Determinants OF Financial Inclusion in Nepal
Role of Financial Literacy and Socio-Economic Factors
DOI:
https://doi.org/10.32674/cz4rky40Keywords:
Digital financial inclusion, financial behavior,, financial literacy,, financial inclusion, household financeAbstract
Purpose: This study aims to examine the determinants of financial inclusion in Nepal, with a particular focus on the role of financial literacy and socio-economic factors.
Design/methodology/approach: The study utilizes data of 9,361 nationally representative individuals of Nepal, obtained from the Nepal Rastra Bank Baseline Survey on Financial Literacy in Nepal (2022). Regression analysis is employed to assess the effects of financial literacy components and socio-economic variables on financial inclusion.
Findings: The results indicate that financial literacy, particularly financial knowledge and financial behavior, significantly enhances financial inclusion, while financial attitude shows mixed effects. Education and income emerge as strong predictors, whereas vulnerable groups remain less financially included. Gender differences reveal higher participation of women in traditional financial services but lower adoption of digital financial tools.
Conclusion: Financial inclusion in Nepal is determined by financial literacy and socio-economic conditions, implying that access alone is insufficient without supporting capabilities and enabling environments.
Implications: The findings highlight the need for capability-centered financial inclusion policies, emphasizing financial literacy and inclusive financial product design.
Originality/value: This study contributes to the literature by adopting a multidimensional approach to financial inclusion and incorporating digital financial inclusion within an empirical framework using nationally representative data from Nepal.
JEL Classification: D14, G21, G53, I32, O16
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