Financial inclusion and digital financial literacy: The case of microfinance sector in Bosnia and Herzegovina

Abstract

This chapter discusses the nexus between financial inclusion and financial literacy, focusing on the microfinance institutions’ contribution to increasing of financial literacy and financial inclusion among their clients. The microfinance sector in Bosnia and Herzegovina is perceived as the most well-organized and regulated worldwide. We use it as a case example of how microfinance institutions make changes in the financial system landscape and contribute to the well-being of individuals. During the COVID-19 pandemic, microfinance institutions in Bosnia and Herzegovina organized a series of workshops on digital financial literacy in order to provide their clients with the knowledge related to digital financial products/services used to help their clients better to integrate into the financial system. The chapter provides evidence on digital financial literacy initiatives contributing to financial literacy increase and more frequent usage of digital financial services contributing to greater financial inclusion of individuals. The presented research will contribute to the existing literature in terms of a better understanding of the importance of financial literacy and education in building inclusive financial systems as well as provide evidence of positive practices among financial institutions, namely microfinance institutions in regard to increasing financial literacy.