Study on the Impact of Financial Literacy of the Rural Population on Microfinance: In Association with the Middeniya East Grama Niladhari Division, Sri Lanka

Abstract

The research focuses on the poverty-stricken rural communities that use the sector's state and commercialized micro-products:

• To empower the people associated with the microfinance sector economically and socially and
• To eradicate poverty in the rural community and raise the standard of living and
• To find out to what extent personal financial literacy has become a decisive factor

The research employed a questionnaire to collect empirical data from 100 households by using random sampling in the Middeniya East Grama Sewa Division, which uses microfinance facilities. Accordingly, personal financial literacy was considered the intrinsic variable, and the efficiency of using financial facilities was used as the extrinsic variable. While reviewing information on personal financial literacy, a lot of data was gathered by presenting questions related to basic financial and advanced basic literacy. Accordingly, a standard multiple regression analysis was carried out to identify the impact of literacy on microfinance affairs. The finding of the multiple regression model was M= -27.7129+ 0.410357L+0.324577AFL. The two intrinsic variables, basic financial literacy and advanced financial literacy showed a corresponding connection related to rural people's micro financial dealings. The performance of utilization of microfinance depends on the person's basic and advanced financial literacy. Accordingly, when basic financial literacy and advanced financial literacy increase, the performance of utilization of microfinance increases.