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From Literacy to Inclusion: The Essential Role of Financial Self-Efficacy

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  • Naseem Al Rahahleh

    (King Abdulaziz University, Saudi Arabia)

Abstract

Focusing on the developing economy of Saudi Arabia, this study examines the impact of financial self-efficacy on the relationship between financial literacy and financial inclusion in the demand-side context. Using a quantitative approach, the study presents the first account of this relationship as it functions in the focal country. The association between financial literacy and financial inclusion is investigated on a quantitative basis via multiple hypotheses tested with partial least-squares structural equation modeling (PLS-SEM) as the methodology. The investigation is based on quantitative data collected from 887 respondents randomly selected using an online survey questionnaire designed specifically for this study. A significant positive relationship is found between financial literacy and financial inclusion. In particular, self-efficacy is identified as a significant predictor of financial inclusion and a partial mediator between financial literacy and financial inclusion.

Suggested Citation

  • Naseem Al Rahahleh, 2024. "From Literacy to Inclusion: The Essential Role of Financial Self-Efficacy," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 14(2), pages 78-93.
    • Handle: RePEc:afj:journ3:v:14:y:2024:i:2:p:78-93
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin_v14_n2_a5
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    More about this item

    Keywords

    PLS-SEM; Financial literacy; Financial inclusion; Self-efficacy; Investment; Factor analysis; Mediator;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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