Does financial literacy improve financial inclusion an empirical analysis in the case of Nepal
Date
2024
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Publisher
Central Department of Economics
Abstract
This study investigates the relationship between financial literacy and inclusion in Nepal through quantitative methods, based on the survey involving 3,355 observations. The analysis encompasses three main components: financial knowledge, financial attitude, and financial behavior, each assessed through specific indicators. The study employs various approach, involving a review of reports, descriptive analysis, and multiple regression analysis. Secondary survey data from Nepal Rastra Bank is utilized, with financial literacy as the independent variable and financial inclusion as the dependent variable, controlling for demographic factors. Ordinary Least Squares (OLS) regression model is used to examine this relationship, revealing that a one-unit increase in financial literacy score corresponds to a 0.215-unit increase in financial inclusion without control variables, decreasing to 0.161 units with control variables. Participation in the formal employment sector significantly boosts the financial inclusion score by 0.527 units, while higher education is positively linked to increased financial inclusion. The study underscores the importance of targeted interventions to enhance financial literacy and promote inclusive financial ecosystems for economic growth and prosperity in Nepal.
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Keywords
Finance, Economic, Literacy