INSURANCE LITERACY, FINANCIAL INCLUSION AND SOCIOECONOMIC SUSTAINABILITY AMONG SME’S

Abstract

In recent years, financial inclusion has emerged as a critical element for promoting economic growth and reducing poverty, particularly in emerging economies. However, disparities in access to financial services continue to hinder individuals from achieving financial stability. Therefore, the primary aims of this study is to examine the effect of insurance literacy, financial inclusion on socio-economic sustainability among SMEs in Nepal. The research design employed both descriptive and causal comparative approaches, focusing on respondents of SMEs in Nepal as the target population. A sample size of 385 was determined using the Cochran formula and convenience sampling. Quantitative data were collected through a structured questionnaire. A multivariate regression model was implemented to examine the impact of insurance literacy, risk-taking propensity, and risk knowledge management, on socio-economic sustainability. The findings revealed significant positive effect of insurance literacy, risk knowledge management, financial inclusion on socio-economic sustainability, indicating that improvements in these areas enhance economic stability for SMEs. In contrast, risk-taking propensity exhibited a weak and statistically insignificant effect on socio-economic sustainability. These results underscore the critical role of insurance literacy and financial inclusion as main determinants of socio-economic sustainability among SMEs in Nepal. This study has practical implications for policymakers and financial institutions, emphasizing the need for targeted educational programs to improve insurance literacy and enhance financial inclusion. By adopting effective risk management practices, SMEs can contribute to broader socio-economic stability and resilience.