Role of Financial Inclusion (As a Formative Mediating Variable) on Financial Literacy and Economic Empowerment: With Special Reference to Rural Poor Women in Sri Lanka

Abstract

As citizens of a developing country, Sri Lankan women in rural areas have to confront many challenges so as to obtain financial knowledge. A 52% of the entire Sri Lankan population is composed of women, these women are poor in financial literacy (Fin Lit) and particularly, lack of knowledge and proper financial attitudes and therefore, poor in financial decision making. In comparison to a number of other Asian countries, Sri Lanka has a financial inclusion (Fin In) rate as high as 73.4%, as stated by the Little Data Book on Fin In, 2018. All adults (above 15 years) who possess an account in the formal financial sector were considered as “Financially Inclusive”. Globally, a 35% of men are financially literate as opposed to a 30% of women. When considering, the Sri Lankan adult population, only 35% are financially literate and this turns out to be a severe drawback in women’s Fin Lit and their wellbeing. In accordance with the above discussion, the researchers noted that Fin Lit and Fin In can be considered as crucial areas which need to be further investigated with relation to Women’s Economic Empowerment (WEE). Hence the main purpose of this study is to investigate and analyse the effect of financial inclusion as a mediator among the financial literacy level and economic empowerment of rural women in Sri Lanka