1. Measuring financial literacy in Asia:
Tools and Results
[The Malaysia’s Experience]
by
Suhaimi Ali
Bank Negara Malaysia (Central Bank of Malaysia)
16 December 2014
OECD/Thailand Seminar on Financial Inclusion and Financial Literacy in Asia
16-17 December 2014, Mandarin Oriental Hotel Bangkok, Thailand

2. Financial education in Malaysia forms an important
component of the consumer protection regime
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Effective
assistance &
recourse
Responsible
conduct and
fair treatment
Transparency
Financial
Consumer
Empowerment
FE Network
Enabling infrastructure:
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Assessment
Framework
(FEAF)
Access to
information
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Financial Capability
Programmes (FCP) throughout
life stages
FCP for
adults
FE in
schools
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Consumer protection regime
core policy objectives

3. FEAF is an important enabler to support effective
financial education strategies
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Financial Literacy &
Capability
Measurement of
Malaysian
Consumers
Evaluation of
Specific FE
Initiatives
Study on
Consumers’
Behavior &
Vulnerability
 Ensure investments in
FE are justified
 Support evidence-based
FE policy formulation
and implementation
 Better prioritize
resources by focusing
on FE initiatives with
outcome and impact
 Monitor progress &
identify areas of
consumer
vulnerabilities
 Identify effective FE
delivery channel and
mechanism
Components of FEAF FEAF ObjectivesMalaysia’s FE
strategies
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1
3

4. Efficiency Effectiveness
How do we think what we expect will happen? What do we expect to
achieve?
Why are
we doing
this?
Each FE initiatives can be assessed based on the intended
objective focusing on efficiency & effectiveness
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Output evaluation - for above the line FE initiatives
Targeting general public and broad target group
Focus on short term, one-off, touch and go,
Suitable to evaluate products of the programme:
i.e. no. of participants, materials
Follow-up on consumers’ feedback of FE
information/ advice may be challenging
Targeted audience
Focus on application/ use of output
Suitable to evaluate knowledge level and skills
Where follow-up actions and further
engagement with consumers are possible
Outcomes evaluation – for below the line FE initiatives
Targeted audience, possibility of a controlled group
for comparison
Focus on longer term engagement, addressing
certain financial issues/ vulnerability
Suitable to evaluate behavior and attitude
Possible to follow-up through regular engagement
with consumers & perform evaluation over time
Impact evaluation – for specific FE programme/
initiatives

5. •Identify vulnerable groups & risk areas for FE initiatives
•Monitor changes in financial literacy & capability level
over time
•Baseline measurement (first done in 2010)
•Repeat measurement every 3 years
•Duration to complete: 4-6 months
Key Focus:
•Financial literacy & capability [knowledge & skills, attitude & behavior, socio
economic environment)
Add-on:
•Financial inclusion (WB) [convenient accessibility, take-up rate, responsible
usage, satisfaction level]
•Financial consumer protection (WB)
•Nation wide survey - Samples representative of Malaysian population
- a minimum of 1,000 samples (2014: 3000 samples, with 3 booster groups)
- individuals aged 15 and above
- face-to-face and/or personal interviews . No internet or online surveys
•Whole process ~60 minutes (need to ensure good attention span of
respondents)
•BNM commissions an independent survey company to conduct the survey
Broad based nation wide baseline assessment provides
measurement of progress over a longer time horizon
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Why
When &
how often
Coverage
Approach

6. •Measure efficiency - FE initiatives use resources
wisely?
•Measure effectiveness - FE initiatives are making
a difference?
•For every FE initiative at early stage of development of programme
•Plan & agree on what to evaluate
•Duration to complete each evaluation: 1-3 months (depending on
scope)
•Outcomes or impacts of each FE initiatives
•Or a combination of 2
•Customised approach for various FE initiatives ranging from
consumer outreach programme, FE website/ portal, specific financial
capability programme (FCP), train-of-trainer session
Program specific evaluation provides immediate
feedback & allows tracking of progress by target groups
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Why
When &
how often
Coverage
Approach

7. • Identify factors affecting financial literacy & capability of
consumers:
- What influence consumers’ behaviour in money mgmt
- How consumers choose and decide on fin. products
& services
- What are the effective measures to deliver FE and to elevate
the literacy & capacity of consumers
- How best to support development of specific FE programme to address
vulnerability & risk identified
- What are consumers’ preferences in learning & accessing FE
• Target 3 studies to be conducted per year
• Duration for each study between 3-6 months
• Financial literacy & capability
• Financial inclusion
• Financial consumer protection
• BNM to indicate/ propose specific topics/ focus areas
• Options:
- Study commission by BNM
- Industry associations’ collective efforts
- Initiatives of consumer groups/ other FE providers
• Study observation/ recommendation ready to be published in relevant journals, media
channels, websites
Studies on consumer behaviour provides in depth
understanding of behaviour for policy & learning intervention
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Why
When &
how often
Coverage
Approach

8. Various measurements, at the aggregate level, provide
holistic insights on financial consumer issues & behaviours
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2010-2011 National
Financial Literacy
Survey using
OECD/INFE’s
methodology
2014 Financial
Capability & Inclusion
Survey
POWER! Programmes
(output, outcome,
impact)
Friday sermon (output –
adoption by different
states)
Media campaign
(output, outcomes)
Malaysia Investment
Week (output,
outcomes)
Outreach programmes
Preparedness for income
shock
Financial distress & debt
management
Effectiveness of the
Mandatory Disclosure
Regime
Effectiveness of Responsible
Lending Guidelines
Portability
Technology risks & consumer
vulnerabilities
current & future work

9. The findings from past measurements have several
important implications for FE in Malaysia
The need to intensify education at
school levels
The need for financial literacy initiatives
to ensure effective planning for
retirement and ability to sustain through
retirement
Need to educate households on the
minimum level of emergency funds
required, as 2/3 of households are
poorly prepared for income shocks with
savings of less than 3 months.
To look beyond financial education in
changing the behaviour as cultural
biases and lifestyle pressures also play
a role in decision making process
Rethinking of disclosure regime
required especially in the distribution
process and navigability of content
Low earning power (of the young) +
rising costs – importance of
educating the young on better
financial management & to cultivate
the habits of living within one
means
Need to focus education on risk
diversification & management,
including to diversify savings by
investing part of savings funds (for
those with financial capability) and
risk mitigation via insurance.
To re-examine measurement for
financial behaviour and attitude
with less reliance on self
assessment.
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10. Thank You
(sali@bnm.gov.my)
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