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THE STATE BANK OF VIET NAM MINISTRY OF EDUCATION AND TRAINING BANKING UNIVERSITY HO CHI MINH CITY GRADUATION THESIS PHAN ANH KHOA THE IMPACT OF FINANCIAL LITERACY ON FINANCIAL INCLUSION IN VIET NAM Su[.]
THE STATE BANK OF VIET NAM MINISTRY OF EDUCATION AND TRAINING BANKING UNIVERSITY HO CHI MINH CITY GRADUATION THESIS PHAN ANH KHOA THE IMPACT OF FINANCIAL LITERACY ON FINANCIAL INCLUSION IN VIET NAM Supervisor: Assoc Prof PhD HA THI THIEU DAO Ho Chi Minh 2021 COMMITMENT` This thesis is the author's study The research results are honest in that there is no previously published content or other content done by someone else except fully cited citations in the thesis Ho Chi Minh City, 29/09/2021 Khoa Phan Anh Khoa ABSTRACT This thesis explores the impact of financial literacy and financial technology on financial inclusion in the university in Viet Nam It employs a sample of 567 respondents sampled across the regions of Viet Nam from June 2021 to August 2021 Logistic regression was used to analyse of impact of financial literacy on financial inclusion The following empirical findings emanate from this thesis: financial literacy positively and significantly affect financial inclusion The thesis discovers that financial literacy has a significant impact on financial inclusion through owning a bank account Finally, it shows that financial literacy and Fintech has a significant impact on financial inclusion Overall, the findings of the study provide policymakers in Vietnam with recommendations ACKNOWLEDGEMENT I would like to thank my teacher Ha Thi Thieu Dao, Assoc Prof, Ph.D., for supporting me to complete the project successfully I would like to express my gratitude to all my friends who have supported me to share my survey in student groups This research would not have been possible without their support ABSTRACT ACKNOWLEDGEMENT Chapter 1: INTRODUCTION 1.1 Problem Statement 1.2 Objectives 1.2.1 Overall objective 1.2.2 Specific objectives 1.3 Research questions 1.4 Objectives and scope 1.5 Research methodology 1.5.1 Data 1.5.2 Regression method Chapter 2: RESEARCH LITERATURE REVIEW 2.1 Financial inclusion 2.1.1 Definition 2.1.2 Financial inclusion measurement 2.2 Financial literacy 2.2.1 Definition 2.2.2 Financial literacy measurement 10 2.3 Determinants of financial inclusion 11 2.3.1 Financial literacy and financial inclusion 11 2.3.2 Control variables 12 2.4 Summary 19 CHAPTER 3: RESEARCH METHODOLOGY 20 3.1 Research Data 20 3.2 Regression method 20 3.2.1 Binary logistic model 20 3.2.2 Model specification 22 3.3 3.3.1 Testing 25 Omnibus Tests 25 3.3.2 3.4 Hosmer and Lemeshow Test 26 Summary 26 CHAPTER 4: RESULT OF STUDY AND DISCUSSIONS 27 4.1 Descriptive statistics 27 4.1.1 Demographic statistics 27 4.1.2 Financial Inclusion Statistics 29 4.1.3 Financial literacy statistics 30 4.2 Regression results and discussions 31 4.3 Summary 37 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 38 5.1 Conclusions 38 5.2 Recommendations 38 5.3 Limitation and research future 40 REFERENCE 41 APPENDICES 51 LIST OF ABBREVIATIONS Fintech HCM VL LC Financial Technology Ho Chi Minh Vinh Long Lai Chau LIST OF TABLES Table 2.1 Conceptual definitions of financial literacy Table 2.2 Summary of previous research on financial inclusion 16 Table 3.1 Summary of variable in the research 23 Table 4.1 Demographic statitics 28 Table 4.2 Percentage of owning an account 30 Table 4.3 Score of financial literacy 31 Table 4.4 Result of regression of financial inclusion 33 Table 4.5 Probability of owning an account 36 Chapter 1: INTRODUCTION 1.1 Problem Statement In the development of industry 4.0, one of the most vital factors determining the development and growth of the national financial system in the current integration context is financial inclusion Financial inclusion offers many benefits for individuals and businesses to access financial services affordably and conveniently Financial inclusion also helps them have a good view of savings, investment, ability to create assets, and improve quality of life For a developing country like Viet Nam, financial inclusion is increasingly becoming a vital pillar of the country's development Besides that, financial literacy plays an important role in furthering financial inclusion (Grohmann, FKlühs & Menkhoff, 2018) Financial literacy contributes to the improvement of social life, economic development and social well-being To catch up with Industry 4.0's development, many countries have developed and implemented national programs and strategies to improve financial literacy and financial education In this way, financial literacy becomes one of the essential skills for all members of society However, the impact of financial literacy of financial inclusion can be reversed by objective factors Babych, Grigolia & Keshelava (2018) demonstrate that low income levels, lower financial behavior may be in part responsible for low levels of financial inclusion and thus, indirectly, lead to lower levels of financial literacy Several studies in developing countries have also confirmed that better financial literacy is positively associated with participation in financial markets, the use of formal sources of borrowing (Klapper et al., 2017) Despite the benefits of financial literacy, financial illiteracy exists worldwide The full benefits of financial inclusion are difficult to realize because of this phenomenon (Akakpo, 2020) Although financial literacy is an important tool, economic and social barriers to access may need to be overcome before financial literacy can be effective (Lyons, Chang, & Scherpf, 2006) Many studies have been advanced towards the financial literacy and financial inclusion discourse due to the global financial crisis, with an increased emphasis on the role of financial literacy in increasing access to, and use of, financial services (Xu & Zia 2012) For instance, Menon (2019) suggested that financial inclusion must be accompanied by financial literacy in order to achieve the best results Grohmann, Klühs & Menkhoff (2018) emphasized that proving the stylized fact that higher financial literacy is systematically linked to better financial inclusion at the national level Recently, there has been limited research that pulls on finance theory to research whether Fintech can help financial inclusion and the way this might ultimately shed light on the intractable problem of lack of financial literacy However, World Bank support in 2011, 2014 and 2017 provided evidence on the connection between Fintech and financial inclusion However, financial inclusion in Vietnam continues to be limited According to World Bank’s Global Findex (2017), in Viet Nam, only 31% of people have accounts, which is higher than Cambodia (22%) and Lao (29%) and this figure is a warning to the government About 69% of adults in Vietnam are non-banked and therefore dependent on money to buy or sell goods and services.That means that out of Vietnam's 97 million citizens, there are approximately 50 million people, aged 15 and over, relying on cash (World Bank, 2018) The number of deposit accounts with commercial banks in Viet Nam per 1000 adults is approximately 1194,86, which is only higher than Lao (672,47) and Cambodia (376,39) Furthermore, while financial inclusion has improved significantly in other Asian economies, progress in Vietnam appears to be slow Some recent studies have been conducted on how financial literacy can help improve ... sample of 567 respondents sampled across the regions of Viet Nam from June 2021 to August 2021 Logistic regression was used to analyse of impact of financial literacy on financial inclusion The. .. that the impact of financial literacy and financial inclusion plays an important role Lack of financial literacy will lead to ineffective financial decisions What is the impact of financial literacy. .. influences to financial inclusion 1.2.2 Specific objectives — Examining financial literacy impacts on financial inclusion — Exploring level of impact of financial literacy on financial inclusion 1.3