Financial Literacy and Saving Patterns of Employees of Kenya National Police Service in Nakuru County-Kenya
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Date
2022
Authors
Owiti, Mark Omondi
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
A cooperative financial institution serves the only aim of pooling member money and
providing low-interest loan facilities while also providing other financial services to
those members. First, the officers have significantly wide variations in salaries across
ranks but share more or less the same livelihood. This can increase the chances of
‘living-beyond-one’s-means’ kind of spending among them. Secondly, the latest
increase of the credit guarantee requirement from four to six guarantors by the Kenya
Police SACCO is an indicator of creditworthiness concern as defaulters impose
significant burden on their guarantors upon default. It is on this basis that the study was
conducted. The objectives of the study were i) to examine the effect of financial
instruments knowledge on saving pattern; ii) to assess the effect of financial budgeting
on the saving pattern; and iii) find out the effect interest rate knowledge on saving
pattern of Kenya police service employees in Nakuru County, Kenya. This study was
supported by prospect theory, life cycle theory and modern portfolio theory. The
researcher conducted a survey on 161 Kenya police officers in Nakuru County and
gathered data which were taken through rigorous statistical analysis. The study
deployed descriptive survey research approach allowing researchers to obtain present
and evaluate the information about the impact of financial literacy among the
employees of Kenya National Police Service. Stratified random sampling was used
since the population of interest was not homogenous in terms of working level in the
organization. The data collected were processed using SPSS 21. A logistic regression of
financial instrument knowledge variables (Respondent Ever Purchased Financial
Instrument, Loan Guarantee Knowledge, and Respondent Ever Taken a Business
Course) on saving patterns (Amount Saved, Saving Frequency, and Saving Resilience)
showed that the latter is a significant determinant of the former. For the second
objective, Wilcoxon rank-sum test for financial budgeting and saving patterns and the
two variables are highly related which implies that persons who make financial
budgeting are likely to save proportionately more and more frequently. The last
objective was assessed using an OLS regression of saving variables on interest rate
scores and it was found that persons with high-interest rate knowledge saved
proportionality more than those with less. From the study, it is recommended that
officers should be taken through thorough financial literacy training and also on the
financial market products to expand their scope of understanding on these.
Description
A Research Project Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Masters in Business Administration (Finance), School of Business, Economics and Tourism Kenyatta University
Keywords
Financial Literacy, Saving Patterns, Kenya National Police Service, Nakuru County, Kenya