The relationship between financial capability, financial competence and household economic wellbeing in rural Fijian households in Naitisiri Province, Fiji : a thesis presented in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Management at Massey University, Palmerston North, New Zealand
The study examined the use of money by households in a monetising rural Fijian community,
and developed and tested a model of financial competence, bringing together previously
disparate strands in the literature to better explain the relationship between the financial
competence of those who make financial decisions on behalf of the household and the
economic wellbeing of the household. Ex post facto field experiment methodology was used,
with control and treatment groups sampled from villages in Naitisiri Province, Fiji that had
participated in a financial capability development intervention comprising a financial literacy
training workshop and a rural banking service.
The study found evidence of a positive relationship between villagers’ levels of functional
literacy and their levels of financial knowledge and skill and financial inclusion (as measured by
ownership of a bank account). Evidence was also found to indicate a positive relationship
between villagers’ levels of financial knowledge and skill and financial inclusion, and their level
of competent financial behaviour. This relationship appears to be moderated by villagers’
attitude to money. Men generally evidenced greater financial knowledge and skill than
women, but lower levels of competent financial behaviour. Evidence of a positive relationship
between the economic wellbeing of the household and the level of competent financial
behaviour of the household’s principal financial decision makers was also found.
The findings of the study have implications for policy. Low levels of functional literacy may
lead to self‐exclusion from financial capability development initiatives which may impede
engagement with the formal financial system. The study found evidence to support
Robinson’s (2001, 2002) argument that the extension of existing institutional retail financial
services is likely to be more successful in reducing levels of financial exclusion than the
promotion of poverty‐lending based microfinance schemes. The findings also suggest accurate
targeting of training programmes to enhance financial knowledge and skill is required.
There is a requirement for further research to validate the theoretical model and determine
modalities for extending the competency approach to international development in a wider
range of contexts. Within the context of Pacific Island States, there is a requirement for baseline
studies of financial competence.