The Effect of Financial Literacy on Financial Growth Among Microfinance Clients

Abstract

Purpose: The purpose of this paper is to examines the effect of financial literacy on financial growth among microfinance clients in Manyu Division, Cameroon. Design/Methodology/Approach: It employed a descriptive and causal-comparative research design and deductive approach. This study gathered primary data from 412 micro finance clients in Manyu Division, Cameroon, using a Likert scale questionnaire and non-probability convenience sampling. Descriptive analysis, Pearson correlation and multiple linear regression models were applied to examine the role of financial literacy on financial growth among microfinance clients in Manyu Division. Findings: The findings indicate that the independent variables accounted for 63.75 percent of the variation in the dependent variable, demonstrating a significant link between financial literacy and financial growth. The results showed that all independent variables played a significant role in driving financial growth and influencing the financial development of microfinance members. Each independent variable demonstrated a positive relationship with the dependent variable. Specifically, financial knowledge, financial behaviour, and financial planning concluded a positive and statistically significant influence on financial growth. Practical Implications: The findings underscore the importance of these factors in promoting financial growth, emphasizing that targeted financial education programs can enhance clients’ financial wellbeing, inform policy decisions, and improved microfinance institutions services. Originality/Value: The originality/value of this study lies in its context-specific focus, targeting microfinance clients, an often-underserved population and providing data-driven insights to inform policy and practice.