Financial Investments, Financial Literacy, and Trust in Financial Institutions

A low level of financial market participation among individuals in developing countries might have essential drawbacks for the economy as a whole, but also for the individual himself. Individuals who participate in the financial market may be better able to save and prepare for financial needs in the future, and thereby they ensure themselves against risks. In many developing economies, financial market participation, within the general population, is still low.

This thesis aims to shed light on different determinants of financial market development in India. In particular this thesis investigates different determinants of financial market participation of individuals. In doing so, relevant and less considered topics like financial literacy, household trust in financial institutions, and the role of foreign banks in customer retail banking in India are investigated. Thereby, some possible reasons of non-participation of Indian households in the financial market and their interrelation with other important factors like financial access or social interaction are analyzed.