Strengthening financial literacy vital to face economic crises | Daily News


 

Strengthening financial literacy vital to face economic crises

H. D. Karunaratne
H. D. Karunaratne

Strengthening financial literacy of exporters is one of the best ways to overcome the economic crisis situation, H.D. Karunaratne, Senior Professor Department of Business Economics Faculty of Management and Finance, University of Colombo said.

Addressing a webinar organized by Sri Lanka Export Development Board, under the theme ‘Financial Literacy for Exporters at Economic Recession’, Prof. Karunaratne said, “Sri Lanka as well as the entire world is in an economic crisis now, hence normal policies and actions are not effective any longer.”

During a crisis, Prof. Karunaratne emphasised that decision makers or exporters shouldn’t panic or take decisions at an economic crisis.

In order to come out of this crisis, he said, “We need to go back to fundamentals, basic life skills such as reading; listening and collection of information and improve financial literacy. More importantly, innovations are the best to overcome crises. Moreover, Innovation can be of various types which include new products, new markets, niche markets, new technology and new sources of raw material,” Prof. Karunaratne added.

Usually when firms are at an economic crisis, fear and panic of decision makers, falling demand and a panic of decision makers, falling demand and supply, declining business profit, falling investment and market prices, a rising unemployment rate and inflation rate are visible. And exporters are one of the most victimized groups in such a situation.

Speaking on how to change the behavior of entrepreneurs and nudge the stakeholders at an economic crisis, he said an economic crisis can arise due to natural disasters or land problems in human behavior.

According to prof. Karunaratne the best way to overcome an economic crisis is to change human behavior.

“Naturally business people think on financial matters more than human relations. However, entire business activities, supply chain and demand depend on human relations,” Prof. Karunaratne added.

Moreover, in order to overcome business problems at an economic crisis, he said it is important to think equally on all factors of production and stakeholders and also to maintain best practices in human relations.

Speaking further, he added that financial literacy is the ability to understand and properly apply financial management skills.

Effective financial planning , properly managing debt , accurately calculating interest, and understanding the time , value of money are characteristics of being financially literate .

“The primary principles of financial literacy include learning how to budget , track spending , effectively pay off debt , and properly plan for retirement . Financial literacy contributes to people making poor financial decisions and becoming victims of abusive financial practices”, he added.

 


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