Financial Inclusion and Vulnerability in a Developing Nation: Role of Financial Literacy, Digital Finance, and Socioeconomics Spacing

Dwitya Aribawa

Authors

Dwitya Aribawa Martin de Tours School of Management, Assumption University

Keywords:

Financial Literacy, Financial Inclusion, Financial Vulnerability, Digital Finance

Abstract

Financial inclusion is a crucial factor in promoting economic growth and reducing income disparities, particularly in developing countries. This study explores the determinants of financial inclusion, focusing on the roles of financial literacy, digital finance, and socioeconomics of households. By analyzing cross-sectional data from the Indonesia National Survey of Financial Literacy and Inclusion, this research bring novelty on seven types of financial services accessed by households. The results show that financial literacy plays a significant and positive role in promoting financial inclusion across different financial service categories. Additionally, digital finance emerges as a key factor in enhancing access to financial services, particularly for households with internet access. The study also highlights the importance of socioeconomic characteristics, such as income, age, education, and rural-urban divide, in influencing financial inclusion. Furthermore, the research addresses issue of financial vulnerability and impact on household financial stability, emphasizing the need for financial planning and education to mitigate risks and improve financial well-being. Ultimately, this study contributes to the existing literature on financial inclusion by providing insights into the factors that drive access to financial services in developing countries, offering implications for policymakers, financial institutions, and stakeholders to enhance financial inclusion initiatives and promote economic empowerment.

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