Evaluating Financial Literacy in Malaysia's Low-Income Populations: Results from Reliability and Exploratory Factor Analysis

Economic inclusion and household resilience are significantly influenced by financial literacy, especially for Malaysia's low-income groups (B40). Strong assessments of financial literacy among vulnerable populations are few, despite legislative initiatives to expand access to financial services. This study uses reliability analysis, exploratory factor analysis (EFA), and confirmatory factor analysis (CFA) within a structural equation modelling (SEM) framework to create and evaluate a multidimensional tool for evaluating financial literacy among low-income families in Malaysia. To ensure representativeness, survey results were gathered from a stratified sample of 1,050 respondents spread over five states. High internal consistency (Cronbach's alpha > 0.78), a distinct three-factor structure (knowledge, attitudes, and behaviors), and a satisfactory CFA model fit (CFI = 0.92; RMSEA = 0.055) are all demonstrated by the results. For the B40 cohort, policy implications place a strong emphasis on focused behavioral interventions and modular financial education programmers. By providing a validated assessment instrument, this study makes a methodological contribution. It also makes a practical contribution by identifying actionable levers for program and policy design.