FINANCIAL INCLUSION ON DIGITAL FINANCIAL LITERACY IN SMALL AND MEDIUM-SIZED ENTERPRISES

The adoption of technology by Financial Technology (FinTech) has changed the financial landscape and led to a sharp increase in digital financial products and services. People are exposed to a number of hazards as a result of the increasing use of these services, including data theft, confidentiality issues, uncontrolled network operators, security threats, and a lack of expertise in digital and financial abilities. Therefore, this study aims to address this issue by investigating the impact of financial inclusion on Digital Financial Literacy (DFL) in Small and medium-sized Enterprises (SMEs) in Sri Lanka. SMEs were in Western Province, Central Province, Northwestern Province, and North Central Province, as there are a significant number of SMEs that were established. The study employed a quantitative approach, drawing a sample of 372 SMEs under purposive sampling methods. A structured questionnaire was used to gather data, and four hypotheses were developed for the investigation. Digital financial literacy was the dependent variable, and financial inclusion was the independent variable in the research model. Regression analysis, correlation analysis, and descriptive statistics were the analytical tools used in the data analysis, which was conducted using the Statistical Package for Social Sciences (SPSS) version 25.0. The regression results revealed that access to and usage of financial services, financial innovation, and service quality in SMEs significantly impact digital financial literacy. The findings revealed significant relationships between financial inclusion and digital financial literacy, highlighting the importance of enhancing financial literacy to improve access and usage of digital financial services among small and medium-sized enterprises. The results offer valuable insights for policymakers, financial institutions, and stakeholders to develop targeted interventions, policies, and programs that promote financial inclusion and empower small and medium-sized enterprises. By improving digital financial literacy, small and medium-sized enterprises can better manage their finances, make informed decisions, and contribute to economic growth and poverty reduction in the region.