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

Abstract

This research examines how financial literacy and trust influence financial
inclusion among refugees in the Kampala district of Uganda, and explores
whether trust mediates the relationship between financial literacy and financial
inclusion. Using a quantitative cross-sectional approach, we selected a sample
of 399 refugees from a population of 107,763 in Kampala. Data were collected
using structured instruments based on a five-point Likert scale and analyzed
using Partial Least Squares Structural Equation Modelling (PLS-SEM).
Findings indicate that both financial literacy and trust significantly enhance
financial inclusion. Financial literacy also positively affects trust in financial
institutions, with trust partially mediating the financial literacy–financial
inclusion relationship. These results support theories of financial literacy and
trust in explaining financial inclusion. Conducted solely among refugees, its
findings may not be fully generalizable to other marginalized groups, such as
women or youth. Additionally, the cross-sectional, quantitative design limits
deeper insights into the dynamics of trust and financial literacy. This research is
among the first to explore the mediating role of trust in the relationship between
financial literacy and financial inclusion within a refugee context, thereby
contributing to the understanding of financial inclusion in Uganda.

Key words: Financial inclusion, financial literacy, trust, refugees.