Financial Inclusion as a Tool for Economic Empowerment of Rural Communities
Downloads
Background. Financial inclusion is one of the main strategies in improving the economic welfare of rural communities. Access to formal financial services can help increase the economic capacity of individuals and communities, but there are still obstacles to their adoption and utilization. Financial literacy factors, infrastructure limitations, and socio-cultural aspects are challenges that affect the effectiveness of financial inclusion in supporting community economic empowerment.
Purpose. This study aims to analyze the role of financial inclusion in the economic empowerment of rural communities and identify factors that affect the level of utilization. The main focus of the research is to examine the relationship between access to financial services and increasing people's economic capacity, especially through a financial literacy approach.
Method. The research method used is a quantitative approach with a survey technique on 70 respondents who are small business actors in rural areas. Data were collected through questionnaires and interviews, then analyzed using descriptive statistical and regression methods to measure the impact of financial inclusion on community economic empowerment.
Results. The results of the study show that access to formal financial services has a positive impact on increasing business and income of rural communities. Financial literacy is an important factor that determines the effectiveness of the use of these services, where individuals who have a better understanding tend to be more productive in managing finances. Financial education and infrastructure support have proven to contribute significantly to accelerating the adoption of formal financial services.
Conclusion. Inclusion not only requires access to financial services but also the right educational strategies so that it can be used optimally. The implications of this study show the need for a community-based approach and more adaptive policies to ensure the success of financial inclusion in encouraging the economic empowerment of rural communities.
Aydin, A., & Selcuk, E. (2019). An investigation of financial literacy, money ethics and time preferences among college students: A structural equation model. International Journal of Bank Marketing, Query date: 2025-02-18 10:27:09. https://doi.org/10.1108/IJBM-05-2018-0120
Baldwin, R. (2021). Economic development and export growth: A study of Northern Rhodesia, 1920-1960. books.google.com. https://books.google.com/books?hl=en&lr=&id=rq_oDwAAQBAJ&oi=fnd&pg=PA1&dq=financial+inclusion+economic+empowerment+financial+literacy&ots=GzwYa_CWbM&sig=o9m6uoyPzBl78uO-fmx8-799gqs
Banna, H., Mia, M., Nourani, M., & Yarovaya, L. (2022). Fintech-based financial inclusion and risk-taking of microfinance institutions (MFIs): Evidence from Sub-Saharan Africa. Finance Research Letters, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S1544612321002300
Botev, J., Égert, B., & Jawadi, F. (2019). The nonlinear relationship between economic growth and financial development: Evidence from developing, emerging and advanced economies. International Economics, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S2110701717303177
Bucher-Koenen, T., Alessie, R., Lusardi, A., & Rooij, M. V. (2021). Fearless woman: Financial literacy and stock market participation. nber.org. https://www.nber.org/papers/w28723
Célerier, C., & Matray, A. (2019). Bank-branch supply, financial inclusion, and wealth accumulation. The Review of Financial Studies, Query date: 2025-02-18 10:27:09. https://academic.oup.com/rfs/article-abstract/32/12/4767/5477425
Dahrani, D., Saragih, F., & Ritonga, P. (2022). Model pengelolaan keuangan berbasis literasi keuangan dan inklusi keuangan: Studi pada UMKM di Kota Binjai. Owner: Riset Dan Jurnal …, Query date: 2025-02-18 10:27:09. https://www.owner.polgan.ac.id/index.php/owner/article/view/778
Ding, C., Liu, C., Zheng, C., & Li, F. (2021). Digital economy, technological innovation and high-quality economic development: Based on spatial effect and mediation effect. Sustainability, Query date: 2025-02-18 10:27:09. https://www.mdpi.com/2071-1050/14/1/216
Doepke, M., & Tertilt, M. (2019). Does female empowerment promote economic development? Journal of Economic Growth, Query date: 2025-02-18 10:27:09. https://doi.org/10.1007/s10887-019-09172-4
Du, Q., Wu, N., Zhang, F., Lei, Y., & Saeed, A. (2022). Impact of financial inclusion and human capital on environmental quality: Evidence from emerging economies. Environmental Science and …, Query date: 2025-02-18 10:27:09. https://doi.org/10.1007/s11356-021-17945-x
Fauzi, F., Antoni, D., & Suwarni, E. (2020). Women entrepreneurship in the developing country: The effects of financial and digital literacy on SMEs’ growth. Journal of Governance and …, Query date: 2025-02-18 10:27:09. https://virtusinterpress.org/IMG/pdf/jgrv9i4art9.pdf
Feyen, E., Frost, J., Gambacorta, L., Natarajan, H., & Saal, M. (2021). Fintech and the digital transformation of financial services: Implications for market structure and public policy. BIS papers, Query date: 2025-02-18 10:27:09. https://ideas.repec.org/b/bis/bisbps/117.html
Jünger, M., & Mietzner, M. (2020). Banking goes digital: The adoption of FinTech services by German households. Finance Research Letters, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S154461231930296X
Kabeer, N. (2021). Gender equality, inclusive growth, and labour markets. Women’s Economic Empowerment, Query date: 2025-02-18 10:27:09. https://doi.org/10.4324/9781003141938-3
Kangwa, D., Mwale, J., & Shaikh, J. (2021). The social production of financial inclusion of generation Z in digital banking ecosystems. … Accounting, Business and …, Query date: 2025-02-18 10:27:09. https://ro.uow.edu.au/aabfj/vol15/iss3/6/
Kaur, S., Ali, L., Hassan, M., & ... (2021). Adoption of digital banking channels in an emerging economy: Exploring the role of in-branch efforts. … of Financial Services …, Query date: 2025-02-18 10:27:09. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7886606/
Koomson, I., Villano, R., & Hadley, D. (2020). Effect of financial inclusion on poverty and vulnerability to poverty: Evidence using a multidimensional measure of financial inclusion. Social Indicators Research, Query date: 2025-02-18 10:27:09. https://doi.org/10.1007/s11205-019-02263-0
Lashitew, A., Tulder, R. V., & Liasse, Y. (2019). Mobile phones for financial inclusion: What explains the diffusion of mobile money innovations? Research Policy, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S0048733319300137
Li, C., & Umair, M. (2023). Does green finance development goals affects renewable energy in China. Renewable Energy, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S096014812201850X
Lina, L., Nani, D., & Novita, D. (2021). Millennial motivation in maximizing P2P lending in SMEs financing. Journal of Applied Business …, Query date: 2025-02-18 10:27:09. https://www.academia.edu/download/80236437/1488.pdf
Liu, Y., Luan, L., Wu, W., Zhang, Z., & Hsu, Y. (2021). Can digital financial inclusion promote China’s economic growth? International Review of Financial …, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S1057521921002167
Liu, Y., Yang, Y., Li, H., & Zhong, K. (2022). Digital economy development, industrial structure upgrading and green total factor productivity: Empirical evidence from China’s cities. International Journal of Environmental …, Query date: 2025-02-18 10:27:09. https://www.mdpi.com/1660-4601/19/4/2414
Luo, S., Yimamu, N., Li, Y., Wu, H., Irfan, M., & ... (2023). Digitalization and sustainable development: How could digital economy development improve green innovation in China? Business Strategy and …, Query date: 2025-02-18 10:27:09. https://doi.org/10.1002/bse.3223
Mosteanu, N., & Faccia, A. (2020). Digital systems and new challenges of financial management–FinTech, XBRL, blockchain and cryptocurrencies. Quality–Access to Success, Query date: 2025-02-18 10:27:09. https://pureportal.coventry.ac.uk/en/publications/digital-systems-and-new-challenges-of-financial-management-fintec
Nasir, M., Huynh, T., & Tram, H. (2019). Role of financial development, economic growth &foreign direct investment in driving climate change: A case of emerging ASEAN. Journal of environmental management, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S0301479719304256
Omar, M., & Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of economic structures, Query date: 2025-02-18 10:27:09. https://doi.org/10.1186/s40008-020-00214-4
Óskarsdóttir, M., Bravo, C., Sarraute, C., Vanthienen, J., & ... (2019). The value of big data for credit scoring: Enhancing financial inclusion using mobile phone data and social network analytics. Applied Soft …, Query date: 2025-02-18 10:27:09. https://www.sciencedirect.com/science/article/pii/S156849461830560X
Pazarbasioglu, C., Mora, A., Uttamchandani, M., & ... (2020). Digital financial services. World …, Query date: 2025-02-18 10:27:09. http://pubdocs.worldbank.org/en/230281588169110691/Digital-Financial-Services.pdf
Philippas, N., & Avdoulas, C. (2021). Financial literacy and financial well-being among generation-Z university students: Evidence from Greece. Financial Literacy and Responsible …, Query date: 2025-02-18 10:27:09. https://doi.org/10.4324/9781003169192-5
Rai, K., Dua, S., & Yadav, M. (2019). Association of financial attitude, financial behaviour and financial knowledge towards financial literacy: A structural equation modeling approach. FIIB Business Review, Query date: 2025-02-18 10:27:09. https://doi.org/10.1177/2319714519826651
Sahay, M., Allmen, M. von, Lahreche, M., Khera, P., & ... (2020). The promise of fintech: Financial inclusion in the post COVID-19 era. books.google.com. https://books.google.com/books?hl=en&lr=&id=UqwYEAAAQBAJ&oi=fnd&pg=PR7&dq=financial+inclusion+economic+empowerment+financial+literacy&ots=YiitKaeB7b&sig=2GEn0uaIX9zCSKgelEoWxdtQ0zw
Tao, Z., Zhang, Z., & Shangkun, L. (2022). Digital economy, entrepreneurship, and high-quality economic development: Empirical evidence from urban China. Frontiers of Economics in China, Query date: 2025-02-18 10:27:09. https://search.proquest.com/openview/a616cdd9ee63a2cb6aace87d23f966ad/1?pq-origsite=gscholar&cbl=326326
Tchamyou, V. (2020). Education, lifelong learning, inequality and financial access: Evidence from African countries. Contemporary Social Science, Query date: 2025-02-18 10:27:09. https://doi.org/10.1080/21582041.2018.1433314
Ye, J., & Kulathunga, K. (2019). How does financial literacy promote sustainability in SMEs? A developing country perspective. Sustainability, Query date: 2025-02-18 10:27:09. https://www.mdpi.com/2071-1050/11/10/2990
Copyright (c) 2025 Pemy Chiristiaan, Lucas Wong
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
a