Re-writing the story of ‘Ireland of Asia’: an investigation into financial literacy, inclusion and financial attitudes in Sri Lanka

Embedded in an instrumental variable approach, this study examines effects of financial literacy on financial inclusion, financial behaviour, financial attitudes and financial knowledge in Sri Lanka. Referred to as the Ireland of Asia for its atypical social patterns, this study inter alia features that Sri Lanka is equipped with a substantially higher levels of financial literacy corresponding to its income level. While enhancing and employing the survey instrument developed by the Organisation for Economic Cooperation and Development International Network on Financial Education, we found that financial literacy results in positive effects on financial inclusion. In contrast to the literature, especially that of Southeast Asia, Sri Lanka depicts no gap in financial literature between men and women. Our results also reveal that those individuals with lower income levels depict no significant correlation with financial inclusion, indicating that financial literacy has no effect on financial inclusion for those who are poor.