The Influence of Financial Self-efficacy on Financial Inclusion in Tanzania

Abstract

It is argued that financial inclusion is the key motivator for both social and economic development. However, its desirable level is yet to be achieved worldwide due to several factors. The main goal of this paper is to examine the influence of financial self-efficacy on financial inclusion in Tanzania. The study looks into the causal relationship between financial inclusion and financial self-efficacy. Using social cognitive theory (SCT), a cross-section sample of 371 adult individuals from three urban areas of Arusha, Dodoma, and Mwanza in Tanzania was used. Both descriptive and partial least square structural equation modelling (PLS-SEM) analyses are conducted in the study with the support of SPSS and SmartPLS3.0. The results of the study supported the hypothesised direct relationship that financial self-efficacy has a significant positive effect on financial inclusion among adult individuals in Tanzania. The findings showed that financial self-efficacy accounted for more than 44% of the variance in financial inclusion. The results demonstrate that financial inclusion is significantly impacted by financial self-efficacy, which is the inner confidence an individual has in using financial products and services. The findings imply that individuals with high financial self-efficacy are financially included. Thus, financial self-efficacy should be considered when developing policies and strategies aimed at boosting financial inclusion among adult Tanzanians. Overall, the study demonstrates the importance of financial self-efficacy in the quest to increase financial inclusion to the desired level to achieve social and economic welfare globally.