How Does Youth’s Financial Literacy Influence Their Financial Inclusion? A PLS-SEM Approach
Authors
-
Pali Gaur
Senior Lecturer (Finance), Regenesys Business School, Sandton, South Africa
https://orcid.org/0000-0003-4972-7596
-
Priyanka Tandon
Senior Lecturer (Finance) (Corresponding Author), Regenesys School of Finance, Regenesys Business School, Sandton, South Africa
https://orcid.org/0000-0002-8077-0317
-
Anurag Bhadur Singh
Associate Professor, Department of Management Studies, Central University of Haryana, Jant-Pali, Mahendragarh - 123031, Haryana
https://orcid.org/0000-0003-3363-4686
-
Nikhil Yadav
Assistant Professor, Jaypee Business School, Jaypee Institute of Information Technology, Noida - 201 309, Uttar Pradesh
https://orcid.org/0000-0002-0115-8219
DOI:
https://doi.org/10.17010/ijf/2025/v19i7/175194Keywords:
financial literacy, financial inclusion, financial literacy, financial awareness, financial behaviour, youth, PLS-SEM.JEL Classification Codes: C8, G2, G4
Publication Chronology: Paper Submission Date : September 14, 2024 ; Paper sent back for Revision : March 12, 2025 ; Paper Acceptance Date : April 20, 2025 ; Paper Published Online : July 15, 2025
Abstract
Purpose : The study examined the linkages between the psychology of youths toward financial literacy and their level of financial inclusion.
Methodology : Fresh data were collected from 381 youths residing in the Delhi-NCR region from January 2022 to April 2022. A 5-point Likert scale questionnaire was developed using purposeful sampling, and its goodness of fit was assessed using SMART-PLS employing partial least squares-structural equation modelling (PLS-SEM). Path analysis was employed for hypothesis testing to examine the interaction of four independent variables.
Findings : As per the study’s findings, financial attitude and financial behaviour were strongly related to the youth’s financial inclusion rather than financial education and awareness. The study’s conclusions clarified the investor’s psychology and enhanced financial inclusion among youths.
Practical Implications : The research findings opened up additional avenues for raising young people’s financial literacy. Regulatory bodies in India should prioritize enhancing the young individuals’ understanding of finance. Despite having financial attitudes and behaviors, they had a limited grasp of finance, as seen by their limited interest in investment opportunities. This study provided valuable insights on how to improve individuals’ financial literacy.
Originality : Unlike prior work on financial literacy, this study focused on the level of financial literacy among youths to understand their economic behaviour and attitudes.
Downloads
Published
How to Cite
Issue
Section
References
1) African Youth Charter. (n. d.). https://au.int/sites/default/files/treaties/7789-treaty-0033_-_african_youth_charter_e.pdf
2) Agarwalla, S. K., Barua, S. K., Jacob, J., & Varma, J. R. (2015). Financial literacy among working young in urban India. World Development, 67, 101–109. https://doi.org/10.1016/j.worlddev.2014.10.004
3) Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179–211. https://doi.org/10.1016/0749-5978(91)90020-T
4) Anumol, M. V., & Malavika, S. (2024). Exploring the impact of financial literacy on financial satisfaction among youth: Mediating role of financial behavior. Adhyayan: A Journal of Management Sciences, 14(1), 31–35. https://doi.org/10.21567/adhyayan.v14i1.06
5) Anuwar, M. A., Adenan, F., Arif, M. I., Rosli, M. S., Ab Hamid, M. H., & Remly, M. R. (2024). Perception on financial literacy among youth: A study on UiTM Puncak Alam student. Al-Qanatir: International Journal of Islamic Studies, 33(3), 389–397. https://al-qanatir.com/aq/article/view/881
6) Arora, A. (2016). Assessment of financial literacy among working Indian women. Business Analyst, 36(2), 219–237. https://www.researchgate.net/publication/298790053
7) Atkinson, A. & Messy, F.-A. (2012). Measuring financial literacy: Results of the OECD/International Network on Financial Education (INFE) pilot study. OECD Working Papers on Finance, Insurance and Private Pensions, No. 15. OECD Publishing. https://doi.org/10.1787/5k9csfs90fr4-en
8) Babajic, A., Okicic, J., & Jukan, M. (2018). Identification of barriers to financial inclusion among youth. International Business Research, 11(7), 120–129. https://doi.org/10.5539/ibr.v11n7p120
9) Bii, P. K., Mutai, N. C., & Rotich, R. K. (2024). Effects of financial literacy on sustainable entrepreneurship among the youths in Bomet County, Kenya. Asian Journal of Economics, Business and Accounting, 24(3), 34–46. https://doi.org/10.9734/ajeba/2024/v24i31239
10) Bire, A. R., Sauw, H. M., & Maria. (2019). The effect of financial literacy towards financial inclusion through financial training. International Journal of Social Sciences and Humanities, 3(1), 186–192. https://doi.org/10.29332/ijssh.v3n1.280
11) Bongomin, G. O., Munene, J. C., Ntayi, J. M., & Malinga, C. A. (2018). Nexus between financial literacy and financial Inclusion: Examining the moderating role of cognition from a developing country perspective. International Journal of Bank Marketing, 36(7), 1190–1212. https://doi.org/10.1108/IJBM-08-2017-0175
12) Calamato, M. P. (2010). Learning financial literacy in the family (Master's thesis). San José State University. https://doi.org/10.31979/etd.4e8a-5y4r
13) Chock, W. Q., & Chin, Y. W. (2024). Financial literacy among undergraduates: A study in Universiti Sains Malaysia. e-BANGI: Journal of Social Sciences & Humanities, 21(1), 147–158. https://doi.org/10.17576/ebangi.2024.2101.13
14) Chowa, G., Masa, R., Ansong, D., Despard, M., Wu, S., Hughes, D., Osei-Akoto, I., Afranie, S., Mark-Sowah, N. A., Ofori-Acquah, C., Lee, Y., Johnson, L., & Sherraden, M. (2015). Impacts of financial inclusion on youth development: Findings from the Ghana YouthSave experiment (CSD Research Report No. 15–35). YouthSave Ghana. https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1717&context=csd_research
15) Demirgüç-Kunt, A., Klapper, L., Singer, D., & Ansar, S. (2022). The Global Findex Database 2021: Financial inclusion, digital payments, and resilience in the age of COVID-19. World Bank Publications. http://documents.worldbank.org/curated/en/099818107072234182
16) Deshpande, R. (2011). Paying attention to the financial needs of youth. CGAP. http://www.cgap.org/blog/paying-attention-financial-needsyouth
17) Finmark Trust. (2018). How South Africans are leveraging informal and formal financial markets: FinScope SA 2018 Fact Sheet. FinScope. https://finmark.org.za/system/documents/files/000/000/196/original/FMT_Finscope_factsheet.pdf?1601972787
18) Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104
19) Garg, N., & Singh, S. (2018). Financial literacy among youth. International Journal of Social Economics, 45(1), 173–186. https://doi.org/10.1108/IJSE-11-2016-0303 20) Government of India (2022). Youth in India 2022. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://mospi.gov.in/sites/default/files/publication_reports/Youth_in_India_2022.pdf
21) Grohmann, A., & Menkhoff, L. (2017). Financial literacy promotes financial inclusion in both poor and rich countries. DIW Economic Bulletin, 7(41), 399–407. https://hdl.handle.net/10419/170500
22) Grohmann, A., Klühs, T., & Menkhoff, L. (2018). Does financial literacy improve financial inclusion? Cross-country evidence. World Development, 111, 84–96. https://doi.org/10.1016/j.worlddev.2018.06.020
23) Gupta, N., Rana, R., & Tandon, D. (2025). Financial literacy as a moderator in behavioral biases and investor decisions. Indian Journal of Finance, 19(5), 79–94. https://doi.org/10.17010/ijf/2025/v19i5/175045
24) Hair, J., Hollingsworth, C. L., Randolph, A. B., & Chong, A. Y. (2017). An updated and expanded assessment of PLS-SEM in information systems research. Industrial Management & Data Systems, 117(3), 442–458. https://doi.org/10.1108/imds-04-2016-0130
25) Haque, A., & Zulfiqar, M. (2015). Women's economic empowerment through financial literacy, financial attitude and financial wellbeing. Research Journal of Finance and Accounting, 6(21), 57–66. https://core.ac.uk/reader/234631160
26) Huang, J., Nam, Y., & Sherraden, M. S. (2013). Financial knowledge and child development account policy: A test of financial capability. The Journal of Consumer Affairs, 47(1), 1–26. https://doi.org/10.1111/joca.12000
27) Huston, S. J. (2010). Measuring financial literacy. The Journal of Consumer Affairs, 44(2), 296–316. https://doi.org/10.1111/j.1745-6606.2010.01170.x
28) Kavita & Suman. (2019). Determinants of financial inclusion in India: A literature review. Indian Journal of Finance, 13(11), 53–61. https://doi.org/10.17010/ijf/2019/v13i11/148417
29) Khan, F., Siddiqui, M. A., & Imtiaz, S. (2022). Role of financial literacy in achieving financial inclusion: A review, synthesis and research agenda. Cogent Business & Management, 9(1), Article ID 2034236. https://doi.org/10.1080/23311975.2022.2034236
30) Khongwir, C. M., & Sharmiladevi, J. C. (2023). A bibliometric analysis on financial inclusion and financial literacy: Analyzing the current research trends. Indian Journal of Finance, 17(2), 27–53. https://doi.org/10.17010/ijf/2023/v17i2/172638
31) Klapper, L. F., Lusardi, A. & Panos, G. A. (2012). Financial literacy and the financial crisis (NBER Working Paper No. 17930). National Bureau of Economic Research. https://doi.org/10.3386/w17930
32) Kodongo, O. (2018). Financial regulations, financial literacy, and financial inclusion: Insights from Kenya. Emerging Markets Finance and Trade, 54(12), 2851–2873. https://doi.org/10.1080/1540496X.2017.1418318
33) Kuri, P. K., & Laha, A. (2011). Determinants of financial inclusion: A study of some selected districts of West Bengal. Indian Journal of Finance, 5(8), 29–36. https://indianjournaloffinance.co.in/index.php/IJF/article/view/72491
34) Liu, D., Xie, Y., Hafeez, M., & Usman, A. (2022). The trade-off between economic performance and environmental quality: Does financial inclusion matter for emerging Asian economies? Environmental Science and Pollution Research, 29(20), 29746–29755. https://doi.org/10.1007/s11356-021-17755-1
35) Liu, H., Yao, P., Latif, S., Aslam, S., & Iqbal, N. (2022). Impact of green financing, FinTech, and financial inclusion on energy efficiency. Environmental Science and Pollution Research, 29(13), 18955–18966. https://doi.org/10.1007/s11356-021-16949-x
36) Lusardi, A. (2008a). Financial literacy: An essential tool for informed consumer choice? (NBER Working Paper Series No. 14084). National Bureau of Economic Research. https://doi.org/10.3386/w14084
37) Lusardi, A. (2008b). Household saving behavior: The role of financial literacy, information, and financial education programs (NBER Working Paper Series No. 13824). National Bureau of Economic Research. https://doi.org/10.3386/w13824
38) Lusardi, A., Mitchell, O. S., & Curto, V. (2010). Financial literacy among the young. The Journal of Consumer Affairs, 44(2), 358–380. https://doi.org/10.1111/j.1745-6606.2010.01173.x
39) Lusardi, A., & Mitchell, O. S. (2011). Financial literacy and retirement planning in the United States. Journal of Pension Economics & Finance, 10(4), 509–525. https://doi.org/10.1017/S147474721100045X
40) Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44. https://doi.org/10.1257/jel.52.1.5
41) Manyenga, G. (2023, July 16). Financial inclusion of young people: Innovation to drive equitable access to financial services. The YouthCafe. https://www.theyouthcafe.com/perspectives/financial-inclusion-of-young-people-innovation-to-drive-equitable-access-to-financial-services
42) Mazumder, R. (2013). The vicious circle of financial exclusion: An empirical study in West Bengal. Indian Journal of Finance, 7(12), 38–46. https://indianjournaloffinance.co.in/index.php/IJF/article/view/72058
43) Mbugua, S., Jauhara, J., & Chaurasia, A. (2023). Empowering youth through entrepreneurship and financial inclusion. MicroSave Consulting. https://www.microsave.net/2023/11/29/empowering-youth-through-entrepreneurship-and-financial-inclusion/
44) McCormick, M. H. (2009). The effectiveness of youth financial education: A review of the literature. Journal of Financial Counseling and Planning, 20(1), 70–83. https://files.eric.ed.gov/fulltext/EJ859566.pdf
45) Mushtaq, R., Murtaza, G., Yahiaoui, D., Alessio, I., & Talpur, Q. (2024). Impact of financial literacy on financial inclusion and household financial decisions: Exploring the role of ICTs. International Studies of Management & Organization, 54(1), 68–84. https://doi.org/10.1080/00208825.2023.2281207
46) Nag, A. K., & Shah, J. (2022). An empirical study on the impact of Gen Z investors' financial literacy to invest in the Indian stock market. Indian Journal of Finance, 16(10), 43–59. https://doi.org/10.17010/ijf/2022/v16i10/172387
47) National Survey for Financial Inclusion. (2018). Mexico financial inclusion: National and regional main findings. https://www.gob.mx/cms/uploads/attachment/file/421411/Cuadriptico_2018_ENG.pdf
48) Nga, J. K., Yong, L. H., & Sellappan, R. D. (2010). A study of financial awareness among youths. Young Consumers, 11(4), 277–290. https://doi.org/10.1108/17473611011093916
49) Nizam, K., & Rashidi, M. Z. (2025). Barriers to digital financial inclusion and digital financial services (DFS) in Pakistan: A phenomenological approach. Qualitative Research in Financial Markets, 17(2), 251–274. https://doi.org/10.1108/qrfm-11-2023-0271
50) OECD. (2005). Improving financial literacy: Analysis of issues and policies. OECD Publishing. https://doi.org/10.1787/9789264012578-en
51) OECD. (2013). PISA 2012 assessment and analytical framework: Mathematics, reading, science, problem solving and financial literacy. OECD Publishing. https://doi.org/10.1787/9789264190511-en
52) OECD. (2014a). PISA 2012 results: Students and money (Volume IV): Financial literacy skills for the 21st century. OECD Publishing. https://doi.org/10.1787/9789264208094-en
53) OECD. (2014b). PISA 2012 technical report. OECD Publishing. https://doi.org/10.1787/6341a959-en
54) OECD. (2020). Advancing the digital financial inclusion of youth. OECD Publishing. https://doi.org/10.1787/21b829d8-en
55) Ozili, P. K. (2024). Effect of gender equality on financial stability and financial inclusion. Social Responsibility Journal, 20(2), 205–223. https://doi.org/10.1108/SRJ-12-2022-0565
56) Pulk, K., & Riitsalu, L. (2024). Youth in individualistic countries have higher financial literacy: Evidence from PISA. The Journal of Consumer Affairs, 58(2), 432–450. https://doi.org/10.1111/joca.12582
57) Rehman, K., & Mia, M. A. (2024). Determinants of financial literacy: A systematic review and future research directions. Future Business Journal, 10(1), Article No. 75. https://doi.org/10.1186/s43093-024-00365-x
58) Ringle, C. M., Wende, S., & Becker, J. M. (2015). SmartPLS 3. SmartPLS GmbH. Bönningstedt. https://www.smartpls.com
59) Sari, Y. W., Nugroho, M., & Rahmiyati, N. (2023). The effect of financial knowledge, financial behaviour and digital financial capabilities on financial inclusion, financial concern and performance in MSMEs in East Java. Uncertain Supply Chain Management, 11(4), 1745–1758. https://doi.org/10.5267/j.uscm.2023.6.016
60) SEEP. (2013). Understanding youth and their financial needs: Youth and financial services working group. The SEEP Network. https://www.findevgateway.org/sites/default/files/publications/files/mfg-en-paper-understanding-youth-and-their-financial-needs-jan-2013.pdf
61) Shihadeh, F. H. (2018). How individual's characteristics influence financial inclusion: Evidence from MENAP. International Journal of Islamic and Middle Eastern Finance and Management, 11(4), 553–574. https://doi.org/10.1108/imefm-06-2017-0153
62) Sunil, N., & Kumar, B. (2025). Financial literacy and fintech : A double-edged sword for millennial investors' behavioral biases. Indian Journal of Finance, 19(3), 44–63. https://doi.org/10.17010/ijf/2025/v19i3/174849
63) Tang, N. (2024). Financial awareness and its role in financial behavior. SSRN. https://doi.org/10.2139/ssrn.5018160
64) The World Bank. (2020). G20 financial inclusion indicators. https://datatopics.worldbank.org/g20fidata/
65) United Nations Youth. (n.d). Financial inclusion of youth. https://www.un.org/esa/socdev/documents/youth/fact-sheets/youth-financial-inclusion.pdf
66) UNESCO. (n.d). The definition of Youth. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.un.org/esa/socdev/documents/youth/fact-sheets/youth-definition.pdf
67) Vaahtoniemi, S., Buturak, G., Kalmi, P., & Ruuskanen, O.-P. (2023). Financial literacy and its determinants and consequences: New survey evidence from Finland. Journal of Financial Literacy and Wellbeing, 1(2), 368–402. https://doi.org/10.1017/flw.2023.14
68) Vaghela, P. S., Kapadia, J. M., Patel, H. R., & Patil, A. G. (2023). Effect of financial literacy and attitude on financial behavior among university students. Indian Journal of Finance, 17(8), 43–57. https://doi.org/10.17010/ijf/2023/v17i8/173010
69) World Bank. (n.d.). MetaData glossary. https://databank.worldbank.org/metadataglossary/world-development-indicators/series/SL.UEM.NEET.ZS
70) World Bank. (2021). The Global Findex Database 2021: Financial inclusion, digital payments and resilience in the age of COVID-19. World Bank Group. https://www.worldbank.org/en/publication/globalfindex
71) Zahid, R. M., Rafique, S., Khurshid, M., Khan, W., & Ullah, I. (2024). Do women's financial literacy accelerate financial inclusion? Evidence from Pakistan. Journal of the Knowledge Economy, 15(1), 4315–4337. https://doi.org/10.1007/s13132-023-01272-2
