Financial self-efficacy: a mediator in advancing financial inclusion

The purpose of this paper is to examine the mediating effect of financial self-efficacy (FSE) on the relationship between financial attitude, financial literacy and financial inclusion (FI) among individuals in Uganda.

Using a quantitative approach and cross-sectional research design, a sample of 400 individuals from urban Central and rural Northern Uganda was drawn. Using SPSS and AMOS™ 21, structural equation models and bootstrapping methods were used to establish the hypothesized relationships and mediation effects between financial attitude, financial literacy and FI.

The results suggested FSE as a mediator of the relationship between financial attitude, financial literacy and FI. Further, there was a significant and insignificant relationship between financial literacy, financial attitude and FI, respectively.

The study was assessed using both potential and actual consumers of financial services collectively. However if separately assessed, possibly there would be a variation in perceptions or behavioural responses towards FI.

There is a need to develop and sustain high levels of financial confidence among individuals to enable them use formal financial services.

Possession of financial knowledge, skills, an evaluative judgement with high levels of financial confidence enable individuals make financial decisions that improve their integration into the formal financial system and improved welfare.

The results contribute towards the limited empirical and theoretical evidence regarding the mediating role of FSE in explaining the financial behaviour.