Purpose: This study investigated the direct relationship between financial inclusion (FI) and socio-economic development (SED) of rural households in Odisha, India. Furthermore, the indirect relationship between financial inclusion and socio-economic development, with social empowerment (SE) as a mediating variable, was examined.

Methodology: Data for the primary survey were collected from 545 rural households in Odisha, India, using a structured questionnaire. The study conducted exploratory factor analysis, confirmatory factor analysis, and path analysis to investigate the interrelationships among financial inclusion, socio-economic development, and social empowerment of households in rural Odisha.

Findings: The primary research findings revealed that financial inclusion had a positive influence on the socio-economic development of rural households in Odisha, enhancing their access to formal banking and financial services. Another key finding was that social empowerment partially mediated the relationship between financial inclusion and socio-economic development. Furthermore, social empowerment contributed to the overall socio-economic well-being of these rural households and the rural economy by enlarging people’s choices and capabilities.

Implications: This study underscored the importance of both direct and indirect pathways through which financial inclusion influences socio-economic development. The results would be helpful for the government, non-governmental organizations, and policymakers in guiding targeted interventions while preparing various financial inclusion and rural development programs. Financial institutions and financial service providers could use these insights to develop strategies that not only provide financial services to rural households but also design and support social empowerment initiatives.

Originality: This research contributed to the existing literature by examining the impact of financial inclusion on rural households in Odisha and emphasizing the mediating role of social empowerment as a catalyst. It also studied multiple dimensions of financial inclusion and socio-economic development to improve the socio-economic conditions of these households in rural Odisha, India.

1. Abdullahi, A., & Adeiza, M. O. (2019). Impact of monetary policy and fiscal policy on economic growth in Nigeria. Journal of Economics and Sustainable Development, 10(24), 145–154. https://doi.org/10.7176/JESD/10-24-16
2. Arora, N., & Kumar, N. (2021). Does financial inclusion promote human development? Evidence from India. Jindal Journal of Business Research, 10(2), 163–184. https://doi.org/10.1177/22786821211045180
3. Ashoka, M. L., & Aswathy, P. (2021). Financial literacy as the key to financial inclusion. International Journal of Business Ethics in Developing Economies, 10(2), 1–6. http://publishingindia.com/ijbede/51/financial-literacy-as-the-key-to-financial inclusion/31973/76540
4. Banerjee, S., & Francis, G. (2014). Financial inclusion and social development. International Journal of Scientific Research and Management, (Special Issue: National Level Conference on Business Growth and Social Development), 13–18. https://www.researchgate.net/publication/358225913
5. Barr, M. S. (2004). Banking the Poor. Yale Journal on Regulation, 21(1), 121–237. https://repository.law.umich.edu/articles/62
6. Beck, T., Feyen, E., Ize, A., & Moizeszowicz, F. (2008). Benchmarking financial development. SSRN. https://ssrn.com/abstract=1149571
7. Behera, D. (2020). Financial inclusion through PMJDY and economic growth linkage: Evidence from all districts of Odisha. Journal of Economic Policy & Research, 16(1), 64–81. https://www.ipeindia.org/wp-content/uploads/2021/11/Current-Issue.pdf
8. Bongomin, G. O., Munene, J. C., Ntayi, J. M., & Malinga, C. A. (2018). Nexus between financial literacy and financial inclusion: Examining the moderating role of cognition from a developing country perspective. International Journal of Bank Marketing, 36(7), 1190–1212. https://doi.org/10.1108/IJBM-08-2017-0175
9. Bongomin, G. O., Ntayi, J. M., Munene, J. C., & Nabeta, I. N. (2016a). Social capital: Mediator of financial literacy and financial inclusion in rural Uganda. Review of International Business and Strategy, 26(2), 291–312. https://doi.org/10.1108/RIBS-06-2014-0072
10. Bongomin, G. O., Ntayi, J. M., Munene, J. C., & Nabeta, I. N. (2016b). Financial inclusion in rural Uganda: Testing interaction effect of financial literacy and networks. Journal of African Business, 17(1), 106–128. https://doi.org/10.1080/15228916.2016.1117382
11. Bongomin, G. O., Munene, J. C., & Yourougou, P. (2020). Examining the role of financial intermediaries in promoting financial literacy and financial inclusion among the poor in developing countries: Lessons from rural Uganda. Cogent Economics & Finance, 8(1), Article ID 1761274. https://doi.org/10.1080/23322039.2020.1761274
12. Burchi, A., Włodarczyk, B., Szturo, M., & Martelli, D. (2021). The effects of financial literacy on sustainable entrepreneurship. Sustainability, 13(9), 5070. https://doi.org/10.3390/su13095070
13. Chakraborty, R., & Abraham, R. (2021). The impact of financial inclusion on economic development: The mediating roles of gross savings, social empowerment and economic empowerment. International Journal of Social Economics, 48(6), 878–897. https://doi.org/10.1108/IJSE-02-2020-0077
14. Cihak, M., Demirgüç-Kunt, A., Erik, F., & Levine, R. (2012). Benchmarking financial systems around the world (Policy Research Working Paper No. 6175). The World Bank. http://documents.worldbank.org/curated/en/868131468326381955
15. Dogan, E., Madaleno, M., & Taskin, D. (2022). Financial inclusion and poverty: Evidence from Turkish household survey data. Applied Economics, 54(19), 2135–2147. https://doi.org/10.1080/00036846.2021.1985076
16. Hair Jr., J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European Business Review, 26(2), 106–121. https://doi.org/10.1108/EBR-10-2013-0128
17. Hair Jr., J. F., Matthews, L. M., Matthews, R. L., & Sarstedt, M. (2017). PLS-SEM or CB-SEM: Updated guidelines on which method to use. International Journal of Multivariate Data Analysis, 1(2), 107–123. https://doi.org/10.1504/IJMDA.2017.087624
18. Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135. https://doi.org/10.1007/s11747-014-0403-8
19. Ibrahim, S. S., Ozdeser, H., & Cavusoglu, B. (2020). Testing the impact of environmental hazards and violent conflicts on sustainable pastoral development: Micro-level evidence from Nigeria. Environment, Development and Sustainability, 22(1), 4169–4190. https://doi.org/10.1007/s10668-019-00377-6
20. Jha, S., & Mohapatra, A. K. (2019). Jobless growth in India: The way forward. SSRN. https://doi.org/10.2139/ssrn.3476599
21. Kandpal, V. (2024). Dimensions of financial inclusion in India: A qualitative analysis of bankers perspective. Qualitative Research in Financial Markets, 16(4), 660–679. https://doi.org/10.1108/QRFM-04-2022-0072
22. Kapoor, S., & Mohandas, V. (2023). Measuring financial inclusion in India: An approach. Indian Journal of Finance, 17(1), 27–46. https://doi.org/10.17010/ijf/2023/v17i1/172601
23. Kaur, S., & Pasricha, J. S. (2019). Problems faced by bank employees in implementation of financial inclusion schemes. Indian Journal of Finance, 13(12), 34–49. https://doi.org/10.17010/ijf/2019/v13i12/149267
24. Khongwir, C. M., & Sharmiladevi, J. C. (2023). A bibliometric analysis on financial inclusion and financial literacy–Analyzing the current research trends. Indian Journal of Finance, 17(2), 27–53. https://doi.org/10.17010/ijf/2023/v17i2/172638
25. Kuri, P. K., & Laha, A. (2011). Determinants of financial inclusion: A study of some selected districts of West Bengal. Indian Journal of Finance, 5(8), 29–36. https://indianjournalofcapitalmarkets.com/index.php/IJF/article/view/72491/56394
26. Lakshmi, P., & Visalakshmi, S. (2013). Impact of cooperatives in financial inclusion & comprehensive development. Journal of Finance and Economics, 1(3), 49–53. https://doi.org/10.12691/jfe-1-3-4
27. Lal, T. (2019). Measuring impact of financial inclusion on rural development through cooperatives. International Journal of Social Economics, 46(3), 352–376. https://doi.org/10.1108/IJSE-02-2018-0057
28. Lal, T. (2021). Impact of financial inclusion on economic development of marginalized communities through the mediation of social and economic empowerment. International Journal of Social Economics, 48(12), 1768–1793. https://doi.org/10.1108/IJSE-12-2020-0830
29. Malik, A. H., Jais, M. B., Md Isa, A. H., & Rehman, A. U. (2022). Role of social sustainability for financial inclusion and stability among Asian countries. International Journal of Social Economics, 49(9), 1324–1348. https://doi.org/10.1108/IJSE-08-2021-0458
30. Matekenya, W., Moyo, C., & Jeke, L. (2021). Financial inclusion and human development: Evidence from Sub-Saharan Africa. Development Southern Africa, 38(5), 683–700. https://doi.org/10.1080/0376835X.2020.1799760
31. Mishra, P. K. (2018). Exclusion to inclusion: An economic paradigm for India. FIIB Business Review, 3(4), 3–15. https://doi.org/10.1177/2455265820140401
32. Mondal, S. (2015). Financial inclusion: A step towards eradicate poverty. American Journal of Theoretical and Applied Business, 1(1), 21–26. https://www.sciencepublishinggroup.com/article/10.11648/j.ajtab.20150101.14
33. Nandru, P., & Rentala, S. (2020). Demand-side analysis of measuring financial inclusion: Impact on socio-economic status of primitive tribal groups (PTGs) in India. International Journal of Development Issues, 19(1), 1–24. https://doi.org/10.1108/IJDI-06-2018-0088
34. Nandru, P., Chendragiri, M., & Velayutham, A. (2021). Examining the influence of financial inclusion on financial well-being of marginalized street vendors: An empirical evidence from India. International Journal of Social Economics, 48(8), 1139–1158. https://doi.org/10.1108/IJSE-10-2020-0711
35. Narayan, D. (2005). Measuring empowerment: Cross-disciplinary Perspectives. World Bank. https://documents.worldbank.org/pt/publication/documents-reports/documentdetail/960161468175149824/
36. Niazi, M. K., & Malik, Q. A. (2019). Financial attitude and investment decision making-moderating role of financial literacy. NUML International Journal of Business & Management, 14(1), 102–115. https://doi.org/10.52015/nijbm.v9i1
37. Omar, M. A., & Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of Economic Structure, 9(1), Article no. 37. https://doi.org/10.1186/s40008-020-00214-4
38. Pal, M., Gupta, H., & Joshi, Y. C. (2022). Social and economic empowerment of women through financial inclusion: Empirical evidence from India. Equality, Diversity and Inclusion, 41(2), 294–305. https://doi.org/10.1108/EDI-04-2021-0113
39. Pandey, A., Kiran, R., & Sharma, R. K. (2022). Investigating the impact of financial inclusion drivers, financial literacy and financial initiatives in fostering sustainable growth in North India. Sustainability, 14(17), 11061. https://doi.org/10.3390/su141711061
40. Paramasivan, C., & Ganeshkumar, V. (2013). Overview of financial inclusion in India. International Journal of Management and Development Studies, 2(3), 45–49. https://www.indianjournals.com/ijor.aspx?target=ijor:ijmds1&volume=2&issue=3&article=005&type=pdf
41. Patel, R., & Patel, N. (2020). Impact of microfinance on women empowerment: A study from the decision—making perspective. Indian Journal of Finance, 14(8–9), 52–68. https://doi.org/10.17010/ijf/2020/v14i8-9/154948
42. Prashar, M. (2017). Bottom of the pyramid inclusion in processes of financial inclusion an SHG mode overview of rural women's empowerment. International Journal of Education and Management Studies, 7(4), 535–544. https://www.i-scholar.in/index.php/injems/article/view/165739
43. Raichoudhury, A. (2020). Major determinants of financial inclusion: State-level evidences from India. Vision, 24(2), 151–159. https://doi.org/10.1177/0972262920923882
44. Rastogi, S., & Ragabiruntha, E. (2018). Financial inclusion and socio-economic development: Gaps and solution. International Journal of Social Economics, 45(7), 1122–1140. https://doi.org/10.1108/IJSE-08-2017-0324
45. Sachs, J. D. (2015). The age of sustainable development. Columbia University Press. https://cup.columbia.edu/book/the-age-of-sustainable-development/9780231173155/
46. Siddik, M. N., Sun, G., & Kabiraj, S. (2015). Financial inclusion and its determinants: A study of Bangladesh. Indian Journal of Finance, 9(6), 7–29. https://doi.org/10.17010/ijf/2015/v9i6/70988
47. Singh, Y., Kaur, A., & Malhotra, R. (2010). Empirical validation of object-oriented metrics for predicting fault proneness models. Software Quality Journal, 18, 3–35. https://doi.org/10.1007/s11219-009-9079-6
48. Soyemi, K. A., Olowofela, O. E., & Yunusa, L. A. (2020). Financial inclusion and sustainable development in Nigeria. Journal of Economics and Management, 39(1), 105–131.
49. Survase, M., & Inumula, K. M. (2019). Financial inclusion: Scale modification and validation of socio-economic indicators. SCMS Journal of Indian Management, 16(4), 31–40. https://www.scms.edu.in/uploads/journal/October-December-2019.pdf
50. Swamy, V. (2014). Financial inclusion, gender dimension, and economic impact on poor households. World Development, 56, 1–15. https://doi.org/10.1016/j.worlddev.2013.10.019
51. Tandon, P., & Singh, A. B. (2021). Antecedents and extent of financial inclusion: A cross-sectional study. Indian Journal of Finance, 15(3), 50–67. https://doi.org/10.17010/ijf/2021/v15i3/158129
52. Tran, H. T., & Le, H. T. (2021). The impact of financial inclusion on poverty reduction. Asian Journal of Law and Economics, 12(1), 95–119. https://doi.org/10.1515/ajle-2020-0055
53. Uma, H. R., Rupa, K. N., & Madhu, G. R. (2013). Impact of bank led financial inclusion model on the socio-economic status of Saral saving account holders. Paripex-Indian Journal of Research, 2(9), 50–52. https://doi.org/10.36106/paripex
54. Zauro, N. A., Zauro, N. A., Saad, R. A., & Sawandi, N. (2020). Enhancing socio-economic justice and financial inclusion in Nigeria: The role of Zakat, Sadaqah and Qardhul Hassan. Journal of Islamic Accounting and Business Research, 11(3), 555–572. https://doi.org/10.1108/JIABR-11-2016-0134