The Effect of Financial Literacy and Financial Inclusion on Economic Growth in Indonesia

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Nurul Hidayatinnisa'
Fauziah
Shinta Maharani Trivena
Yulis Nurul Aini

Abstract

Increasing financial literacy and inclusion become a global issue that are believed affect
economic growth. However, in Indonesia, increasing financial literacy and inclusion in
several provinces is not followed by the economic growth. The purpose of this research is to
analyze the effect of financial literacy and financial inclusion on economic growth in
Indonesia.This study analyzed 34 provinces in Indonesia with 2 survey periods, 2016 and
2019. The method of the data analysis used panel data regression with e-views 10 software.
Moreover, Chow test and Hausman test are carried out to determine the best model. The
results of the hypothesis test showed that financial literacy and financial inclusion have no
significant effect on economic growth in Indonesia, neither partially or simultaneously. It
showed that the financial literacy and inclusion improvement in Indonesia need to be
enhanced in order to achieve inclusive growth as the main goal.

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