Mapping the Linkage Between Financial Literacy and Financial Inclusion: Evaluating the Mediating Effect of Online Banking and the Moderating Effect of Income

In the era of the digital world, the revitalization of poor households' responses to the availability and usage of financial services is essential. Deprived individuals who possess financial literacy are able to make better financial decisions by learning about and comprehending the different financial services that are offered in the market. This research is an attempt to investigate the mediating effect of online banking and the moderating effect of income while mapping linkages between financial literacy and financial inclusion in the context of PMJDY which is a national mission of financial inclusion in India. The primary data acquired from marginalized people having bank accounts under PMJDY via structured questionnaires in Himachal Pradesh (India) were analyzed using a structural equation model combined with bootstrap. The results of the current study shed valuable light on the crucial mediating role of online banking as a driver for financial inclusion through financial literacy for the beneficiaries of PMJDY. Additionally, this study emphasizes understanding the significance of household income in encouraging financial inclusion for marginalized groups. This study identifies crucial predictors of financial inclusion, especially through PMJDY and provides practical implications to assist policymakers in increasing financial services among marginalized populations by leveraging financial literacy and online banking, thereby contributing to broader financial inclusion in India.