Synergizing financial literacy and digital finance: A catalyst for financial inclusion among rural women in Kenya

Abstract

This study investigates the synergistic effect of financial literacy and digital finance on the formal financial inclusion of rural women. While financial inclusion is recognized as a key driver of economic empowerment, many rural women in Kenya remain excluded from the formal financial sector. The proliferation of digital financial services presents a significant opportunity, but its full potential may be unrealized without a corresponding increase in financial knowledge. This research posits that the combination of financial literacy and access to digital financial tools creates a powerful catalyst, enabling rural women to not only access but also effectively utilize a wider range of formal financial products, such as savings accounts, credit, and insurance. Using a descriptive cross-sectional design, Partial Least Squares Structural Equation Modelling (PLS-SEM) and Chi-Square, we analyze data from a sample of 1000 rural women. The findings demonstrate that the interaction between financial literacy and digital finance has a stronger positive effect on formal financial inclusion than either factor in isolation. This research provides critical insights for policymakers and development organizations, highlighting the importance of integrated interventions that combine financial education with the promotion of digital financial services to genuinely empower rural women and bridge the financial inclusion gap.