Exploring the Influence of Financial Literacy on Mobile Financial Service Usage: An Ordered Probit Analysis

Abstract

Mobile financial service, an emerging form of financial services that has developed alongside the internet and mobile devices, are becoming increasingly significant in the global financial market. Financial literacy is crucial for safely and effectively using these services, as it equips individuals with the necessary knowledge and skills to navigate the digital financial landscape, make informed decisions, and manage their finances responsibly. This study explores the link between financial literacy and the use of mobile financial services, aiming to promote financial inclusion and help users benefit from mobile banking technologies.  The results indicate that the impact of objective financial literacy varies significantly across different types of mobile financial services. It boosts the utilization of mobile banking services, with coefficient 0.025 (p<0.01), while simultaneously reducing the frequency of mobile payments and transfers, with coefficients -0.041 and -0.012 respectively (p<0.01). The results also show that subjective financial literacy always positively relate to the use of mobile banking, mobile payments and mobile transfers, with coefficients 0.038, 0.044 and 0.03 respectively (p<0.01). Further, this paper investigates how financial literacy miscalibration affects the use of mobile financial services. The results show that individuals who over-evaluated their financial literacy are more likely to use mobile financial services than individuals who under-evaluated or correct-evaluated their financial literacy. The results serve as decisive evidence for policymakers to enhance consumer financial literacy, thereby improving their use of mobile financial services. Future studies could delve deeper into the underlying reasons for the differential impact of objective financial literacy on various MFS types.