Impact of Financial Literacy, Trust in Financial Institutions, and Technology Adoption on Economic Well-being through Financial Inclusion

Abstract

This study investigates the impact of financial literacy, trust in financial institutions, and technology adoption on economic well-being, with financial inclusion as a mediating variable. Although there have been national programs in India, there is little empirical evidence on how these individual-level factors lead to economic opportunity. Structured questionnaire based data were obtained from 100 respondents in the Coimbatore District of Tamil Nadu and processed through Structural equation modeling (SEM). The measurement model had adequate reliability and validity, and the structural model fitted well (CFI = 1.000, RMSEA = 0.005, SRMR = 0.067). Results reveal that financial literacy (β = 0.321), trust (β = 0.366), and technology adoption (β = 0.655) have a significant positive prediction toward the financial inclusion. Additionally, the economic well-being is much improved where there is high level of financial inclusion (β = 0.546). Importantly, the mediation analysis provides support that financial inclusion is a complete mediator in the relationship between these three antecedent variables and economic well-being. These findings underscore that technology adoption is the strongest driver of inclusion. The study concludes that policies aimed at improving economic resilience must integrate digital infrastructure development with financial education and trust-building initiatives to foster effective financial inclusion.