Financial Inclusion and Digital Financial Literacy: Do they Matter for Financial Well-being?

Pawan Ashok Kamble (), Atul Mehta () and Neelam Rani ()
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Pawan Ashok Kamble: Indian Institute of Management Shillong
Atul Mehta: Indian Institute of Management Shillong
Neelam Rani: Indian Institute of Management Shillong

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2024, vol. 171, issue 3, No 1, 777-807

Abstract: Abstract Globally, financial well-being has received considerable attention from researchers and policymakers as an indicator of financial health in the aftermath of financial shocks. Additionally, financial inclusion has been a priority for developing countries in their efforts towards poverty alleviation and bringing vulnerable populations into the mainstream financial system. Moreover, the shift in digital technologies and financial services has overcome access and usage barriers through the acquisition of digital financial literacy. This paper develops novel multidimensional indices and investigates the relationship between financial well-being, financial inclusion, and digital financial literacy. The study utilizes data from InterMedia’s Financial Inclusion Insight (FII) 2016 Survey conducted in India. The results indicate that both financial inclusion and digital financial literacy have a significant positive impact on financial well-being. However, considering the potential endogeneity bias, instrumental variable 2SLS regression reveals that financial inclusion plays the most crucial role in defining financial well-being. Our findings help policymakers recognize the importance of demand-side financial inclusion and digital financial literacy in promoting financial well-being, which may be achieved through robust financial and digital literacy programs. Additionally, the study contributes to the financial well-being literature by incorporating essential attributes of financial inclusion and digital financial literacy.

Keywords: Financial well-being; Financial Inclusion; Financial Literacy; Digital Financial Literacy; Vulnerable; India (search for similar items in EconPapers)
JEL-codes: G20 G50 G53 I31 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11205-023-03264-w

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