Digital Financial Inclusion and Entrepreneurial Aspirations of Rural Youth in Rajasthan

Abstract

This study aims to examine the impact of digital financial inclusion on entrepreneurial intentions among the rural youth in Rajasthan, India. Digital financial services which include mobile banking, Unified Payments Interface (UPI), Aadhaar-based digital financial services, digital wallet, banking correspondent and various financial inclusion schemes by the government have increased the accessibility of formal financial services while reducing some of the traditional barriers in participation in the financial system. Simultaneously, there is also a growing perception among the rural youth in considering self-employment or entrepreneurship as a legitimate substitute to traditional employment. In order to understand the association between digital financial inclusion and entrepreneurial intentions, the study will focus on four aspects of digital financial inclusion namely, access to formal financial accounts, use of digital payments, digital financial literacy and access to digital credit and savings products. On the other hand, entrepreneurial intentions will be measured using, intention to start business, entrepreneurial capability, financial risk-taking and establishing business in the coming three years. Survey questionnaire was used to gather data from 420 rural youth aged 18-35 years across selected districts of Rajasthan. For analysis, descriptive statistics, reliability analysis, correlation analysis, independent samples test and multiple regression analysis have been used. It has been observed that there exists a positive relation between digital financial inclusion and entrepreneurial intentions with digital financial literacy as the strongest predictor followed by usage of digital payments and access to formal financial services. In addition to this, the regression analysis explains around 38% of variance in entrepreneurial intentions. Individuals with high digital financial inclusion perceive themselves as having ability to manage business transactions, accessing formal financial service and identifying business opportunities. However, there still exist barriers such as low digital literacy, fear of financial fraud, lack of stable internet connectivity, lack of easy access to cheap loans and fear of financial loss. Thus, it can be concluded that just increasing financial inclusion is not enough and needs an integrated strategy involving digital access, financial literacy, entrepreneurship education, facilitating credit and consumer protection. This study adds to the existing research on the link between digital finance and rural youth entrepreneurship in India with specific focus on Rajasthan.