Determinants of Utilization of Mobile Financial Services in Small Scale Businesses in Kiambu County, Kenya

Abstract

The Kenyan government has been implementing policies to expand financial access including promoting mobile enabled financial services to those excluded by the formal banking sector. Majority of small scale businesses in Kenya have no access to a bank account due to limited bank branches and information asymmetry about the sector. To facilitate financial inclusion and reach out to rural areas historically marginalized by convectional banking, mobile network operators have made huge investment to create network and ease access to money. While invention of Mobile money offers financial alternatives businesses have not seized the opportunity. This study investigated the determinants of mobile financial services utilization among small scale businesses in Kiambu County using primary data obtained through interviews with licensed small scale businesses. The logit regression analysis was used and the results indicated that; size of business, age of business, distance to bank, transport cost, business type and sex of business owner were significant determinants of mobile financial service utilization by small scale businesses. The study recommends, infrastructure development by the government to facilitate movement in rural areas and to encourage financial service providers to penetrate with ease, provision of an encouraging environment for business to thrive and improvement of mobile financial services by the mobile network operators