The Impact of Financial Literacy and Financial Behavior on Financial Stability Among Polytechnic Students in Malaysia

Rosasmanizan binti Ahmad; Abd Rahman Yaacob

Rosasmanizan binti Ahmad * Politeknik Tuanku Syed Sirajuddin, Perlis, Malaysia
Abd Rahman Yaacob Politeknik Tuanku Syed Sirajuddin, Perlis, Malaysia

Keywords: Financial Literacy; Financial Knowledge; Insurance; Loan; Polytechnics

Abstract

Personal financial literacy benefits to individuals, families, businesses, and economies, making it crucial for long-term and sustainable economic growth. Long-term growth, particularly among young people, is associated with improved economic indicators and financial literacy. This study investigates the relationship and the impacts between financial literacy and its effects on financial knowledge, insurance awareness, and loan management among Malaysian polytechnic students. A quantitative research design was used, with a structured questionnaire distributed to 250 polytechnic students across five institutions in Malaysia via online. The respondents are from the Diploma in Accountancy, Commerce Department of Politeknik Tuanku Syed Sirajuddin (PTSS), Politeknik Tuanku Sultanah Bahiyah (PTSB), Politeknik Ungku Omar (PUO), Politeknik Muadzam Shah (PMS), and Politeknik Kuching Sarawak (PKS). The study discovered a significant positive link between financial literacy and financial knowledge (strong), financial behaviour in insurance (strong), and financial behaviour in loan management. The regression analysis demonstrates that financial knowledge is the most influential factor in determining financial literacy, while financial insurance and loans also play important roles. This suggests that improvements in knowledge, insurance, and loans may contribute to an increase in financial literacy. The study highlights the importance of Polytechnic to continuously offer financial literacy courses to students, enabling them to make wise financial decisions to avoid debt traps and establish long-term financial well-being through budgeting, saving, and credit understanding.

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