetary security. The
study also revealed that the respondents tend to be academically prepared but received lesser
guidance in terms of financial literacy. The result showed that parental guidance has a very
strong influence on financial literacy. This is followed by academic ability as it also
influences the respondents' financial literacy level. Lastly, the degree program is considered a
contributing factor as well.

Dr. Allan A. Lalola’s study explains that financial literacy is a very important
knowledge and skill necessary to manage financial resources effectively especially as a
student. He also explains the connection of parental guidance, and academic ability that
highlights the nature of financial literacy education. His study highlights that enhancing
financial literacy can lead to a much better financial making decision-making capability, that
would contribute to the financial security of individuals and familes.

Financial knowledge

According to a related study of Panaguiton (2022). The rapid economic developments and
emergence of new financial products in recent years have made it imperative for individuals
to be “financially literate” in order to maximize financial opportunities and minimize
financial risks. Simply put, one must possess the knowledge and skills for making sound day-
to-day financial decisions—from saving and spending to borrowing and investing—to attain
a life of financial security and well-being. On the downside, the lack of knowledge of key
financial concepts may lead to financial disasters resulting from mistakes in crucial economic
decisions. Such financial blunders create negative externalities that may ripple across other
economic participants (Huston, 2010). As such, many governments and private institutions
around the globe have taken a closer look at the levels of financial literacy among the
populace and explored means to improve it.

The study Panaguiton focuses on the importance of financial literacy, especially

among young people. He emphasizes the importance and the need for financial literacy in this
rapidly changing economy. His study suggest that financial literacy is essential for equipping
young people most especially the students with the knowledge and skill they need to handle
their personal finances. The study of Investigating financial literacy of grade 11 students in
Halapitan national high school in making smart financial decisions also aims to identify the
current level of grade 11 students and assess the factors for improvement.

According to a related study Kenny Fernando et.al, ( 2022). A business really needs
adequate records to evaluate business operational activities and determine future
improvement steps. 30 Youths in Sitio Tamale Village, Philippines have developed a
Mushroom Business which took place since October 2021. The Research Team was entrusted
with two modules consisting of series A and B and aiding answer the need for mushroom
Business development in the village. Module A on financial literacy knowledge and Module
B on the technical steps of making financial reports are solutions to these needs. By
presenting material that is practical knowledge and active interaction through filling out
modules related to financial literacy, the training team explained via Google Meets to
participants. The results of the assistance showed that 33% of participants understood very
well, 37% of participants understood and 30% were neutral. There are several obstacles such
as internet access, data processing technology capabilities, educational background, and
commitment to be the main factors in this training. There are several key issues including
challenges, risks, and further opportunities for village business. This financial literacy
assistance could be an incubator to effectively oversee the business health.

This study explains how important it is to financial record keeping and the need for
adequate financial literacy to evaluate financial situations and enhance decision making
capabilities.

Government program, Philippines poor community, 4ps

According to a related study of Once et.al, (2019). This study was ventured to verify if
the poorest communities in Samar, Philippines met the objectives and criteria of Pantawid
Pamilyang Pilipino Program (4Ps). This was done through profiling the financial literacy of
parent-beneficiaries and by determining the level of satisfaction in the said program of both
the parent and child beneficiaries. Using the survey questionnaire as main instrument and
employing quantitative approach in a form of descriptive design with comparative analysis, it
was found that 4Ps has served its purpose in the identified research locale. All the criteria of
the program had been met by the beneficiaries. The aimed of the program to give monetary
support to extremely poor families to respond for immediate needs is very efficient. In fact,
both the parents and children beneficiaries are satisfied when it comes to the program
objectives to alleviate poverty, selection process, clarity of implementation procedure,
frequency and thoroughness in monitoring, transparency to prevent corruption, understanding
of the conditionalities, compliance to implementation conditionalities, reactive monitoring,
opportunities provided, and increasing the beneficiaries’ enrolment, survival, attendance and
participation in school

This study connects to the Investigating the financial literacy of grade 11 students in
Halapitan National High School in making smart financial decisions by highlighting the
importance of financial knowledge in making smart financial decisions that would lead to a
much better economic outcomes.

According to a related study of Gerald Lalawigan et.al, (2024). Demographic aspects

like age, the highest level of education attained, and income, as well as financial literacy
components like financial knowledge, financial attitude, and financial behavior were
investigated, appraised, and extensively examined. The study's findings showed that age does
not affect the three main competencies of financial literacy. However, the respondent's
highest level of education impacts their financial knowledge but not their financial behavior
and attitude, while income influences their financial behavior but not their knowledge and
attitude. This study could serve as a springboard for policies that could be adopted by the
Department of Social Welfare and Development (DSWD), the locale of the study, and
concerned businesses in formulating financial programs, trainings and seminars that are
expected to elevate the financial literacy level of 4Ps beneficiaries. Likewise, social programs
for marginalized communities in other countries may use this study as a pattern in assessing
their own services.
Financial Capability and Money management; Public school teachers

According to a related study of Jerick C Ferrer (2018). Financial capability of public

school teachers is far from what is desired and merely reflects the negative trend on financial
capability nationally and all over the world. Contributing to this findings are the respondent-
teachers’ deficient money management skills, low incidence of financial planning, and
inadequate knowledge on basic financial concepts as reflected in their dismal performance in
the financial literacy quiz. Integrating financial education in the teacher education curriculum
and in-service training of public school teachers can be an effective means not only to enrich
the academic training of future teachers, but also to empower them to secure a more wealthy
and prosperous future for themselves and for their family.

Financial literacy in Stock market

According to the study of Arena et.al, (2023). The emerging role of the stock market has
become vital in the aspect of the financial sector in advancing economic growth performance.
Several studies argue that a matured and operational stock market strengthens accumulation
of capital and establishes an effective resource distribution within a country thereby
maximizing productivity to progress and expand. From the perspective of the firms, large
corporations were able to raise capital for their development and expansion through the stock
market.

Financial management behavior

According to a related study of Hai Thanh Phan et.al, (2022). Financial literacy is a
set of awareness, knowledge, skill, attitude, and behavior needed to make suitable financial
decisions and attain individual financial well-being. Being financially literate means that a
person has financial skills to prepare for retired-based planning and saving (Behrman et al.,
2012; Lusardi and Mitchell, 2014). Financial literacy plays a vital role for individuals who
consume financial products and the national and global economy, especially in the digital era
(Agarwal et al., 2009; Setiawan et al., 2020). It affects all financial affairs, including
borrowing, saving, investment, and money management (Widdowson and Hailwood, 2007).
Improving financial knowledge in the general population is crucial for all governments when
many financial services are delivered

Financial literacy of Entrepreneurs; MSEs.

 According to a related study of Anshika et.al, (2021). The success of MSE sector
depends highly on the level of financial literacy of the entrepreneurs. Financial literacy is
defined as managers’ capacity to understand and analyse financial data so as to take financial
decisions (Marriott & Mellett, 1996). Similarly, Mandell (2007) has defined financial literacy
as “the ability to evaluate the new and complex financial instruments and make informed
judgments in both choices of instruments and extent of use that would be in their own best
long-run interest”. As per Lusardi and Mitchell (2014), financial literacy is “the knowledge of
basic financial concepts and ability to do simple calculations”. The significance of financial
literacy has gained importance due to commencement of new financial products/services,
complexity of financial markets and the rapidly changing economic environment. However,
the extant literature reveals that there is no well-defined standard definition of financial
literacy (Gerrans & Heaney, 2016; Mabula & Ping, 2018). Therefore, the measurement of
financial literacy has been considered as a big challenge (Remund, 2010).

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