DEVELOPING AND VALIDATING THE MEASUREMENT MODEL FOR FINANCIAL LITERACY CONSTRUCT USING CONFIRMATORY FACTOR ANALYSIS

Abstract

Purpose of the study: This study aims to develop and validate the instruments measuring financial Literacy construct. Methodology: The pilot study randomly sampled some 100 school-teachers using a self-administered questionnaire. The Exploratory Factor Analysis (EFA) procedure has explored the usefulness of measuring items and determined the dimensionality of the construct. Finally, using the newly developed instruments, the field study obtained a random sample of 300 school-teachers to survey using a self-administered questionnaire. The data from the field were used to validate the instruments through the Confirmatory Factor Analysis (CFA) procedure. Main Findings: The EFA procedure found three components that emerged from the items. The CFA procedure validated the instruments measuring Financial Literacy construct for uni-dimensionality, validity, and reliability. Applications of this study: The result showed that the measurement model of the Financial Literacy construct achieved the requirement for construct validity and reliability and should be able to be used in the future of research. Novelty/Originality of this study: This study produced instruments to assess Financial Literacy performance specifically among school teachers in Malaysia. School teachers consist of the highest number of employees in the country besides their nature of works and job characteristics differ from another group of employees.