Financial Capability and Saving Behavior: Evidence From Industrial Workers in Thailand

Abstract

This article uses unique survey data to examine the determinants and potential impacts of financial capability on the savings decisions of Thai industrial workers. A random sample of 352 individuals was interviewed, using the questionnaire to gather information on demographics and financial capability. It finds that less than half of the respondents were able to handle an emergency expense of 1 month’s income without borrowing. The results indicate that socioeconomic factors including education level, household income, and age are the key determinants of financial capability. Migrant workers from remote regions of the country are more likely to have a lower financial capability, especially in the financial knowledge component. An instrumental variable approach is used to investigate its potential impact on saving behavior. Overall, the strong and positive association between financial capability and savings adequacy suggests that financial education initiatives should place a strong emphasis on household budgeting and savings.