Indonesia's Financial Literacy Rate Remains Low

Based on data from the Financial Services Authority (OJK), Indonesia's financial literacy index stood at 38.03% in 2019. Although an improvement over previous years, this level of financial literacy remains relatively low.

This 38.03% financial literacy index indicates that out of every 100 people, only about 38 possess a good understanding of financial institutions and financial services products. This means that 62 people lack adequate financial literacy.

Financial literacy, in this context, refers to understanding the features, benefits, risks, rights, and obligations associated with financial products and services. It also measures the level of skill, attitude, and appropriate behavior in using financial products and services.

Given the still low level of financial literacy, significant effort is required from stakeholders to improve public understanding of financial institutions.

This is especially crucial given the rapid advancement of financial technology in the current digital era. The public needs to be educated to use financial services optimally and to prevent them from becoming victims of fraud due to a lack of understanding.

Considering respondent gender, males exhibited a higher level of financial literacy at 39.94% in 2019, compared to females at 36.13% in the same year.

This represents a 3.81% gender gap in financial literacy in 2019. This gap is smaller than in previous surveys, where a 7.7% gap was observed in 2016.

Meanwhile, by region, urban areas showed higher financial literacy at 41.41% in 2019, while rural areas stood at approximately 34.54% in the same year.

This financial literacy and inclusion survey is conducted by the OJK every three years. The latest survey in 2019 involved 12,773 respondents spread across 34 provinces and 67 regencies/cities, covering all financial services sectors under OJK supervision.