Financial Literacy Meets Inclusion: The Dual Pillars of Entrepreneurial Success in Kerala's MUDRA Scheme

Archive Details

Home
Archive Details

Important Links

Call for Paper

Help Desk

Year	2025
Volume/Issue/Review Month	Volume-XVIII \| Issue-I \| Jan.-Jun.
Title	Financial Literacy Meets Inclusion: The Dual Pillars of Entrepreneurial Success in Kerala's MUDRA Scheme
Authors	Ashadevi. M, Dr. Anil.P.V
Broad area	Finance
Abstract	Abstract: This study examines the impact of financial literacy on the business performance of MUDRA scheme beneficiaries engaging in entrepreneurship in Kerala and investigates the mediating role played by financial inclusion. The factors of financial inclusion and financial literacy are also understood as the main determinants of an entrepreneur’s success; thus, this research examines how the financial knowledge of an entrepreneur contributes to his business performance and how the extent of financial inclusion strengthens this relationship. The sample comprised 240 entrepreneurs from Kerala, with 60 entrepreneurs selected from each of the following financial institutions: Public sector bank – State Bank of India (SBI), private sector bank – Federal Bank, regional rural bank – Kerala Gramin Bank, and small finance bank – ESAF Small Finance Bank. Using this approach, institutional support can be represented in diverse ways. To analyse the data, this study uses Structural Equation Modelling (SEM) to explore direct and mediated effects. These findings contribute to a better understanding of how financial literacy affects business performance and how financial inclusion is an important factor in promoting entrepreneurial success. This research identifies strategies for integrating financial literacy and inclusion to inform policymakers, financial institutions, and practitioners on their valuable implications for helping promote the growth and sustainability of small enterprises under the MUDRA scheme in Kerala.
File
Referenceses	Atkinson, A., & Messy, F. (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. https://doi.org/10.1787/5k9csfs90fr4-en Banerjee, A., & Duflo, E. (2014). Poor economics: A radical rethinking of the way to fight global poverty. Public Affairs. Beck, T., Demirgüç-Kunt, A., & Levine, R. (2007). Finance, inequality, and poverty: Cross-country evidence. Journal of Economic Growth, 12(1), 27-49. https://doi.org/10.1007/s10887-007-9010-6 Bentler, P. M. (1990). Comparative fit indexes in structural models. Psychological Bulletin, 107(2), 238-246. https://doi.org/10.1037/0033-2909.107.2.238 Browne, M. W., & Cudeck, R. (1993). Alternative ways of assessing model fit. In K. A. Bollen & J. S. Long (Eds.), Testing structural equation models (pp. 136-162). Sage. Burgess, R., & Pande, R. (2005). Do rural banks matter? Evidence from the Indian social banking experiment. American Economic Review, 95(3), 780-795. https://doi.org/10.1257/0002828054201466 Cámara, N., & Tuesta, D. (2014). Measuring financial inclusion: A multidimensional index. BBVA Research Paper, 14(26), 1-34. Cole, S., & Fernando, A. N. (2008). The value of financial literacy. Financial Literacy and Education Commission. Demirgüç-Kunt, A., Beck, T., & Honohan, P. (2015). Financial inclusion and development: Recent impact evidence. World Bank Policy Research Working Paper No. 7255. https://doi.org/10.1596/1813-9450-7255 Dupas, P., Karlan, D., Robinson, J., & Ubfal, D. (2018). Banking the unbanked? Evidence from three countries. American Economic Journal: Applied Economics, 10(2), 257-297. https://doi.org/10.1257/app.20160597 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 Fungá?ová, Z., & Weill, L. (2015). Understanding financial inclusion in China. China Economic Review, 34, 196-206. https://doi.org/10.1016/j.chieco.2014.12.004 Grohmann, A. (2018). Financial literacy and financial behavior: Evidence from the emerging Asian middle class. Pacific-Basin Finance Journal, 48, 129-143. https://doi.org/10.1016/j.pacfin.2018.01.007 Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (8th ed.). Cengage Learning. Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115-135. https://doi.org/10.1007/s11747-014-0403-8 Hooper, D., Coughlan, J., & Mullen, M. R. (2008). Structural equation modelling: Guidelines for determining model fit. Electronic Journal of Business Research Methods, 6(1), 53-60. Hu, L., & Bentler, P. M. (1999). Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives. Structural Equation Modeling: A Multidisciplinary Journal, 6(1), 1-55. https://doi.org/10.1080/10705519909540118 Klapper, L. F., El-Zoghbi, M., & Hess, J. (2016). Achieving the sustainable development goals: The role of financial inclusion. World Bank Group. https://doi.org/10.1596/978-1-4648-0959-9 Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. National Bureau of Economic Research. https://doi.org/10.3386/w18952 Mandell, L., & Klein, L. S. (2007). Motivation and financial literacy. Financial Services Review, 16(2), 163-181. Marsh, H. W., Hau, K., & Wen, Z. (2004). In search of golden rules: Comment on hypothesis-testing approaches to setting cutoff values for fit indexes and dangers in Overgeneralizing Hu and Bentler's (1999) findings. Structural Equation Modeling: A Multidisciplinary Journal, 11(3), 320-341. https://doi.org/10.1207/s15328007sem1103_2 Sarma, M. (2012). Index of financial inclusion. IGIDR Working Paper, 2012(1). https://doi.org/10.2139/ssrn.1994675 Schermelleh-Engel, K., Moosbrugger, H., & Müller, H. (2003). Evaluating the Fit of Structural Equation Models: Tests of Significance and Descriptive Goodness-of-Fit Measures. Methods of Psychological Research Online, 8(2), 23-74 Sharma, P. N., & Sushil, P. (2016). Financial literacy and its impact on business success. Indian Journal of Economics and Business, 15(1), 145-160. Sundararajan, V., & Zaman, S. (2018). Financial inclusion in India: A journey to sustainable development. Journal of Financial Regulation and Compliance, 26(3), 328-342. https://doi.org/10.1108/JFRC-12-2017-0100 Xiao, J. J., & Porto, N. (2017). Financial literacy and small business success. Journal of Financial Counseling and Planning, 28(2), 250-266. Zins, A., & Weill, L. (2016). The determinants of financial inclusion in Africa. Review of Development Finance, 6(1), 46-57. https://doi.org/10.1016/j.rdf.2016.05.001