Digital Financial Knowledge Scale (DFKS): Insights from a Developing Economy

Abstract

This work aims to create and validate the digital financial knowledge scale (DFKS). Three studies were carried out, including a focus group, expert validation, pre-testing, and the application of item response theory. From these procedures, two versions of the scale were constructed and validated. An evaluation and classification methodology was proposed. Two versions for measuring digital financial knowledge are presented. The long version is composed of 40 items and the short version has 26 items. Applying the proposed methodology, it is possible to classify the level of digital financial knowledge as low, intermediate, or high. The DFKS can be useful for both financial system agents and governments and researchers, who can use it in different contexts. In the banking sector, identifying the level of digital financial knowledge can reduce risks, as losses suffered by clients due to an uninformed adoption of digital banking services break the relationship of trust and can lead to lower financial inclusion.