Socio-economic empowerment in rural India: Do financial inclusion and literacy matters?

Abstract Financial literacy as a major catalyst in the area of inclusive growth has obtained utmost prevalence, based on which this study intended to analyze the role of financial literacy in ensuring financial inclusion which further enhances socio-economic empowerment in rural areas of Karnataka, India. In order to conduct the study 398 responses (i.e. 93% response rate) were collected through comprehensive questionnaire which was then analyzed using SPSS 26 and SPSS AMOS 23 software, as SEM (Structural Equation Modeling) was used to evaluate the proposed conceptual model, as well as two-way ANOVA to analyze the demographic effect on the components. The study outcome confirmed that financial inclusion is highly affected by the financial literacy of a rural community in a direct way; but when they can take effective financial decision and are responsible in financial behavior, they tend to show more financial inclusion which has contributed to their socio-economic empowerment. Realizing the dominant role of financial literacy one of the key policy implications of this article is that the Indian government may begin spending considerable amounts of money to promote financial literacy, which can significantly expand financial inclusion. Furthermore, measures might be taken to discover the gaps in digital financial transaction (online and mobile banking) where the Government of India should be aggressive in building the infrastructure for financial inclusion, which would aid in the socio-economic growth of the rural people.


Background
In many rural areas, cash is still the preferred mode of transaction, and savings are often kept in the form of physical assets like gold or land (Matin et al., 2002;Zelizer, 2021). However, with the advent of digital financial services and the government's push for financial inclusion, there has been a gradual shift towards more formal financial management practices (Cohen & Nelson, 2011). One of the key challenges in rural financial management is the lack of financial literacy and awareness (Arora, 2016). Many individuals in rural areas have limited knowledge about basic financial concepts like interest rates, inflation, and risk management. This often leads to a lack of trust in formal financial institutions, as well as a preference for informal moneylenders who charge exorbitant interest rates (Lusardi & Mitchell, 2011). The seasonal nature of rural income can make it difficult to manage finances effectively. Many rural households rely on agriculture or other seasonal occupations, which can result in fluctuating income levels throughout the year. This can make it challenging to plan for the future and save for emergencies (Parvin et al., 2016).
Over the last few years, financial inclusion has gained due eminence for sustainable growth throughout the globe (Sarma & Pais, 2008;Twumasi et al., 2022). Contemplating to which World Bank in the report of McKinsey demonstrated that amelioration of financial inclusion can positively contribute to a developing country's GDP by 3.7 trillion dollars or six percent before 2025. Furthermore, to encourage financial inclusion 67% of the bank regulators have been targeted in 143 jurisdictions as per the World Bank report (T. T. H. Nguyen, 2021). Regarding financial inclusion, the major concern is for the rural communities of developing nations as there is huge social inequality between rural and urban counterparts, as the urban population is four times wealthier than the rural population (Cooke et al., 2016;Twumasi et al., 2022). Hence, an additional measure to expand the scope of financial inclusion has been undertaken on a large scale, especially in developing countries where, out of 1.7 billion people 9/10 of the world population is not associated with financial institutions (Demirgüç-Kunt et al., 2020;Twumasi et al., 2022). Moreover, D. Thomas (1999) and Case et al. (2002) argued that rural people with the rich background are well-versed in good health, education, entrepreneurial competencies, and risk mitigation ability due to higher income; consequently, improved income eliminates poverty in the rural region and enhances economic prosperity (Atkinson, 2017). Whereas, Rural population with the least wealth composition is not privileged to possess a large number of funds with the low capability to do financial planning due to the high vulnerability and volatility of their income (Beck et al., 2007); thus, these community demands financial literacy for a better financial decision making with zero expense ratio; Accordingly, higher financial literacy induces to higher saving habits, better decision making on their finances which aids to diversified savings as well as insurance (Gaisina & Kaidarova, 2017). Yet, OECD (2017) notes that despite the widespread implementation of financial literacy initiatives, literacy on finance is extensively low among the underprivileged populations living in emerging nations. Therefore, assuming financial literacy as an optimal solution, this study attempts to critically examine the role of financial literacy in socio-economic empowerment through financial inclusion by considering the mediating role of financial decision-making and financial management behavior to give a new direction to the existing research concerning financial literacy and inclusion.
Financial management and behavior in rural India are shaped by a range of factors, including income levels, education, cultural norms, and access to financial services (Demirguc-Kunt & Klapper, 2013). While there are still many challenges to be addressed, there have been significant efforts to improve financial inclusion and education in rural areas, which are expected to result in long-term benefits for individuals and the wider economy (Ozili, 2018). Considering these wider issues and challenges, current research is intended to identify how socio-economic empowerment can be made with the help of financial inclusion, financial decision and behavior (Mader, 2018). The paper has been structured beginning with an introduction by explaining the background of the study, followed by a literature review has presented. The methodology illustrated the research design and samples. Further, the result and discussion are presented with suitable explanations and interpretations. The study concluded with suitable practical and theoretical implications by notifying its limitation.

Related works and hypotheses formulation
In order to conduct extensive literature review, the researcher used many keywords such as "financial inclusion", "financial literacy", "financial management behavior", "financial decision making", "socioeconomic empowerment", "financial literacy OR financial decision making", "financial literacy OR financial management behaviour", "financial decision making OR financial inclusion", "financial management behavior OR financial inclusion" and "financial inclusion OR socio-economic empowerment' to search for relevant literature in Google Scholar, Scopus Journals, and PubMed. The researcher downloaded 64 publications and then categorized them according to their objectives in order to determine the study variables. Four categories have been used to categorize the literature review in order to determine how one variable affects another consisting of i) Financial literacy and financial inclusion, ii) Mediating role of financial decision-making between financial literacy and financial inclusion, iii) Mediating role of Financial Behavior between Financial Literacy and Financial Inclusion and iv) Financial Inclusion and Socio-Economic Empowerment.

Financial literacy and financial inclusion
According to Remund (2010), financial literacy is a measurement of a person's understanding of fundamental financial concepts and their confidence in their capacity to manage their own money via smart, long-term financial planning and appropriate, short-term decision-making. Moreover, financial inclusion is an "access for individuals to suitable financial goods and services" (Aduda & Kalunda, 2012). The idea of achieving full financial inclusion entails giving every family access to a range of contemporary financial services, such as savings, credit, insurance, and payments, as well as enough education and assistance to enable users to make informed choices (Goland et al., 2010). As far as measuring financial inclusion is concerned, it can be quantified using four lenses in order of importance of complexity. Firstly, "access" which refers to the capacity to use formal institutions' accessible financial services and products. Secondly, there is quality, which refers to the appropriateness of the financial product or service to the consumer's lifestyle demands. Third, use should go beyond the fundamental acceptance of banking services and focus on the long-term and in-depth use of financial services and products. Finally, there is effect, which involves assessing changes in customers' lives that may be ascribed to the use of a financial gadget or service (Serrao & Sequeira, 2012). Thus, financial inclusion, measured as access to and use of financial services, is an important goal of economic and, in particular, financial development; accordingly it has been argued to be an important policy tool that can help to achieve the Sustainable Development Goals (SDGs) (Klapper et al., 2016). With this regard, lack of financial literacy may make it upsetting for someone to use financial services like holding a savings account, utilizing credit, and trading stocks (Andoh et al., 2015;Ankrah Twumasi et al., 2019;Frost et al., 2018;Okello et al., 2020;M. Rooij et al., 2011;N. Xu et al., 2020). In 2015, the World Bank, in collaboration with commercial and public sector partners, established an ambitious goal of achieving UFA by 2020 and promoting financial inclusion. The World Bank and the International Financial Corporation (IFC) have pledged to provide 1 billion individuals with access to a transaction account through targeted actions (World Bank, 2018). Improved access to a transaction account (including mobile money) has been regarded as the first step toward broader financial inclusion, which would include credit, ownership and use of financial products (i.e. credit and debit cards, ATMs, e-banking, etc.), insurance products, remittance receipts, and other indicators unique to some countries (World Bank, 2018). However, lack of financial inclusion is still a widespread issue. According to Findex statistics from 2014, 2 billion adults are unbanked; this figure reduced to 1.7 billion in 2017, representing about 40% of adults worldwide (Demirguc-Kunt et al., 2015;Demirgüç-Kunt et al., 2020). A number of studies have indicated that FL greatly enhances FI, providing evidence to justify the World Bank's choice to use Financial Literacy (A. Atkinson & F.-A. Messy, 2013;Klapper et al., 2013). Pondering on which the study done by Akakpo et al. (2022) found a favorable and significant correlation between account ownership and financial literacy. This suggests that financial literacy boosts financial inclusion because those who are financially literate are more likely to own accounts, which is the most fundamental type of financial inclusion. Hence, financial inclusion is influenced favorably by financial literacy.
The above discussion gives a direction to formulate the below hypothesis.

H1: Financial literacy has a significant positive effect on financial inclusion
Apart from that, numerous researches have looked into the factors that affect financial inclusion, where, Demirguc-Kunt and  discovered that variations in income among 148 countries and between people within these countries had an impact on the degree of financial inclusion. They did this by using the Global Findex database of the World Bank. Based on data for 123 countries, Allen et al. (2015) highlighted the significance of income and education in predicting ownership of a bank account and saving into a bank account. Using data from India, Ghosh and Vinod (2017) demonstrate that women are more likely to experience financial exclusion. The socioeconomic characteristics, area of a nation, bank network development, and marital status are other variables that may have an impact on financial inclusion (Davutyan & Öztürkkal, 2016). This justifies the influence of various demographic factors on financial inclusion.

Mediating role of financial decision-making between financial literacy and financial inclusion
Financial literacy, or the capacity to comprehend financial concerns and to act on that information, leads to better financial decisions (Vieira, 2012). Financial literacy research primarily focuses on the link between financial literacy and sound financial decision making (see, e.g., Lusardi and Mitchell (2014)) where, Financial literacy refers to a person's understanding of various financial concepts such as the time value of money, financial planning, consumer rights, compound interest, and many others, which enhances one's ability to make sound decisions about investments, savings, taxes, retirement, insurance, and other financial matters (Zakaria et al., 2016). It claims that increased financial literacy leads to better financial decision-making abilities in rural areas. According to the OECD (2009), it is critical for the poor since they live on the edge and are subject to continually negative financial pressures. To make educated judgments, it is vital to educate and empower the poor so that they are aware of and capable of assessing various financial goods and services. Financial literacy benefits low-income households by providing useful advice on alternative activities to follow that will affect their financial decisions and choices (G. O. C. Bongomin et al., 2018). Hence, Financial literacy is the significant factor which enables effective financial decision making with respect to investment (Lusardi & Mitchell, 2014;M. Rooij et al., 2011), retirement plans (Lusardi & Mitchell, 2007), borrowing (Disney & Gathergood, 2012;Huston, 2012), budgeting , keeping emergency savings and cash flow (Hilgert et al., 2003), earning higher portfolio returns (Calvet et al., 2007), involvement in the derivatives markets (Hsiao et al., 2018) and promotes lower financial disputes. On the other hand, insufficient financial literacy raises the cost of mortgages (Moore, 2003), the financial burden of debt (Gathergood, 2012), and other issues as a result of increased debt (Lusardi & Tufano, 2008). Overall, According to research, financial literacy enhances household financial decision-making, which increases savings and financial well-being (Cole et al., 2009). Based on these discussions one can deduce that Access to different financial products and services is influenced by people's capacity for making sound financial decisions. Consequently, financial literacy enables better financial decision making which enables to access and utilize better financial products and services. From the above discussion, it can be stated that financial decision-making has a mediating role between financial literacy and financial inclusion.

H2:
Financial decision-making acts as a mediator in the connection between financial inclusion and financial literacy.

Mediating role of financial behavior between financial literacy and financial inclusion
Financial behaviour is the attitude and actions of an individual to do something related to their finances (Kempson et al., 2017). It can also be described as setting and sticking to a budget, making purchases, borrowing money, investing it, and managing risks (Xiao & Xiao JJ, 2008). Studies on financial management behaviour found its connection with financial literacy (Allen et al., 2015;Andrew & Linawati, 2014;Herawati, 2015;Sabri & Falahati, 2012). It is strongly argued that most people behave better when they have a comparatively greater level of financial knowledge and attitude (Hayhoe et al., 2005;Potrich et al., 2016;Yong et al., 2018;Çera et al., 2021). Moreover, numerous studies have looked at the relationship between financial management behaviour and literacy, but previous papers haven't specifically shown how this affects financial inclusion. It is reported that someone with good financial judgment will act honorably and responsibly, according to (Hilgert et al., 2003;Potrich et al., 2016). Furthermore, Akakpo et al. (2022) in their research on financial behavior's impact on financial inclusion showed that persons with sound investing and saving behaviour are more likely to have access to credit, use their accounts to save, frequently withdraw funds from them, and make payments using those accounts. Particularly, financial knowledge is associated to both long-term and short-term financial behaviour (Civelek et al., 2019;Kalmi, 2018;Moreland, 2018), as people with greater levels of literacy and business-related education are more likely to save money on a regular basis for their own needs (Bel'as et al., 2016;T. A. N. Nguyen et al., 2017). Another study showed how borrowing, saving, and investing are associated with decisions and behaviors which are affected by the level of financial literacy (Lusardi & Mitchell, 2014). Discussions like this point the researcher in the direction of the mediating function that financial management behaviour plays in the connection between financial literacy and financial inclusion. Therefore, it is evident that financial literacy supports financial inclusion, such as savings accumulation (Berry et al., 2018) and wealth accumulation (M. C. J. Rooij et al., 2012). The advantage of these micro-based studies is their clear identification, ensuring that indeed an increase in financial literacy improves financial behavior (e.g (Kaiser & Menkhoff, 2017;Miller et al., 2015).) which further alters financial inclusion. As a result it is clearly evidenced that financial management behavior plays a mediating role between financial literacy and financial inclusion.
H3: Financial Management Behaviour significantly mediates the relationship between financial literacy and financial inclusion.

Social empowerment
The social empowerment of rural people involves the implementation of strategies and initiatives to improve the well-being and opportunities of individuals living in rural areas. It encompasses various aspects such as education, health, employment, gender equality, and community participation. For instance, programs like India's Sarva Shiksha Abhiyan (SSA) aim to provide free and compulsory education to all children in rural areas, with a specific focus on girls and marginalized communities. Similarly, the Village Health Worker program by the World Health Organization trains individuals within rural communities to provide essential healthcare services and raise awareness about health issues. Additionally, initiatives that promote income-generating activities, vocational training, and entrepreneurship, such as the microcredit services offered by the Grameen Bank in Bangladesh, play a crucial role in improving the economic well-being of rural individuals. Empowering rural women through education, skills development, and access to resources is also vital for achieving gender equality and social empowerment, exemplified by organizations like India's Self Employed Women's Association (SEWA). Finally, encouraging community participation in decision-making and local governance through methods like Participatory Rural Appraisal (PRA) helps foster a sense of ownership and empowerment among rural populations.

Economic empowerment
Economic empowerment of rural individuals involves empowering them to have greater control over their economic resources and opportunities, leading to improved livelihoods and economic well-being. This is achieved through initiatives such as providing financial services, promoting entrepreneurship, and enhancing skills for income generation. For instance, microfinance institutions like Grameen Bank in Bangladesh have played a pivotal role in granting microcredit and financial services to rural people, particularly women, enabling them to establish businesses and enhance their economic circumstances (Yunus, 2007). Similarly, the Indian government's National Rural Livelihood Mission (NRLM), which focuses on vocational training and encouraging rural entrepreneurship, has effectively fostered economic empowerment by equipping individuals with the necessary skills and opportunities for generating income (Ministry of Rural Development, 2020). By addressing financial barriers and promoting entrepreneurship, these economic empowerment initiatives contribute to poverty reduction and sustainable development in rural areas.

Financial inclusion and socio-economic empowerment
Numerous supply side variables have been investigated while examining the obstacles to financial inclusion. It is frequently noted that factors like high transaction costs, uncertainty, asymmetric knowledge, or a lack of physical access obstruct the effective use of financial services (Beck et al., 2007;Karlan & Ã, 2010). Therefore, these are supply-side justifications for why conventional banks and other financial organizations would not extend credit or provide customers with savings accounts. According to Klapper et al. (2016), removing these obstacles encourages financial inclusion. Thus, increasing access to financial services and encouraging their usage may help to end extreme poverty (Jack & Suri, 2014). For instance, Nandru et al. (2021) found that if rural families, in particular farmers, have access to banking services and products, they may boost farm revenue through increased agricultural productivity. Cooperatives are essential in this context. According to research, financial inclusion through cooperatives enables disadvantaged groups to combat poverty and advance inclusive development, which leads to socioeconomic empowerment, economic growth, poverty reduction, and social inclusion (Mir et al., 2014;Shabna Mol, 2014;Ugbajah & Nenna, 2014;Vinit, 2014). Additionally, it gives repressed individuals in rural regions the opportunity to become financially independent, selfsufficient, and actively involved in the development process (Coon & Leistritz, 2012). In addition to financial capital, other capitals such as physical assets (roads, buildings, equipment and machinery, and infrastructural facilities), human capital (skills, competencies, education, and health, etc.), and natural capital (land, water, forests, farm animals, and other natural resources) should also be taken into account when examining the issue of financial inclusion (Lal, 2019). Access to financial goods and services that are expressly targeted towards the rural poor may considerably benefit the socioeconomic development of a rural population, which ultimately leads in a decrease in poverty (Pradhan et al., 2021). Hence, it is strongly argued that greater financial inclusion can reduce rural poverty (Burgess & Pande, 2005), boost employment (Bruhn & Love, 2014), and increase savings (Brune et al., 2015). Better financial inclusion can therefore have welfare consequences that go beyond financial gains to the actual economy. Moreover, Blanco (2013) illustrates the effect of FI on economic development using data from 16 nations spanning the years 1961 to 2010. According to Blanco, high-income countries have a far greater effect of FI on Economic development than low-income countries. Hence, Concern should be expressed about Financial Exclusion (FE). Numerous research at various academic levels support the idea that beside major role played by the financial inclusion in reducing the poverty it also highly promotes inclusive prosperity with economic development (Abrar-Ul-Haq, 2016;Bhave, 2014;Blanco, 2013;GFDR, 2014;Sehrawat & Giri, 2016;Toindepi, 2016). A sound financial system is a fundamental tool for offering a wide range of banking services, such as credit, payments, savings, and insurance products, to a sizable portion of the population (Demirguc-Kunt & . Supporting to which the previous studies conducted in Ghana such as (Andoh et al., 2015;Atakora, 2013;Koomson et al., 2020;Twumasi et al., 2020) suggested that Financial inclusion and financial literacy are the major catalyst in enhancing rural growth. However, A. Atkinson and F.-A. Messy (2013) contend that by preventing poor people from fully utilizing already-existing products, access hurdles are created due to a illiteracy, ignorance, lack of self-realization, and inadequate managing habits and conduct that results into diminished utilization of financial products and services (G. O. C. Bongomin et al., 2016a). In addition to that, finance-growth theory indicates that financial development fosters economic expansion through a "supply leading" or "demand following" influence. Theories also hold that a major cause of ongoing economic disparity and slower growth is a lack of access to financing. Since income disparities and poverty must be reduced in order to accelerate growth and create equal opportunities for those who are economically and socially excluded, access to safe, simple, and affordable sources of finance is now understood to be a necessary prerequisite. This enables these individuals to better integrate into the economy, actively contribute to its growth, and protect themselves from economic shocks (Serrao & Sequeira, 2012). As per the previous studies it is witnessed that financial literacy is very vital.

H4: Financial inclusion has a direct positive effect on socioeconomic empowerment.
Based on the literature review, theories, and hypotheses, the researchers developed a conceptual model (Figure 1) that depicts the direct impact of financial literacy on financial inclusion, as well as the significant role of financial literacy in determining financial decision-making and financial management behavior. Effective financial decision-making and management behavior, in turn, contribute to financial inclusion. Additionally, financial inclusion has a direct impact on socioeconomic empowerment, which encompasses various constructs related to education, finance, employment, social welfare, and health.
With the aid of a measurement model and confirmatory factor analysis, these factors were further verified along with validity and reliability test. Structural equation modeling was used to further analyze the structural links between the aspects of financial literacy, financial decisionmaking, financial management behaviour, financial inclusion, and socio-economic empowerment.

Sources of information
The current study uses both descriptive and inferential analysis to answer the research questions and is both descriptive and explanatory in nature. Both primary and secondary data were employed in the current study to achieve the study's goal and numerous objectives. Through a questionnaire, the primary data were gathered from rural clients with at least one bank account. Furthermore, Books, journals, articles, organizational reports, planning and statistical department annual drafts, RBI reports, periodicals, and the internet were used to gather secondary data.

Population and sample
The study focused on the rural population of Karnataka, India, selecting the top 10 most populated districts for data collection. These districts included Belgaum, Tumkur, Mysore, Gulbarga, Bijapur, Chitradurga, Davangere, Bidar, Haveri, and Dakshina Kannada, with a total population of 35,67,739, 20,78,665, 17,56,412, 17,31,298, 16,74,311, 13,32,012, and 13,17,816, respectively, as per census data from 2011. The sample size was determined using the Taro Yamane formula, which indicated a minimum of 385 rural households with a confidence level of 95%. In this study, 428 questionnaires were distributed and total 398 samples were collected, representing a response rate of 93%. Of these, 327 households held BPL cards, while the remaining 71 held APL cards. The sample population included 10 districts, which were selected based on having the  Here, we divided whole population into districts (strata), then selected eight districts randomly. Within district we followed proportionate sampling to determine sample size in the district and convenient sampling technique to distribute questionnaire. Primary data was collected from rural households using a structured questionnaire with standardized parameters. The reliability and validity of the questionnaire were checked using Cronbach alpha and composite reliability, while content validity, correlation, convergent, and discriminant validity were used to check its validity. The various measurements used in the study were based on existing literature.

Data collection instrument
Constructing a questionnaire that incorporates various constructs is a critical stage because the results will rely on the selected measurement scales and constructs, which must be supported by evidence from previous studies or focused group interviews. In this study, the questionnaire was developed with several constructs that were built based on supportive articles, including demographic details, basic financial literacy, advanced financial literacy, financial decision-making, financial management behavior, financial inclusion, and socio-economic empowerment (comprising education, finance, social welfare, employment, and health) and were depicted in Table 1. The variables were assessed using a five-point Likert scale, ranging from 1 (Strongly Disagree) to 5 (Strongly Agree). Afterwards, a score was calculated for each variable. If the mean score is below 2, it indicates a very low level of empowerment among respondents. Mean scores between 2.1 and 3 suggest a low level of empowerment. A mean score between 3.1 and 4 indicates a high level of empowerment, while a mean score above 4.1 signifies a very high level of empowerment.

Pretesting
As part of the process of validating the research instruments, the questionnaire was reviewed by five research scholars, banking professionals, and two subject matter experts. Based on their feedback, the research instrument was modified and then distributed to additional subject matter experts in statistics, banking, and basic finance. To finalize the questionnaire and its various measurement scales, it was important to examine the reliability of the data. Therefore, a pilot study was conducted among 50 rural customers in the Dakshina Kannada region, and the obtained data were subjected to reliability and validity testing. This process was essential to ensure that the questionnaire was a valid and reliable tool for collecting data for the research study. Table 2 provides reliability, convergent and discriminant validity testing values.
The table presents the results of the Cronbach Alpha Test for Reliability conducted on seven constructs using the research instruments. This test is used to check the internal consistency of the data and the study is considered reliable if the alpha value is greater than 0.70. As all the constructs have alpha values above this threshold, all the items in the questionnaire can be retained. This indicates that the indicators and latent factor of the model can be used to build the structural model and test the hypothesis. Validity testing is crucial to ensure that the test accurately measures what it is intended to measure. The table also shows that all the metric

Correlation analysis
The main purpose of this paper is to test the interaction effect of perception in the relationship between financial literacy, financial decision making, financial management behaviour, financial inclusion and socio-economic empowerment of the rural community in India. Michael and Bustelo (1986) D4 set three cases for testing existence of interaction/moderation effect. Therefore, the existence of relationships between the variables should be established through correlation and regression analyses (see Michael & Bustelo, 1986). Pearson's correlation analysis was performed to establish the relationships and effects of moderator and independent variables on dependent variables.
As per the correlation results, Financial literacy is highly associated with Financial decision making (r = .746**) indicating positive significant relationship, it also has a correlation with Financial Management Behaviour (r = .675**), Financial Inclusion (r = .654**) and Socio-Economic empowerment (r = .592**). Furthermore it was found that Financial Decision Making highly correlates with Financial Management Behaviour (r = .663**) compared to Financial Inclusion (r = .548**) and Socio-Economic empowerment (r = .316**). Similarly, Financial Management Behaviour is highly associated with Financial Inclusion (r = .642**) importantly, financial inclusion has highly significant positive correlation with socio-economic empowerment(r = .545**). Overall, it was found that financial literacy is a major catalyst here, as it has a highly positive significant correlation with all the selected variables.

Assumption testing
In the current investigation, normality was evaluated in two different ways: (1) Graphical method: To visually evaluate the normality of the data, histogram and Box plot were utilized, and the results showed that the data were normally distributed. (2) Numerical approach: The study employs two statistical tests, namely Skewness and Kurtosis, with the aid of the SPSS 23 version in addition to the graphical examination of normalcy. The values of Skewness and Kurtosis were within the respective threshold limits of ± 2 and ± 7 respectively. The data were dispersed normally, as seen by this.
Further the collected data has been analyzed using SPSS 26 and SPSS AMOS 23 software, as SEM (Structural Equation Modeling) was used to evaluate the proposed conceptual model, as well as two-way ANOVA to analyze demographic effect on the components.

Sample profile
According to the study's findings, most poor households (46.2%) belong to the 25-35 age group, while 35.9% belong to the 35-45 age groups. They are divided into 53.5 percent men and 46.5% women. The research also revealed that 27.1% of poor households only have primary education, compared to 34.9% of poor households with high school degrees. Additionally, most rural respondents (86.2%) are married, and the majorities are farmers (24.4%) and daily laborers (21.1%), showing that they work in low-skilled occupations. Furthermore, the results showed that 17.8% of impoverished households have monthly incomes below 10,000 while 40.2% have incomes between 10,000 and 20,000. This demonstrates that most households earn less than 20,000 annually. Most of them save less than 2500 (31.9%) and between 2500 and 5,000. (31.9%). Additionally, the results showed that most respondents (64.1%) are part of joint families, indicating a sizable family. Additionally, the results revealed that most poor households (82.2%) are BPL card holders, indicating that the bulk of the population in rural areas lives below the poverty line.

Descriptive statistics
The findings from the study revealed the following mean scores:

Inferential analysis
Influence of Demographic Factors on Financial Literacy, Financial inclusion, financial decisionmaking, financial management behaviour, financial inclusion, and socio-economic empowerment analyzed using two-way ANOVA. The test has examined the effect of Age, Gender, Marital Status, Education, Occupation, Income, savings, Type of Family, and Ration card on the financial literacy of rural customers. Education (F = 5.284, p = .000) and occupation (F = 1.974, p = .042) has a statistically significant effect on the financial literacy of rural customer. As far as the influence of demographic factors on financial decision-making is concerned results witnessed that demographic factors of the rural customers do not affect their financial decision-making with the Adjusted R Square of .033. In the case of financial management behaviour, education has a statistically significant influence on financial management behaviour (F = 8.149, p = .000). However financial inclusion seems to be influenced by the majority of the demographic factors of rural customers; particularly Gender (F = 3.192, p = .049), Education (F = 11.584, p = .000), Occupation (F = 2.701, p = .021), Income (F = 3.317, p = .011), Family (F = 3.385, p = .047), type of ration card (F = 4.349, p = .038) has a statistically significant influence on financial inclusion with the Adjusted R Square is.218; Moreover, two-way ANOVA described the influence of rural customers' demographic factors on their socio-economic empowerment, which demonstrated that Age (F = 2.674, p = .047), Education (F = 4.609, p = .000), Income (F = 2.903, p = .022) and type of Ration card (F = 9.423, p = .002) highly and significantly impacts socio-economic empowerment of the rural customers with the Adjusted R Square of .116. Overall, it can be stated that financial inclusion and socio-economic empowerment is highly influenced by the demographic details of rural banking customers.

Structural equation model
To test the evidenced hypothesis the study acquired structural equation modeling demonstrating the effect of one variable on the other. To simplify, the relationship structural models have been framed and they are discussed below; Contribution of financial literacy on financial inclusion leading to socio-economic empowerment through various mediating variables. The goodness of fit of the proposed model can be confirmed through the recommended value given by D. Thomas (1999); Goland et al., 2010), and Lusardi and Tufano (2008). The obtained value of the model showed satisfactory results as the x 2 value is above 0.05 (i.e. 0.079); x 2 /df falls between 2 and 5.0 (i.e 2.382); GFI is above .90 (i.e. .902); AGFI exceeds 0.80 (i.e. 0.866) and NFI is above .90 (i.e. .917). Moreover, RMSEA was also found to be satisfactory as the obtained value is less than 0.05 (i.e. 0.037). Hence, the obtained value confirms the goodness of fit of the proposed model. Therefore to test the evidenced hypothesis structural equation modeling can be undertaken by demonstrating the effect of one variable on the other.

Contribution of financial literacy on financial inclusion leading to socio-economic empowerment through various mediating variables
Because it was found that the model fit indices were within the permitted ranges. Figure 2 depicts the structural relationships as one-sided arrows (hypothesized paths between the constructs). P values were extremely significant (P .001) for most of the hypothesized correlations. As per the results in Table 3, it is proved that financial literacy has a significant direct effect on financial inclusion with an estimated value of .258 (H1). Secondly, financial literacy also has a highly significant impact on financial decision-making (E = .842, P < .001), which shows that increase in financial literacy leads to an increase in financial decision-making.
Similarly, Cole et al. (2009) have also stated that financial decision-making is enhanced due to a better financial literacy level which consequently enhances saving habits and overall well-being of the citizens. This financial decision making highly and significantly contributes to financial inclusion (E = .176, P < .001) demonstrating increase in financial decision-making leads to more financial inclusion. Furthermore, financial literacy is highly and significantly contributing to financial management behaviour (E = .735, P < .001) indicating hike in financial literacy leading to increase in financial management behaviour. This financial management behaviour among rural community directly contributes to financial inclusion (E = .499, P < .001). Lastly and importantly financial inclusion through these mediation shows its impact on various dimensions of socio-economic empowerment in the above

Mediation analysis
To analyze the mediation effect of financial decision-making and financial management behavior, the indirect impact of financial literacy on financial inclusion has been assessed and result shown in Table 4.

H2:
The relationship between financial inclusion and financial literacy is mediated by financial decision-making.
Financial decision-making as a mediator between financial literacy and financial inclusion can be measured through standardized estimates. As per the result shown in Table 5, the total effect of the model is highly significant with an estimate of .773. Moreover, financial literacy has a direct positive impact on financial inclusion (Estimate=.480, p = 0.000). Contemplating the indirect effect, it is strongly evidenced that financial decision-making acts as a mediator between financial literacy and financial inclusion (Estimate=.293, p = 0.000) indicating a more direct effect compared to the indirect effect. Consequently, it can be inferred that financial decision-making mediates the relationship between financial literacy and financial inclusion. Therefore, H2 holds true.

H3:
The relationship between financial inclusion and financial literacy is mediated by financial management behaviour.
Standardized estimates were calculated to test this hypothesis which can be used to gauge financial management behaviour as a mediator between financial inclusion and literacy. As per the result, the total effect of the model is highly significant with an estimate of .773. Moreover, financial literacy has a direct positive effect on financial inclusion (Estimate=.367, p = 0.000).
Considering the indirect effect it is strongly witnessed that financial management behaviour acts as a mediator between financial literacy and financial inclusion (Estimate=.406, p = 0.000) indicating the highest mediating effect compared to the direct effect. The association between financial literacy and financial inclusion can therefore be deduced to be moderated by financial management behaviour. H3 is therefore true.
Considering the two mediators, financial management shows a high mediation effect between financial literacy and financial inclusion in comparison with financial decision-making. However, both have highly significant mediation effects in the relationship between financial literacy and financial inclusion.

Discussion
The present research was an attempt towards examining the effectiveness of financial literacy in influencing financial inclusion which in turn enhances the socio-economic empowerment of rural banking customers. There are various studies conducted in the near past while assessing the impact of financial literacy on financial inclusion such as (G. O. C. Bongomin et al., 2016a;Dam & Hotwani, 2018;Hasan et al., 2018) and also there are various articles assessing the influence of financial inclusion on social and economic development of backward sections such as (Koomson et al., 2020;Lal, 2019;Nandru et al., 2021;Rastogi & E, 2018) but this study made an attempt to analyze the contribution of financial literacy leading to financial decision making, better financial management behaviour which in turn have a positive contribution towards financial inclusion ensuring socio-economic empowerment. The results of the study indicated a high positive association of Financial literacy with Financial decision-making (r = .746**) it also has a correlation with Financial Management Behaviour, Financial Inclusion and Socio-Economic empowerment. Furthermore, Education and occupation have a statistically significant effect on the financial literacy of rural customers; the study conducted by Kaufmann (1984) also found that the financial knowledge of the person varies with their educational qualification. Similarly, education also has a statistically significant influence on financial management behaviour (F = 8.149, p = .000). Furthermore it was found that Gender, Education, Occupation, Income, Family and type of ration card have a statistically significant influence on financial inclusion; this result affirms with the previous studies such as (Nandru et al., 2021) stating the impact of education and income levels on the owing bank account. Socioeconomic empowerment of rural customers is also influenced by the demographic variables with special reference to Age, Education, Income, and type of Ration card which is supported by the idea of previous researchers such as (A. Atkinson & Messy, ;Cole et al., 2009;M. Rooij et al., 2011;Stango & Zinman, 2009;L. Xu & Zia, 2012). G. O. C. Bongomin et al. (2016a) have argued that financial literacy has an impact on financial inclusion in support of this the study result also showed that financial literacy has a significant direct effect on financial inclusion (E = .258, P < .001). The study also found that financial literacy also leads to better financial decision making ensuring financial inclusion. It states that better financial literacy better will be the financial decision-making ability of rural where Okello et al. (2020) states that financial literacy is crucial for the poor because they have trouble making financial decisions that could have a big impact on their lives. Moreover, Cole et al. (2009), report that financial literacy enhances the financial decision-making of households, which in turn increases savings and well-being which is in support of our result. Financial literacy also enhances financial management behaviour which ensures financial inclusion; a similar result was witnessed by (Çera et al., 2021;Potocki & Cierpiał-Wolan, 2019;Xiao et al., 2014) stating financial behaviour as the major catalyst towards financial capabilities. Lastly and importantly the outcome of the study showed that financial inclusion through this mediation shows its impact on various dimensions of socio-economic empowerment illustrating its direct positive effect on Educational, Financial, Economical, Employment, and Health dimensions of socio-economic empowerment except social indicators. This implies that an increase in financial inclusion through financial literacy and various mediators improves the Educational, Financial, Economical, Employment, and Health conditions of the rural community in India. These results are consistent with earlier research which depicted that financial literacy increased understanding of the financial market and encouraged the use of financial services and products (Andoh et al., 2015;A. Thomas & Spataro, 2018;N. Xu et al., 2020) which in turn, affects household wellbeing and economic growth positively (Churchill & Marisetty, 2020;Kabakova & Plaksenkov, 2018;Kumari & Ferdous Azam, 2019;Nandru et al., 2021).

Conclusion
The main intention of this study was to examine the effect of financial literacy on financial inclusion through various mediators and to assess how it would affect the overall socio-economic empowerment of the rural community in Karnataka, India. Where the results showed that financial literacy has a strong direct effect on financial inclusion, furthermore it also has a strong influence on financial decision-making and financial management behavior leading to financial inclusion. Moreover, examining its effect on socio-economic empowerment also showed that financial inclusion has a dominant role in enhancing socio-economic empowerment. Financial literacy has a huge impact on the poor's financial inclusion in rural areas. Indeed, financial literacy enables the poor to make sound financial judgments and choices before engaging in sophisticated financial services and products offered by official financial institutions. it is important for the poor because they live on the edge and are subject to ongoing downward financial pressures. Financial literacy is the ability to evaluate various financial goods and services in order to make educated decisions that result in maximum utility and, ultimately, savings and wellbeing. Finally, financially included people are socially and economically empowered. Based on this study it can be concluded that financial literacy must be aggressively promoted to ensure better financial decision-making and managing habits among the rural community for inclusive and sustainable growth directed towards balanced regional development.

Practical implications
There are several practical solutions that can be implemented to enhance the socio-economic empowerment of rural communities through financial inclusion. The use of digital financial services, such as mobile banking and digital payment systems, can greatly enhance financial inclusion in rural areas. These services can enable rural communities to access financial services from anywhere, including remote areas, and can reduce the need for physical bank branches. In addition, digital financial services can facilitate the transfer of funds and payments for goods and services, enabling rural communities to engage in commerce and access a wider range of products and services. Similarly, effective establishment of micro finance could contribute better financial empowerment. Microfinance institutions provide small loans to underserved populations, including rural communities. These loans can be used for a variety of purposes, such as starting or expanding small businesses, purchasing agricultural inputs, or meeting emergency expenses. Microfinance institutions often require minimal collateral and are more accessible to rural communities than traditional banks. Further, financial education programs can improve financial literacy and increase awareness of financial services and products in rural communities. Such programs can provide rural communities with knowledge and skills required to make informed financial decisions, budgeting and savings, investment, credit management and other basic financial concepts. Finally, government intervention in promoting financial inclusion can take many forms, including subsidies for the establishment of rural banks or the provision of grants to microfinance institutions, tax incentives for the expansion of financial services in rural areas, and regulatory measures to promote the use of digital financial services.

Limitation of the study
The limitation of the study lies in its narrow focus on the two factors of financial inclusion and literacy as determinants of rural socio-economic empowerment. While financial inclusion and literacy are undoubtedly crucial components in promoting socio-economic progress, they do not encompass the entirety of the complex challenges faced by rural communities in India. Other influential factors, such as infrastructure development, access to quality healthcare and education, gender equality, agricultural productivity, and government policies, also play significant roles in shaping rural empowerment. Therefore, this study fails to capture the multifaceted nature of rural socio-economic empowerment and may overlook important dimensions that contribute to the overall well-being of rural populations in India.