Abstract:
Purpose: The main purpose of this study is to examine the impact of financial inclusion
on poverty alleviation with moderating effect of microfinance and mediating effect of
financial literacy
Design/methodology/approach: In order to fulfil the objectives of the study, primary
data were collected from 300 users of microfinance banks using multistage stratified
convenience sampling technique. Respondents are the people who used the
microfinance services. They are usually self-employed business owners who operate
out of their homes. The PLS-SEM method was used to analyze the data that was
gathered for this study. In particular, PLS-Graph (Chin, 2010) and Smart PLS (Ringle,
Wende, & Will, 2005), two popular PLS- SEM software programs, were used for the
analysis and output display.
Findings: Study results reveals that financial inclusion positively affects poverty
alleviation and this effect is further enhanced by the presence of microfinance and
financial literacy. The relationship between financial inclusion and poverty alleviation
is represented by the mediating effect of financial literacy.
Originality/Value: The study makes contribution towards financial inclusion literature
relating to poverty alleviation and fulfils the research gap to some extent by assessing
the impact of financial inclusion on poverty alleviation through microfinance and
financial literacy. This paper can help the policymakers and other stakeholders of
microfinance banks in promoting banking habits among poor rural households at the
national level.
Limitations: The cross-sectional data used in the study may make it more difficult to
establish causal linkages because temporal fluctuations in the variables are not well
represented. Data constraints, such as the lack of current and reliable financial literacyx
information, may have an impact on how precise the study's conclusions are. It may
have overlooked qualitative details that could have added to a thorough comprehension
of the intricate relationships between the variables. The study may oversimplify the
complex dynamics at work by failing to account for the wide variety of microfinance
programs and their differing effects on the variables listed.
