Financial Literacy and Access to Mobile Loan Finance Capital by Salon Businesses in Nairobi City County, Kenya
Makasi, Sarah Minoo
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Small businesses are faced with challenges in accessing finance due to the stringent requirements by financial institutions which include collateral, tedious paperwork and generally a long process before the financing is available for the business. Yet, most small businesses require only little amounts to start-off their venture. With the growth of mobile technology in Kenya and other countries, there have emerged growths of mobile loan facilities which can be beneficial to individuals and groups operating small and medium businesses. Salon businesses are unable to access loan to expand their businesses due to the many requirements by commercial banks and inability of the salon owners to provide collateral for the loans advanced. Therefore, the study sought to evaluate how financial literacy affects access to mobile loan finance capital by salon businesses in Kasarani Sub County. The specific objectives of the study were; to assess the effect of financial awareness, financial attitudes, financial behaviors, and financial knowledge on access to mobile finance capital by salon businesses in Kasarani Sub County, Kenya. The study was guided by prospect theory, theory of financial intermediation and unified theory of acceptance and use of technology. The questionnaires were used to collect data from 122 Salon owners. The distribution method was drop-and-pick method. Descriptive research design was used and descriptive statistics like mean, mode, and median were examined. Additionally, inferential statistics such as regression and the Pearson’s correlation coefficient were used in the study. Frequency distribution tables, charts, and bar graphs were used to present the results. According to the study, there was a strong and positive correlation between financial awareness and access to financing for mobile loans. The study found that access to mobile loan finance capital and financial attitude were positively and significantly correlated. The study found a strong and positive relationship between financial behaviors and access to mobile loans. The findings were that financial knowledge had a significant effect on access to mobile loans. The study concluded that more financially educated business owners who comprehend essential financial concepts, such as managing risk, bond yields, time value of money and the dynamics of the capital markets, the more effective and long-lasting the small and medium enterprises. The finance industry should concentrate on creating solutions that cater to the actual needs of small and medium enterprises. The government and its partner agencies must develop, administer, and implement policies to support this crucial industry. This industry should get ongoing training in financial education, financial behavior, financial awareness and financial knowledge Enhancement of functions like formulating and reviewing policies and programs for small and medium enterprises should be emphasized. These policies should be favorable for small and medium enterprises growth addressing their financing limitations. Programs to advance general education by the national government and in particularly financial literacy training should be implemented.