Exploring Financial Literacy Programmes Delivered by the Sri Lankan Microfinance Institutions: A Case Study Approach

Abstract

According to the Global Financial Literacy Survey done by Standard & Poor's Ratings Services, in 2014 only 35% of adults were financially literate in Sri Lanka. However, Microfinance Institutions (MFIs) were struggling to improve this rate and there is a dearth of research covering this critical area utilizing a qualitative approach. Thus, the purpose of this paper is to focus on the critical, yet an under-researched dimension of Microfinance (MF), the intercession of MFIs in delivering FL to the MF clientele focusing on profiles such as delivering channels, importance, constraints and strategies to address. The multiple case study method was used in this study as the research methodology. The data were gathered from a purposive sample using in-depth interviews. The findings show that channels of delivering Financial Literacy (FL) are Social Mobilization Programmes, seminars, training programmes, community committees, and credit societies, and the importance of delivering FL is; enhancement of human capital, the sustainability of industry and firm, upgrade new venture survival, client protection, social and economic empowerment and development. Further, the barriers to deliver FL; budget, industry competition, in active participation, attitudes of clients, the contribution of inactive regulatory bodies and external barriers were investigated with the strategies adopted in addressing barriers; community awareness, motivational strategies, regulatory framework and cost addressing strategies. These findings contribute to both the knowledge and practice domains. They have implications for policy makers in paying attention to make a financially literate clientele in the MF discipline.

Financial Literacy Variables in Microfinance Institutions studies: A Systematic Literature Review

“…Moreover, it protects financial service users against fraud, abuse vulnerability, bankruptcy and delinquency (OECD, 2005;Lusardi and Mitchell, 2013). Financial knowledge also promotes women's empowerment, clients' livelihood realization, firm sustainability, economic growth and social economic development (Bijli, 2012, Refera et al, 2016Premarathne and Abeysekera, 2020).…”

“…The MFIs worked tirelessly to improve this rate through seminars, training and mobilization of community committees and credit societies. Obstacles faced by the financial literacy programmes in Srilanka were inadequate budget, competition in MFI industry, poor attitudes, poor participation of MFI clients and regulatory bodies' ineffectiveness (Premarathne and Abeysekera, 2020). The MFIs imparted financial literacy to poor clients in India (Vijaykumar and Naidu, 2016;Sayankar and Mali, 2022).…”