Abstract:
The integration of digital financial services has become increasingly significant in enhancing financial inclusion, particularly in developing countries. This study focuses on the mediating roles of digital consumer protection and digital financial literacy in the relationship between mobile money adaptation and financial inclusion in Pakistan. The research investigates how these mediators impact financial inclusion outcomes, aiming to provide insights for policymakers and financial institutions. Mobile money services offer a convenient alternative to traditional banking, especially in regions with limited access to financial infrastructure. However, the effectiveness of these services depends on the consumers' understanding of digital finance and the security measures in place to protect them. The study distributed a 770 questionnaire among individuals and 412 individuals responded from diverse demographics in Lahore, Peshawar, Rawalpindi and Islamabad with a response rate of 54.93%. The Partial Least Squares Structural Equation Modeling (PLS-SEM) method is employed to analyze the data due to its effectiveness in handling complex models. Findings indicate that digital financial literacy significantly enhances the positive effects of mobile money adaptation on financial inclusion, while robust digital consumer protection mitigates potential risks associated with digital transactions. Additionally, the research highlights significant differences in mobile money usage and financial inclusion across various regions and socioeconomic groups in Pakistan. The results underscore the importance of promoting digital financial literacy and strengthening consumer protection frameworks to maximize the benefits of mobile money services. Policymakers are encouraged to implement targeted educational programs and enforce stricter regulatory measures to safeguard consumers. The study's limitations include its focus on Pakistan and a specific set of digital financial services. Future research could explore similar dynamics in other developing countries and include a broader range of digital financial products. By addressing these critical factors, this research contributes to the broader discourse on financial inclusion and offers practical recommendations to enhance digital financial ecosystems in emerging economies.
