FINANCIAL DIMENSIONS OF THE BLUE ECONOMY AND COASTAL POVERTY REDUCTION IN NORTHERN PENINSULAR MALAYSIA

Abstract

Harnessing the blue economy for poverty reduction requires a clear understanding of how financial mechanisms, community resources, and marine-based livelihoods interact in vulnerable coastal settings. This study investigates the financial dimensions of the blue economy in Northern Peninsular Malaysia by examining how financial literacy (FL), financial inclusion (FIN), and social capital (SC) contribute to poverty reduction (PR) among coastal households engaged in fisheries, aquaculture, marine tourism, and related activities. The specific objectives are: (i) to assess the impact of financial literacy on poverty reduction, (ii) to examine the mediating role of financial inclusion in the relationship between financial literacy and poverty reduction, and (iii) to explore how social capital facilitates financial inclusion and contributes to poverty reduction in blue economy-dependent communities. A quantitative research design is employed, using structured questionnaires to be administered to households involved in blue economy and other coastal livelihoods. The Krejcie and Morgan (1970) table is used to determine an appropriate sample size, resulting in 382 respondents drawn from the combined coastal population. Data will be collected and subsequently analysed using SmartPLS to evaluate the measurement and structural models and to test the mediating effect of financial inclusion. The study is expected to demonstrate that financial literacy reduces poverty both directly and indirectly through improved financial inclusion, while social capital enhances access to, and effective use of, financial services. The anticipated findings will provide theoretical implications by clarifying the mechanisms linking financial literacy, social capital, and poverty within the blue economy context, and practical implications by informing policymakers and practitioners on how to design integrated financial education, inclusive finance, and community-based programmes to strengthen coastal resilience and support sustainable poverty reduction.