The Mediating Effect of Financial Literacy and the Moderating Role of Social Capital in the Relationship between Financial Inclusion and Sustainable Development in Cameroon

Abstract

Financial inclusion has a wide range of positive effects on sustainable development, but studies indicate a lack of awareness about financial services in the large group of financially excluded individuals within the economy. This paper examines the mediating effects of financial literacy and the moderating role of social capital on the relationship between financial inclusion and sustainable development in Cameroon. A PLS-SEM model was used with 488 collected samples as empirical data from the residents of the Douala and Buea municipalities in Cameroon through a questionnaire survey. Financial inclusion was found to be positive and significantly related to financial literacy, and to have a positive and significant impact on sustainable development. Financial literacy and social capital positively and significantly affect sustainable development in Cameroon. However, financial literacy mediates, while social capital does not moderate the relationship between financial inclusion and sustainable development. The mediation is complementary because both the direct and indirect relationships are significant. The findings and contributions of this study provide useful insights and practical implications for financial institutions and governments, especially in developing countries. It provides empirical evidence and a better understanding of the link between financial inclusion and sustainable development, and the mediating effects and moderating role of financial literacy and social capital.