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Financial Literacy and Behavioral Intention to Use Central Banks’ Digital Currency: Moderating Role of Trust

Author

Listed:
  • Mohanamani Palanisamy

    (KCT Business School, Kumaraguru College of Technology, Coimbatore 641049, India)

  • Maria Tresita Paul Vincent

    (School of Business and Economics, Westminster International University in Tashkent (WIUT), Tashkent 100047, Uzbekistan)

  • Md Billal Hossain

    (School of Business and Economics, Westminster International University in Tashkent (WIUT), Tashkent 100047, Uzbekistan)

Abstract

Building on the Innovation Diffusion Theory, this study proposes and explores the influence of financial literacy on the behavioral intention to use central banks’ digital currency (CBDC) and the moderating role of trust of respondents in the financial institution on the above relationship. This study has employed a quantitative research design to examine the relationship between financial literacy, behavioral intention to use CBDC and trust. The final sample comprised 241 respondents who had used CBDC across India. The statistical relationship between the above variables was assessed using PROCESS macro in SPSS 23.0. Findings revealed that financial literacy emerges as a strong predictor of CBDC use. Individuals with higher financial literacy are more likely to understand the features, benefits and risks associated with adopting CBDC. The interaction effect reveals that as financial literacy increases, the relative importance of trust diminishes. On the other hand, those who lack sufficient knowledge of financial literacy depend more on trust to fill in their knowledge gaps. This is one of the first studies to scientifically support the relationship between trust and financial literacy and how both influence behavioral intention to use CBDC. This research contributes valuable knowledge to the discourse on the use of CBDC, which is crucial for achieving a nation’s broader digital transformational goal.

Suggested Citation

  • Mohanamani Palanisamy & Maria Tresita Paul Vincent & Md Billal Hossain, 2025. "Financial Literacy and Behavioral Intention to Use Central Banks’ Digital Currency: Moderating Role of Trust," JRFM, MDPI, vol. 18(3), pages 1-13, March.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:3:p:165-:d:1615872
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    References listed on IDEAS

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    1. Anirudh Tagat & Mehmet Özmen & Gregory Markowsky, 2024. "Banknote Life in India: A Survival Analysis Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 22(2), pages 519-545, June.
    2. Deepak Mishra & Naveen Agarwal & Sanawi Sharahiley & Vinay Kandpal, 2024. "Digital Financial Literacy and Its Impact on Financial Decision-Making of Women: Evidence from India," JRFM, MDPI, vol. 17(10), pages 1-23, October.
    3. Sheila Dow, 2019. "Monetary Reform, Central Banks, and Digital Currencies," International Journal of Political Economy, Taylor & Francis Journals, vol. 48(2), pages 153-173, April.
    4. Michael Peneder, 2022. "Digitization and the evolution of money as a social technology of account," Journal of Evolutionary Economics, Springer, vol. 32(1), pages 175-203, January.
    5. Butticè, Vincenzo & Caviggioli, Federico & Franzoni, Chiara & Scellato, Giuseppe & Stryszowski, Piotr & Thumm, Nikolaus, 2020. "Counterfeiting in digital technologies: An empirical analysis of the economic performance and innovative activities of affected companies," Research Policy, Elsevier, vol. 49(5).
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    Cited by:

    1. Kanika Thapliyal & Chandan Gupta, 2025. "Unlocking CBDCs’ potential: the role of government support and financial literacy on sustainability," Digital Finance, Springer, vol. 7(4), pages 703-723, December.

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