Assessing the Nexus between Digitalization, Digital Financial Literacy, and Financial Behaviour Transformation among Individuals

Abstract

The rapid expansion of digital technologies has significantly transformed financial systems, reshaping individuals’ financial knowledge, access, and behaviour. The purpose of the study is to assess the Nexus Between Digitalization, Digital Financial Literacy, and Financial Behaviour Transformation Among Individuals. However, no comprehensive study has been conducted in the state of Chhattisgarh to examine the relationship. This study examines the level of digitalisation and digital financial literacy among individuals and analyses their relationship with financial behaviour transformation. The present study adopts an exploratory, descriptive, and explanatory research design and is based on primary data collected through a structured questionnaire from 95 respondents residing in the capital city of Chhattisgarh using the convenience sampling method. The measurement of digitalisation was adapted from the Digital Economy and Society Index (DESI) and the OECD Model Survey on ICT Access and Usage, while digital financial literacy and financial behaviour items were drawn from the OECD/INFE (2023) International Survey of Adult Financial Literacy. Reliability analysis confirmed strong internal consistency of the scales. Descriptive statistics revealed a high level of digitalisation (97.9%) among respondents, while digital financial literacy was found to be moderate to high. To examine relationships among variables, Spearman’s rank-order correlation was employed due to non-normal data distribution. The results indicate a statistically significant positive relationship between digitalisation and digital financial literacy, suggesting that greater digital exposure enhances individuals’ financial knowledge and skills. Digitalisation was also found to be positively associated with financial behaviour transformation, highlighting its role in promoting digital financial practices. Notably, digital financial literacy exhibited the strongest positive relationship with financial behaviour transformation, underscoring its critical role in converting digital access into meaningful behavioural change. The findings emphasize that while digital infrastructure is essential, digital financial literacy serves as a key driver of responsible and effective financial behaviour. The study concludes that policy interventions should focus on strengthening digital financial education alongside digital inclusion initiatives to foster sustainable financial behaviour in a rapidly digitalising economy.