Explaining Financial Inclusion: A Critical Realist Theory on the Role of Financial Literacy

• Main Authors: Bernabe, Bryan, Triviño, Jyro B
• Format: text
• Published: Archīum Ateneo 2024
• Subjects: financial inclusion; financial literacy; critical realist theory; positivist theory; policymaking; Business; Finance and Financial Management
• Online Access: https://archium.ateneo.edu/leadership-and-strategy-faculty-pubs/34; https://archium.ateneo.edu/context/leadership-and-strategy-faculty-pubs/article/1033/viewcontent/3_Explaining_Financial_Inclusion_A_Critical_Realist_Theory_on_the_Role_of_Financial_Literacy.pdf
• Institution: Ateneo De Manila University

The impact of financial inclusion on social groups' economic divide is explored in this study, which introduces a critical realist theory underscoring the crucial role of financial literacy elements—behavior, attitude, knowledge, and skills—in promoting financial inclusivity. Initially framing a positivist explanatory theory inspired by Jaccard & Jaccoby's work and existing literature, the study then refines this into a critical realist causal theory using Sayer's established principles. This shift toward a critical realist approach allows for a more comprehensive and sophisticated theoretical evolution. By delving into fundamental causal mechanisms and considering the impact of social structures and context, the critical realist theory presented here offers a deeper comprehension of financial inclusion dynamics. This paper enriches theoretical understanding while proposing practical, evidence-based financial inclusion policies tailored to the distinctive challenges and opportunities within the Philippines. Consequently, it stands as a valuable roadmap for future research endeavors aimed at promoting fair financial access and economic empowerment in the country.