The impact of financial literacy on financial inclusion

Using survey data of owners of micro, small and medium enterprises (MSMEs), we investigate the nexus between financial literacy (FL) and financial inclusion (FI). Furthermore, we examine whether the FL_FI nexus is different by gender. Our results show that FL has statistically significant positive effects on all three dimensions of FI (access, usage and quality). Our findings highlight policy implications for countries desiring to enhance FI by improving the financial literacy and education levels of MSME owners. Furthermore, our findings suggest that targeted financial education programmes result in better outcomes. JEL Classification: G10, G50, G53