Factors Influencing Financial Inclusion (A Consumer Perspective Study on Nepali Context)

Abstract

Financial inclusion is a multi-dimensional concept relevant to the anticipated enhancement of mainstream financial services to all the members of the economy. It helps to overcome the market friction preventing the financial market operations in favor of marginalized segments of an economy. In the context of Nepal, various policies and regulations have been undertaken to enhance financial inclusion status still it is not at a satisfactory level. Thus, this research was carried out to examine the influence of personal and social capabilities on financial inclusion from the consumer perspective. This study was based on positivist epistemology. Usable primary data was collected from 417 Nepali adults having accounts in financial institutions through an online survey mechanism. The hypothesized relationship between study variables was examined using the partial least square structural equation modeling (PLS-SEM) approach. The result shows that individuals' personal capability viz. financial attitude, and financial literacy as well as social capability viz. subjective norms except social networks have a statistically significant influence on the inclusive financial system. Similarly, the integrative form of personal capability and social capability has a key influence on financial inclusion. Further, financial self-efficacy has a significant mediating impact on the relationship between study variables. Hence, the result of the research is in line with Sen's capability theory and it can be taken as an effective tool to estimate financial inclusion in the context of Nepal.