FINANCIAL INCLUSION OF THE POOR-DOES FINANCIAL LITERACY MATTER

Abstract

The objective of this study was to identify the effect of financial literacy on financial inclusion among the poor people in 158 countries collected from Global Findex Database. The study was informed by financial capability theory. The study collected secondary data from the Global Findex Database published by World Bank in 2014 and 2017. The data was cleaned and examined for completeness and comprehensibility and entered into the Eviews 10 student version for analysis. The data was analyzed using both inferential and descriptive statistics. Descriptive statistics used included standard deviation, means, and frequencies and percentages. Regression models were used for inferential statistics to establish the relationship between variables.

The study found out that financial literacy items (saving practices, credit knowledge, earnings, financial technique, protection and interest) of the poor people influenced the access and use of financial practices to a great extent. The study concludes that there was a positive and significant relationship between financial literacy and financial inclusion. The study recommended that various financial institutions and government agencies should organize financial education and awareness programs to the poor people on financial literacy. Financial education also should be incorporated in the school curriculum from primary level so that individuals are financially informed early in life.