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

Abstract

The study applied a systematic literature review to explore financial literacy variables in microfinance institution (MFI) studies. Using manual content analysis, 73 studies identified variables covered in MFIs' financial literacy literature. The study revealed that the majority of scholars have assessed the role of financial literacy in promoting clients' savings, money and mobile money usage, loan repayment and investment. However, few studies focused on variables such as outreach, budgeting, interest rates and women's empowerment. In most of the reviewed studies, regression data analysis was used. The findings indicate that there is a dearth of MFI studies that use the term "financial literacy" and its sub-variables. Furthermore, there are no studies that have examined how financial literacy impacts MFI performance variables such as sustainability, profitability, efficiency, credit risk management and corporate governance. In addition, there are a few studies that link financial literacy with MFI theories. Generally, the findings indicate that variables related to financial literacy are not adequately covered in MFI studies. The study recommends the formulation of policies that promote financial literacy training for formal and informal MFIs. This is the first comprehensive systematic review to examine financial literacy variables in MFI studies.