Financial Inclusion of Refugees: The Role of Trust and Financial Literacy

Abstract

This research examines how financial literacy and trust influence financialinclusion among refugees in the Kampala district of Uganda, and exploreswhether trust mediates the relationship between financial literacy and financialinclusion. Using a quantitative cross-sectional approach, we selected a sampleof 399 refugees from a population of 107,763 in Kampala. Data were collectedusing structured instruments based on a five-point Likert scale and analyzedusing Partial Least Squares Structural Equation Modelling (PLS-SEM).Findings indicate that both financial literacy and trust significantly enhancefinancial inclusion. Financial literacy also positively affects trust in financialinstitutions, with trust partially mediating the financial literacy–financialinclusion relationship. These results support theories of financial literacy andtrust in explaining financial inclusion. Conducted solely among refugees, itsfindings may not be fully generalizable to other marginalized groups, such aswomen or youth. Additionally, the cross-sectional, quantitative design limitsdeeper insights into the dynamics of trust and financial literacy. This research isamong the first to explore the mediating role of trust in the relationship betweenfinancial literacy and financial inclusion within a refugee context, therebycontributing to the understanding of financial inclusion in Uganda. Key words: Financial inclusion, financial literacy, trust, refugees.