• Priyaranjan
• Dr M N Samantaray

This study examines the association between financial literacy and access to formal finance among micro-enterprises in Odisha, India. It disaggregates financial literacy into three dimensions — financial knowledge, financial behaviour, and financial attitude — and conceptualizes access to finance as a multidimensional construct beyond formal account ownership or a binary loan-approval outcome. The study draws on primary survey data from 450 micro-enterprise owners, collected through face-to-face interviews between October 2023 and March 2024. The questionnaire adapted established financial literacy measures and captured enterprise characteristics, financial practices, and perceived access to finance. The analytical procedure included descriptive statistics, exploratory and confirmatory measurement validation, and partial least squares structural equation modelling (PLS-SEM). While formal account ownership was reported by 93% of respondents, bank loans accounted for only 17% of start-up finance. Among those who applied for bank credit, 47% reported rejection, with insufficient collateral cited as the most frequent reason. The component-level structural model indicated a significant positive association between financial knowledge and access to finance (β = 0.925, p < .001) and between financial behaviour and access to finance (β = 0.241, p = .035), whereas the association for financial attitude was not statistically significant (β = 0.125, p = .976). A separate higher-order model indicated a significant positive association between overall financial literacy and access to finance (β = 0.906, p < .001). Given the cross-sectional design, these results should be interpreted as associations rather than causal effects. The study provides state-specific evidence on the relationship between financial literacy dimensions and perceived access to finance among micro-enterprises in Odisha, highlighting the distinction between financial inclusion through account ownership and effective access to and use of enterprise finance. The findings suggest that financial capability initiatives may be enhanced through practical modules on interest and loan-cost calculation, business record-keeping, cash-flow planning, and credit documentation, complemented by streamlined lending procedures and borrower support. The effectiveness of such measures requires rigorous evaluation rather than being assumed to improve loan outcomes.

financial literacy; financial knowledge; financial behaviour; access to finance; micro enterprises; Odisha; India; PLS-SEM

"Does Financial Literacy Unlock Formal Credit? Evidence from Micro Enterprises in Odisha, India", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.13, Issue 10, page no.c177-c182, October-2026, Available :http://www.jetir.org/papers/JETIR2610223.pdf

"Does Financial Literacy Unlock Formal Credit? Evidence from Micro Enterprises in Odisha, India", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.13, Issue 10, page no. ppc177-c182, October-2026, Available at : http://www.jetir.org/papers/JETIR2610223.pdf