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Monte Carlo-Based Bayesian Path Analysis for Modeling Indirect Financial Effects on Literacy in Emerging Markets

Author

Listed:
  • Junianto Fachira Haneinanda

    (Department of Mathematics, University of Brawijaya, Malang, Indonesia)

  • Fernandes Adji Achmad Rinaldo

    (Department of Statistics, University of Brawijaya, Malang, Indonesia)

  • Solimun Solimun

    (Department of Statistics, University of Brawijaya, Malang, Indonesia)

  • Astuti Ani Budi

    (Department of Statistics, University of Brawijaya, Malang, Indonesia)

Abstract

Banking literacy is an important foundation in realizing financial inclusion, especially in developing countries such as Indonesia. This study examines the indirect effects of payment instrument use, financial inclusion, and financial capacity on banking literacy, with financial knowledge as a mediator. A Bayesian Parametric Path Analysis approach is used with estimation through Markov Chain Monte Carlo (MCMC) simulation. Primary data were obtained from a national survey of 600 respondents selected through multistage sampling. Results show that the three exogenous variables have significant indirect effects through financial knowledge, with credible intervals of all paths above zero. The Bayesian approach allows flexible estimation and probabilistic interpretation. The findings provide theoretical contributions and practical implications for financial education policies that support the digital transformation of banking services.

Suggested Citation

  • Junianto Fachira Haneinanda & Fernandes Adji Achmad Rinaldo & Solimun Solimun & Astuti Ani Budi, 2025. "Monte Carlo-Based Bayesian Path Analysis for Modeling Indirect Financial Effects on Literacy in Emerging Markets," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 40(4), pages 677-696, December.
    • Handle: RePEc:ris:integr:021800
    DOI: 10.11130/jei.2025009
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    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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