Bridging Financial Literacy and Credit Confidence: A Theoretical Model for Ongoing Client Engagement in Rural Microenterprise Lending

In Kenya, the increase in multi-borrowing and its effects on loan repayment is a growing concern for microfinance institutions. The general purpose of this research was to establish the effect of multi-borrowing on loan repayment among MSEs in Meru County. Specifically, the study aimed to determine how the number of loans borrowed, interest payable, and the financial literacy of borrowers influenced loan repayment within Meru County Microfinance. The research was anchored on information asymmetry, prospect theory, moral hazard, and adverse selection theories. The study targeted 6,000 MSE owners who were members of Meru County Microfinance, from which a sample of 200 borrowers was selected. A descriptive research design was employed to assess how multiple borrowings affected loan repayment. Cluster and random sampling methods were used to identify respondents across the seven branches of Meru County Microfinance. Primary data was collected using questionnaires, and analyzed by use of descriptive, correlational, and regression analysis techniques. Inferential analysis was conducted at a 0.05 significance threshold, utilizing the Statistical Package for Social Sciences (SPSS) version 28 for data analysis. Ethical standards were strictly observed throughout the study. The study revealed that the number of loans borrowed had a significant impact on loan repayment among MSEs in Meru County. Effective management of borrowing was crucial for better repayment outcomes. Interest payable was identified as a critical factor affecting loan repayment; enterprises with well-managed credit risk practices, including the adjustment of interest rates and repayment schedules, exhibited better repayment performance. Furthermore, the level of financial literacy positively influenced loan repayment, with higher financial literacy levels leading to improved loan management and repayment behaviors. The study concluded that the number of loans borrowed significantly affected loan repayment, although its impact was less direct compared to other factors. Interest payable had the most substantial effect on loan repayment, with effective credit risk management correlating strongly with better repayment outcomes. Additionally, a higher level of financial literacy was found to significantly enhance loan repayment. Based on the findings, it is recommended that micro and small enterprises regularly review and manage their borrowing policies to improve loan repayment. Financial institutions should implement clear policies on irrecoverable loan provisions and adopt robust credit management practices to ensure better loan repayment. Moreover, enhancing financial literacy among borrowers is crucial for improving loan repayment, and thus, targeted financial education programs should be developed. Policymakers should also evaluate and update regulatory frameworks to support effective loan management and repayment practices within microfinance institutions.

Loan Repayment (LR) is one of the key performance indicators in SACCOS. Given the importance of LR, researchers and policymakers have dedicated their attention to the phenomenon by implementing strategies and policies aimed at improving the LR rate to reduce defaulting on loan repayments. To complement the efforts of policymakers, several empirical studies have been conducted regarding LR models. However, few studies exist on the use of mathematical modelling in LR of SACCOS, especially in the Tanzanian context. Therefore, this study seeks to fill this gap, in Tanzania specifically, by modelling the financial literacy (FL) effect on LR using a 2D advection-diffusion equation (ADE). Both primary and secondary data are used in the study. The findings reveal that there is a significant and positive relationship between FL and LR in SACCOS. The mathematical modelling (partial differential equations) indicates the increase of FL in SACCOS members leads to a rise of LR in SACCOS. The findings of the study at hand shed new light on using mathematical modelling especially partial differential equations in modelling FL and LR in SACCOS in the Tanzanian context.

IntroductionThe expanded BRICS block presents significant opportunities for SMEs (Small and Medium Enterprises), but challenges related to financial literacy and digital access hinder their potential. While global efforts emphasize financial literacy and digitization as key drivers of economic growth, especially in developing regions, their specific impact on SMEs in the BRICS block remains underexplored. This paper contributes to the literature by contextualizing how financial literacy and digital financial access influence SME sustainability and economic progress, particularly in light of ongoing efforts to bridge the digital divide.MethodsUsing Principal Component Analysis to reduce dimensionality, the study uses advanced Random Forest Tree modeling, to evaluate current practices in SME finance, credit access, and digitization.ResultsResults indicate that both financial literacy and digitalization play pivotal roles in driving sustainable economic development, with significant implications for policy interventions aimed at supporting SME growth in emerging economies.DiscussionThis study addresses the crucial intersection of SME financial literacy and digital financial access, focusing on their role in fostering economic development within the expanded BRICS block-a group now comprising major emerging economies that collectively face substantial disparities in financial inclusion. The study results are relevant not only for understanding the BRICS context but also for shaping global strategies toward inclusive financial systems and SME resilience in the digital era.

Background – The penetration of technology into economy sector effects individual ability to adapt the use of technology. It has impacted on the changes financial behavior by the ease of shopping and payment transactions which leads to extravagant. Moreover, those generation has high rate of debt compared than other generation whilst they have high financial literacy and digital financial literacy. Both skills suggest do not automatically effecting good financial behavior. Previous research has focused more on the direct affecting of financial literacy and digital financial literacy on financial behavior. However, this study attempts to explore by using demographic vaariables such as gender, given that is a factor that can effecting financial decision making, especially for Milenial and Z generation. Aim – This study aims to investigate the effect of financial literacy and digital financial literacy towards financial behavior for Z and Milenial generation by using gender as moderating variable. Design / methodology / approach – This study uses cross-sectional survey conducting in Province of Papua Barat Daya. The sample consist of 420 individual of Milenial and Z generations. Structural Equation Model and Partial Least Square (SEM-PLS) used for analysis techniques. Findings – The result shows that gender does not significantly strengthen the effect of financial literacy and digital financial literacy on the financial behavior of milenial and Z generation. While financial literacy and digital financial literacy have significant effect toward financial behavior. Research implication – This study reinforces previous research that showing financial literacy and digital financial literacy contribute in shaping financial behavior, particularly among young generation. Furhermore, the moderating variable of gender do not significantly strengthen the influence of financial literacy on digital financial literacy due to the widespread exposure and equitable to information. Policy maker, teacher, and financial institution should collaborate to design in order to strengthen young generation understanding of financial literacy and digital financial literacy through comprehensive learning embedded in the curriculum Limitations – The future research can use the alternative moderating variable that used in order to further analysis towards financial literacy and digital financial literacy to financial behavior.

Women entrepreneurs immensely contribute to economic development in developing nations. In Kenya, women constitute over 70 percent of new business startups. However, women entrepreneurs face several challenges, including discrimination in access to finance. To overcome these challenges, the national government of Kenya came up with initiatives, including the Women's Enterprise Fund and Uwezo Fund, among others. Women access these funds through groups or as individuals. Despite these interventions, women entrepreneurs in Kenya, particularly in Homabay County, still register a high level of loan defaults in these devolved funds. This study examined the influence of business training and financial literacy on loan repayment in devolved fund programmes among women entrepreneurs in Homabay County in Kenya using a structured questionnaire with a sample of 397 women entrepreneurs. Based on Cronbach's Alpha values above 0.7 for all the study variables, the data were considered reliable. From the descriptive analysis, the majority of the women entrepreneurs participating in devolved funds in Homabay County were financially literate, had a moderate level of business training, and were aware of loan repayment benefits. There was a high positive correlation between business training and loan repayment, as well as between financial literacy and loan repayment. Regression results also reported a significant positive influence of business training and financial literacy on loan repayment. To improve loan repayment, the fund managers should collaborate with training institutions to develop and implement tailor-made training programmes for women entrepreneurs to enhance their business and financial skills

In view of the amplified inflation rates and economic stagnation in a number of countries in recent times, financial vulnerability became a key concern in both developed and developing economies. The current study advocates financial literacy is a key to lessen financial vulnerability and promote financial well-being. We propose and test a thorough model investigating the key mechanisms contributing to financial literacy, and how it contributes to individuals’ financial well-being in the context of an emerging market (i.e., Morocco). The mediating effects of indebtedness and financial behavior are also scrutinized. Based on survey data collected from a sample of 848 respondents from Morocco, the conceptual model was assessed using structural equation modeling. Our findings suggest financial literacy as a key to lessen financial vulnerability and promote financial well-being. Policy makers in Morocco and developing countries, where financial vulnerability is more prevalent, may use the current study findings to promote effective education programs to improve citizens’ financial literacy and well-being. Our findings also convey no impact of education on financial literacy, suggesting that education programs in Morocco are still not yet aware of the importance of financial literacy as a key shaping students’ career and financial well-being. Education policy makers are therefore urged to incorporate financial education and literacy as a key component in all education programs. Financial education programs should also take into consideration demographic disparities and therefore design financial education programs based on the target group to better delineate financial literacy in education programs.

Background: The empirical knowledge of the relationship between loan performance and financial literacy in understudied rural context is greatly advanced by this publication. It provides policymakers with concrete insights by quantitatively validating that the knowledge, skills, behavior, and awareness components of financial literacy work together to promote repayment discipline and lower loan defaults. Aims: This study aimed to contribute to the body of knowledge by quantitatively assessing the correlates between financial literacy and loan performance, with a focus on loan defaults and NPLs in local contexts. Place and Duration of Study: This study used a descriptive correlational design, conducted in Boston, Davao Oriental, Philippines, as it is conveniently close to the researcher’s location, which provided easier and sufficient access to information for local loan takers. Additionally, the intervention or the gathering of data from the respondents was completed from March and April 2025. Methodology: The respondents of this study were 260 individuals from different financial institutions. This study utilized the snowball sampling technique as it allows the identification and recruitment of participants with specific characteristics, such as individuals involved in loan-taking, through referrals from initial respondents, which is particularly useful when the population is difficult to access (Parker et. al, 2019). A structured questionnaire adapted from Plaza (2023) was used to measure the level of financial literacy among borrowers. The second part of the survey will focus on collecting information about the respondents’ loan performance. Responses were measured using 5-point Likert scale. Descriptive statistics and correlational analysis were used to determine the strength and direction of the association between these variables. Results: the composite variable of overall financial literacy shows a strong relationship with both loan repayment status (r = 0.71) and overall loan performance (r = 0.78), and a moderate relationship with fines and penalties (r = 0.65), all highly significant at p = 0.00. Idris et al. (2018) found that clients who underwent financial education programs before borrowing exhibited higher loan repayment rates and better loan utilisation. Their findings closely reflect the significant relationship shown between overall financial literacy and loan performance, suggesting that interventions aimed at enhancing literacy can lead to measurable improvements in financial behaviour. Conclusion: The study confirmed a significant positive relationship between financial literacy and loan performance among borrowers. All four components, financial knowledge, skills, behavior, and awareness, contributed moderately to loan outcomes, with overall financial literacy showing a strong correlation with repayment status and overall loan performance. The findings emphasize that enhancing financial literacy is essential for reducing loan defaults and improving financial stability, especially in rural areas like Boston and Davao Oriental, where formal financial education may be limited. Strategic and targeted financial education programs are necessary to empower borrowers to make informed and sustainable financial decisions.

The article describes the process of formation and development of financial inclusion and examines the changes that occur as a result in various sectors and spheres of public life. Authors argue that inclusion plays an important role in the work of financial institutions today. The team of the article is of the opinion that financial inclusion should be disclosed in three main dimensions, namely: coverage (how easy to reach access points to financial services?), use (what is the frequency of use of services?), quality of financial services meets the needs?). The article argues that increasing the level of financial inclusion is an important factor in the development of various stakeholders, in particular for the state, regulators, consumers, financial service providers. Authors tried to reveal the content of national financial inclusion through the prism of eight basic principles of digital financial inclusion G 20, including the promotion of digital financial services as a priority for inclusive financial systems, including based on coordinated, monitored and evaluated national strategies and action plans. Research has argued that digital financial integration enables banks to reduce costs by reducing queues in bank halls, reducing paperwork, and reducing the cost of maintaining bank branches. Authors argue that the key to the formation of sustainable financial inclusion in the digitalization of the economy is the availability of financial services, i.e., the ability of the user to actually use the service through contact with a financial intermediary; financial literacy, i.e., the ability of the consumer to make an informed choice of financial service/product during the digitalization of the economy, fully understanding the benefits and risks of using it. The article examines the institutional aspects of financial inclusion and its elements that should be developed in the context of digitalization of economic relations. In particular, we are talking about the practical regulatory support of digital financial inclusion and the introduction of responsible digital financial practices; promoting the development of digital financial services as a priority for the development of inclusive financial systems, ensuring a balance of innovation and risks to achieve digital financial inclusion, simplification and implementation of joint digital customer identification for digital financial services; strengthening digital and financial literacy and awareness; expanding the ecosystem and infrastructure of digital functional services.

Financial literacy enhances the ability of the borrower to manage their finances such as budgeting and monitoring cash flow, thus leading to successful repayment of debts. This research employs a detailed review of secondary data, which includes qualitative insights. By focussing articles, reports, journals and websites, the study aims at providing insights on Mudra scheme and the role financial literacy in successful loan repayment and the importance of financial literacy to address the challenges faced by borrowers under the Mudra Yojana Scheme. Research reveal that higher financial literacy leads to better finance management, which leads to informed decisions and adherence to repayment schedules. Financial literacy enables individuals to mitigate financial challenges, make informed decisions, financial management, which in turn leads to timely loan repayments. It also highlights the importance of enhancing financial education through training programs conducted by policy makers, as it contributes to the strategic decision making and business growth. Thus contributing to the broader goals of financial inclusion and economic development. KEY WORDS: Sishu, Kishore, Tharun and Financial literacy.

In recent years, there has been a developing emphasis on exploring and assessing Financial literacy and its broader ramifications. However, much of this research has tended to focus on vulnerable population sub-groups, often overlooking more affluent segments of society. To establish a sustainable financial system, it's essential to extend financial literacy efforts to all individuals, including those who are educated and capable of disseminating financial information. This paper aims to offer a comprehensive perspective on the importance of financial literacy from a global standpoint and the determinants that influence an individual's level of financial education. Financial literacy is increasingly recognized as a key skill necessary for navigating today's complex financial landscape. It encompasses understanding concepts such as budgeting, saving, investing, and managing debt. Moreover, it involves the ability to critically evaluate financial products and make informed decisions about personal finances. Despite its importance, financial literacy levels vary widely among individuals and across different demographics. Factors such as education, income level, age, and cultural background can significantly influence one's financial literacy. For instance, individuals with higher levels of education generally exhibit greater financial literacy due to their exposure to financial concepts and resources. However, merely possessing a high level of education does not guarantee financial literacy. Other factors, such as personal experiences, family upbringing, and access to financial education resources, also play crucial roles. Furthermore, societal and cultural norms regarding money management can shape an individual's financial attitudes and behaviors. In light of these complexities, efforts to enhance financial education must be inclusive and holistic. This entails providing accessible and relevant financial education to individuals across all demographics, including those who may not traditionally be considered at risk. By empowering people with the knowledge and skills to make sound financial decisions, we can contribute to building a more resilient and equitable financial system for the future. KEY WORDS Financial Literacy, Importance, Determinants, Vulnerable Populations, Affluent Segments, Sustainable System, Education, Dissemination, Global Perspective, Navigating

Chronic mismanagement of working capital by microentrepreneurs confines not only the sustainability of loan's repayment but also the growth of microenterprises, thereby calling for a better approach of coordinating and supporting to clients in micro enterprise lending. This paper presents a holistic conceptual framework that systematically delineates the channels through which ongoing client engagement – in the form of modular financial literacy training, business advisory support, and interactive lender-client communication – drives financial capability development and fosters better credit management among borrowers of microenterprises. Based on financial literacy, relationship banking, and entrepreneurial resilience theories, the framework describes how to blend normal education programs, peer-led support groups, and customized supports that meet a range of learning levels, especially for street food selling. The model also categorizes strategic intervention points along the lending cycle and proposes loops to incorporate behavioural data into service design. The implementation-focused insights gleaned through this mapping are intended to assist lending organisations to mitigate credit abuse, foreclosure or rollover, and microenterprise viability by establishing and delivering ongoing relational-based training and advisory elements. Policy makers can obtain useful information in the mobilization context vis-à-vis the political economy aspects of savings. This framework provides a strategic design for the forthcoming empirical testing, and for practitioners to advance their practice in supporting responsible credit use and enterprise resilience.

The study applied a systematic literature review to explore financial literacy variables in microfinance institution (MFI) studies. Using manual content analysis, 73 studies identified variables covered in MFIs' financial literacy literature. The study revealed that the majority of scholars have assessed the role of financial literacy in promoting clients' savings, money and mobile money usage, loan repayment and investment. However, few studies focused on variables such as outreach, budgeting, interest rates and women's empowerment. In most of the reviewed studies, regression data analysis was used. The findings indicate that there is a dearth of MFI studies that use the term "financial literacy" and its sub-variables. Furthermore, there are no studies that have examined how financial literacy impacts MFI performance variables such as sustainability, profitability, efficiency, credit risk management and corporate governance. In addition, there are a few studies that link financial literacy with MFI theories. Generally, the findings indicate that variables related to financial literacy are not adequately covered in MFI studies. The study recommends the formulation of policies that promote financial literacy training for formal and informal MFIs. This is the first comprehensive systematic review to examine financial literacy variables in MFI studies.

Poor understanding of financial products and an inability to process financial information prevent millions of rural households in the developing world from making informed financial decisions. This article assesses the financial literacy and cognitive ability of farmers using data from a unique field experiment in the Indian state of Gujarat. Using ordered response models, the effect of farmers' education on cognitive ability and financial literacy is estimated on the one hand, and the relationship between cognitive ability and financial literacy is analysed on the other. Farmers' education and financial experience are shown to be significantly correlated with achievements in customized tests for ability in mathematics and probability, which are taken as the two components of cognitive ability. Cognitive ability, in turn, predicts financial aptitude and debt literacy, the two components of financial literacy. By focusing on farmers in a developing country, the findings contribute to an improved understanding of financial literacy in such settings and can inform the design of inclusive financial systems that are sensitive to the cognitive and informational limitations of rural households.

The aim of this article is to shed light on an adult learner’s financial literacy development experience from an insider’s point of view through autoethnography. The research results are briefly presented as follows. Firstly, I controlled the size of my desire for goods and money, endured the volatility and loss of financial assets. These attempts corresponded to the self-management competency of the competency-based curriculum. Secondly, I constructed self-knowledge about the investment target, distinguished between speculation and investment, and managed the risk of investment with financial knowledge. This financial literacy was in line with knowledge information processing capability. Thirdly, I searched for investment destinations with a wide range of culture and reverse ideas, and invested while drawing a future society with humanistic imagination. This financial literacy corresponded to the creative thinking and aesthetic sensitivity competencies of the competency-based curriculum. Fourthly, I communicated with others, made investments to accompany companies, and tried to become an altruistic investment educator. These attempts corresponded to the collaborative communication and community competency of the competency-based curriculum. In the end, as an adult learner, I was able to develop financial literacy by becoming aware of the interrelationship between financial literacy and educational competency. This study will provide practical and theoretical implications for improving financial literacy by interpretively discussing an adult learner’s financial literacy development experience and its educational meaning.

The paper is aimed at examining the link between financial literacy and financial inclusion in the presence of social interaction. An established theoretical framework was used, and tested questionnaire was employed to test the hypotheses and data collection. Smart PLS was used as the data is primary in nature. The model is a considered to be a strong model as the effect size is 0.76. Results show that behaviour and knowledge contribute to have an impact on financial inclusion while skills and attitude do not significantly influence, which implies a significant positive influence of financial literacy on financial inclusion. Also, it was found that social interaction moderates the relationship between financial literacy and inclusion as hypothesized in the study. These results imply that in order to improve knowledge and understanding of financial ideas and practises, policy makers, financial institutions, and groups working on financial inclusion projects should concentrate on offering financial education and literacy programmes. Also, tailored interventions must be considered by the policymakers and organizations that combine financial literacy programs with opportunities for social interaction. These interventions could involve interactive workshops, community-based financial education initiatives, and social platforms that facilitate knowledge sharing and peer support.