Digital Financial Innovations and Financial Inclusion in Community-Based Deposit Taking Savings and Credit Cooperatives in Kenya
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Date
2024-09
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Publisher
Kenyatta University
Abstract
Financial inclusion is widely recognized as a crucial element in providing formal financial access to the poor and the underserved at affordable costs. While Savings and Credit Co-operatives (SACCOs) have been fundamental in advancing financial inclusivity, there has been a discernible decline in the utilization of SACCO products and services in the country. According to the FinAccess baseline survey conducted in 2006, the usage of SACCO products and services stood at 13.1 percent. However, this proportion has since decreased to 9.6 percent in 2021. In light of this, the research employed exploratory research design to evaluate the effect of digital financial innovations on financial inclusion in community-based DT-SACCOs in Kenya. The research was underpinned on the Theory of Planned Behavior, the Technology Acceptance Model, the Financial Innovations Model and the Modern Portfolio Theory. A census survey was administered to all 25 community-based DT-SACCOs in Kenya, and through purposeful sampling, respondents, comprising of Front Office Service Activities (FOSA) managers were selected to complete a structured questionnaire with a 5-point likert scale. The internal consistency of the research tool was evaluated via Cronbach's alpha test. Diagnostic tests were done to assess the quality and appropriateness of the data, focusing on multicollinearity, normality, heteroscedasticity and correlation. The study utilized a multiple regression analysis to examine the effect of digital financial innovations (digital credit services, mobile money connectivity and ATM connectivity) on financial inclusion in community-based DT-SACCOs in Kenya. The results show that digital credit services (β=0.102, p=0.6689) and mobile money connectivity (β=0.098, p=0.6387) had positive but insignificant influence on financial inclusion in community-based DT-SACCOs while ATM connectivity (β=- 0.055, p=0.4800) had a negative but insignificant relationship. The study came to a conclusion that digital financial innovations do not have a statistically significant effect on financial inclusion in community-based DT-SACCOs in Kenya. Community-based DT SACCOs are yet to embrace digital credit services, mobile banking connectivity and ATM connectivity as a strategy to enhance financial inclusion.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration (MBA) - Finance, September 2024.
Supervisor
Charity Njoka