Financial literacy and saving behavior of university student in Nepal

Abstract

Purpose: This study investigates the relationship between financial literacy and saving behavior among university students in Nepal, with a focus on the mediating roles of peer influence, parental socialization, and self-control. Methods: The research used an explanatory design employing quantitative data collection methods. The research collected 404 valid responses through purposive sampling methods. The researchers utilized Smart PLS 4 to perform SEM analysis to study the direct effects and indirect relationships between financial literacy and saving behavior with peer influence and parental socialization and self-control acting as mediators. The assessment of construct reliability used Cronbach’s alpha to determine internal consistency. Average Variance Extracted (AVE) served to evaluate convergent validity while discrimination validity was determined through Fornell-Larcker criterion. Findings: Financial literacy shows a strong direct impact on saving behavior and additional indirect effects through making parents socialize savings practices and self-control development. The data demonstrated that peer influence failed to establish a substantial connection between these factors. The strength of financial literacy produced positive results in building self-control that subsequently improved saving practices. Parental socialization participation proved to be a substantial influence on saving behavior yet peer relationships did not impact the outcome of financial practices. Conclusion: This research demonstrates that financial education together with strong self-control and parental involvement creates favorable conditions for university students to save in Nepal. Financial literacy programs must dedicate their efforts toward improving self-control and parental guidance because peer influence shows limited significance in this setting. Originality: The research establishes new findings about financial literacy intervening variables that influence saving behavior among Nepalese students while providing useful insights for developing financial literacy programs for university students within developing nation settings.