Financial Literacy and Inclusion in India: Evidence from Household-level Data after Demonetization

This article examines the link between financial literacy and financial inclusion in India between 2015 and 2018 using household-level survey data. We explore heterogeneities by gender using data from households with female respondents. We find a strong and positive association between financial literacy and inclusion, and a small positive impact of the demonetization policy and the Pradhan Mantri Jan Dhan Yojana on inclusion. The subgroup analyses suggest that these associations are driven by men, those residing in the eastern states of India and belonging to the upper two quintiles of the wealth distribution. Limitations of the current work and implications for policy are discussed. JEL Codes: G53, G28, O16