Abstract
The use of formal financial services has been associated with increased financial wellbeing and overall economic growth. Efforts to increase financial inclusion have emphasized financial literacy provided through formal training and education without due recognition that people’s financial behaviors and practices may be motivated by social interactions. The current study examines the moderating effects of social learning on the relationship between financial literacy and formal financial services usage within a developing country context. Survey data collected from a sample of 351 adults in Kampala, Uganda, was analyzed using Pearson correlation coefficients, hierarchical regression, and ModGraph. Findings reveal significant positive relationships between financial literacy, social learning, and usage of formal financial services. Results indicate that social learning moderates the relationship between financial literacy and financial services usage among people in Kampala. The study finds peers and friends to be critical socializing agents with a significant influence on formal financial services usage. Beyond the promotion of financial literacy, financial inclusion initiatives should recognize the effects of social learning to increase the use of formal financial services in countries such as Uganda. The study integrates aspects of the social learning theory into the financial services domain hitherto dominated by finance and economic models. Key words: Financial literacy, financial inclusion, Uganda
Highlights
Formal financial services for savings, loans, insurance, and investment have been associated with increased financial wellbeing and overall economic growth (Demirgüç-Kunt et al, 2017a)
The results imply that individuals who demonstrate higher levels of social learning through observations and discussions with their peers and friends were more likely to have a higher incidence of using formal financial services
This finding is consistent with mainstream thinking shaped by previous studies that have justified the application of financial literacy as a tool for improved uptake and use of financial services in many countries
Summary
Formal financial services for savings, loans, insurance, and investment have been associated with increased financial wellbeing and overall economic growth (Demirgüç-Kunt et al, 2017a). In this respect, several low-income countries worldwide work toward broadening the financial sector and increasing populations' financial inclusion. The increasing diversification and sophistication of financial services requires correspondingly high levels of the masses' financial literacy to ably understand and use them to improve their wellbeing (Peachey and Roe, 2004). According to the World Bank, globally, close to one-third of adults – 1.7 billion – are still unbanked (Demirgüç-Kunt et al, 2017b); necessitating an inquiry into improved formal financial services utilization approaches
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
