Financial Literacy and Financial Inclusion of Youths in Nairobi City County, Kenya
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Date
2025-04
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Kenyatta University
Abstract
In an effort to promote greater financial inclusion, Kenya has implemented a number of
financial sector changes in recent years, propelled by technological innovations like ATMs
and mobile banking. This expansion is seen as key to achieving Kenya’s target growth rate
of ten percent as outlined in Vision twenty thirty, by expanding access to financial solutions,
encouraging investments, savings, and supporting the country’s development objectives.
However, despite these advancements, access to formal financial services remains limited.
This study aimed to investigate the relationship between financial literacy and financial
inclusion among the youth in Nairobi City County, focusing on the roles of investment
methods, debt management, financial planning, and saving behaviours. The study was
grounded in theories of information asymmetry, behavioural economics, financial education,
and financial growth. A causal research design was used, targeting a population of One
million nine hundred ninety, three thousand three hundred and ninety youths in Nairobi, with
a sample size of four hundred respondents. Data were collected using structured
questionnaires, validated through a pilot study with forty participants. Reliability was
ensured with a Cronbach's alpha score, and the data were analysed using descriptive and
inferential statistics, including regression analysis. The study’s findings showed that the four
independent variables; saving behaviours, debt management, financial planning, and
investment practices accounted for a higher variation in financial inclusion. Savings had a
significant positive effect on financial inclusion, with youths who regularly save better able
to access formal financial services. Debt management practices also positively influenced
financial inclusion, although to a moderate degree, suggesting that improved debt
management skills could reduce financial exclusion. Financial planning techniques were
strongly associated with financial inclusion, indicating that youth who engage in organized
financial planning are more likely to access accredited financial assistance and make sound
financial decisions. Investment practices had a very strong positive influence on financial
inclusion, emphasizing the importance of promoting investment literacy among youth. The
study concluded that fostering saving habits, debt management skills, financial planning,
and investment literacy is crucial to enhancing financial inclusion. It recommended
implementation of youth targeted financial literacy education initiatives in educational
institutions, financial organizations, and government agencies to equip them with essential
financial skills needed for greater financial empowerment.
Description
A Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of the Degree of Master of Business Administration (Finance) of Kenyatta University April 2025
Supervisor:
1.Salome Musau