Determinants of Digital Financial Inclusion in Enhancing Financial Well-being Among Poor Households: Evidence from Malaysia

Ming Pey Lu; Zunarni Kosim; Yong Kang Cheah

doi:10.22146/gamaijb.v28i1.17993

Ming Pey Lu School of Economics, Finance and Banking; Co-operative and Entrepreneurship Development Institute (CEDI), Universiti Utara Malaysia
Zunarni Kosim School of Economics, Finance and Banking, Universiti Utara Malaysia
Yong Kang Cheah School of Economics, Finance and Banking, Universiti Utara Malaysia

DOI: https://doi.org/10.22146/gamaijb.v28i1.17993

Keywords: Digital financial inclusion, poor households, financial wellbeing, Malaysia, SDG1: no poverty

Abstract

This study examines the factors influencing financial well-being and investigates the mediating role of digital financial inclusion among households with incomes below the national poverty line in Malaysia. The study used Partial Least Squares Structural Equation Modelling (PLS-SEM) and Importance-Performance Map Analysis (IPMA) to estimate the results. This study collected 1,171 responses and found that digital literacy, digital financial service infrastructure, and financial service providers were determining factors of digital financial inclusion. Financial service providers and digital financial inclusion showed a significant relationship with financial well-being. Mediation analysis showed that digital literacy, digital financial service infrastructure, and financial service providers indirectly affected financial well-being through digital financial inclusion. The results of the IPMA showed that financial service providers and digital financial inclusion were the most important factors in achieving financial well-being. Furthermore, financial service providers were the key factor of digital financial inclusion in high-poverty states, while digital literacy was a key factor in moderate- and low-poverty states. The study offers insights for policymakers working towards an inclusive society and provides financial service providers with information to design services that meet the needs of poor households. This study also offers important implications for other developing countries in Southeast Asia that share similar socio-economic and digital challenges.

Author Biographies

Ming Pey Lu, School of Economics, Finance and Banking; Co-operative and Entrepreneurship Development Institute (CEDI), Universiti Utara Malaysia

Lu, Ming-Pey holds the position of Senior Lecturer at the School of Economics, Finance and Banking, Universiti Utara Malaysia. She earned a Bachelor of Business Administration (Finance) in 2006 from Universiti Malaya, a Master of Science (Banking) in 2010 from Universiti Utara Malaysia, and a Ph.D. in Finance in 2017 from Universiti Sains Malaysia. Her research interests include banking, financial economics, and capital markets. She has published in Business Strategy and Development, Journal of Financial Services Marketing, Journal Ekonomi Malaysia, International Journal of Business and Society, and International Journal of Banking and Finance. Author’s contact detail: Email: lu.ming.pey@uum.edu.my

Zunarni Kosim, School of Economics, Finance and Banking, Universiti Utara Malaysia

Kosim, Zunarni holds the position of Senior Lecturer at the School of Economic, Finance and Banking, Universiti Utara Malaysia. She earned her Bachelor of Business Administration (Hons.) (2005) from Universiti Utara Malaysia, her Master of Science (Management) (2009) from Universiti Utara Malaysia, and her Ph.D. in Banking (2017) from Universiti Utara Malaysia. She also holds a Diploma in Business Studies (1992) from UiTM Segamat, Johor. Her research interests include digital financial inclusion, financial well-being, consumer behaviour in financial services, banking performance, corporate finance, household indebtedness, and Islamic wealth accumulation. She has published in reputable journals such as the International Journal of Banking and Finance, Jurnal Ekonomi Malaysia, Journal of Financial Services Marketing, Asian Economic and Financial Review, Investment Management and Financial Innovations, International Journal of Applied Business and Economic Research, International Journal of Academic Research in Business and Social Sciences, and others.
Author’s contact detail: Email: zunarni@uum.edu.my

Yong Kang Cheah, School of Economics, Finance and Banking, Universiti Utara Malaysia

Cheah, Yong Kang is an Associate Professor at the School of Economics, Finance and Banking, Universiti Utara Malaysia. He earned a Bachelor of Social Sciences (Economics) in 2009 and a Master of Economic Management from Universiti Sains Malaysia in 2010, and his Ph.D. in Health Economics from Universiti Malaya in 2014. He was a Visiting Scholar at the Center for Health and the Social Sciences, the University of Chicago. His research focuses on public health, specifically health behaviors, health economics, mental health, and adolescent health. In addition, Yong Kang has expertise in the analysis of survey data. He has published in Socio-Economic Planning Sciences, Asian Economic Journal, and Social Science Journal.
Author’s contact detail: Email: yong@uum.edu.my

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