Financial Literacy and Its Impact on Financial Inclusion: Moderating Role of Gender

Abstract

Financial literacy has been recognized as a vital pre-requisite for financial inclusion, especially in emerging economies like India. The present research contributes to this growing domain of research by examining the effect of the financial literacy on inclusion. Considering the enormous growth of finance industry in terms of products and services as well as operations, it is hard to confine financial inclusion to bank-based services only. Therefore, this article adopts a comprehensive measure to gauge financial inclusion by integrating banking services, investment products, and government schemes. In addition, a financial literacy score has been computed using objective-based questions focusing on varied financial aspects. Apart from financial literacy, the current study also assesses the moderating effect of gender on the relation between financial literacy and inclusion. Based on regression output, the findings convey a significant positive effect of financial literacy on all measures of inclusion. However, the moderation effect of gender lacks statistical significance. Present research findings have important implications for policymakers and industries; as an example, the service providers can use financial literacy development strategies to expand market share with long-term perspectives.