Empowering financial choices: how financial literacy and behavioral bias shape access to financial products and services

Purpose This study aims to examine the effect of financial literacy (FL) on individuals’ access to financial products and services (AFPS). Through a mediation framework, it further explores the mediating role of behavioral bias (BB) in this relationship. Design/methodology/approach A cross-sectional quantitative research methodology has been used; data from 605 individuals in India were gathered via structured questionnaires and subsequently analyzed using PLS through the SmartPLS 4.0 software. Findings The hypothesized mediation model was supported where BB partially mediated the relationship of FL and AFPS; thus, exhibiting that enhancing FL helps individuals overcome BBs, enabling them to better understand financial products and services and choose options that align with their financial goals. Practical implications The findings provide significant implications for policymakers and financial regulatory authorities, suggesting the need for FL programs in schools, public campaigns and simplified product disclosures to address BBs among the Indian individuals. Combined efforts of employers, financial advisors and digital tools can empower individuals to make sound financial choices aligned with their long-term goals. Originality/value In addition to the body of prior research on FL, this study is a novel attempt to incorporate the relationship between FL and AFPS within the Indian landscape. In addition, the research model takes a new and unexplored approach to explore the intervention role of bias in the FL–AFPS interaction.