Role of Financial Literacy in Maximizing the Impact of Decentralized Finance on Financial Inclusion

Abstract

One of the goals of international policy is financial inclusion, which may be attained by individuals who possess financial literacy and are able to make wise financial decisions. The use of financial technology and decentralized finance is one of the key factors shaping the inclusive space. This chapter aims to conduct an inclusive analysis of the role of financial literacy in maximizing the impact of decentralized finance on financial inclusion. The discussion in this chapter contributes to the emerging studies that examine the role of decentralized finance in boosting financial inclusion. Insights from this chapter can improve our understanding of the importance of financial innovation for unprivileged people and can also help regulators appreciate the nexus between fintech and financial inclusion. The chapter also provides a discussion on some difficulties that persist with implementing decentralized finance at a larger scale and how financial literacy plays a primordial role in meeting these challenges and improving how well DeFi works for people, businesses, and governments.