Income Inequality and Its Implications on Households Consumption, Investment and Financial Inclusion in Kenya
Loading...
Date
2024-05
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Across the world, nations face unique challenges in the quest to deal with the problem of
income inequalities. Some developing countries have the largest disparities in income
distribution. In Kenya, inequality in income is a major challenge. The inequality index is
about 0.416, with considerable discrepancies in education, consumption, investment,
employment, and agricultural sectors as well as financial accessibility and availability.
Inequality in income distribution has facilitated reduction in access of quality education,
investment, consumption and financial access by households in the economy. The main focus
of this study is to determine the effect of income inequality on household consumption
patterns, investments and financial inclusion in Kenya. The study employed; non experimental research design with time series data for a period 1990-2021 for the variables:
household’s investment, consumption, government expenditure, wealth endowment, land
ownership, inflation rate, population size, domestic credit, level of education and income
inequality in the Country. Data analysis was achieved through regression analysis; the Auto regressive Distribution Lag (ARDL) method was helpful to estimate the parameters in the
equation. The study found that income inequality proxy by per-capita income has a negative
and significant effect on household’s investment, consumption, financial inclusion in Kenya.
The study recommended that government should enact policies to ensure even distribution of
income to reduce inequality across the country thereby enhancing household’s investment,
consumption and financial inclusion. This finding is very useful for the national government,
sub-national governments, and other researchers as an insight to design long-term solutions to
equality in income distribution to households. This is in line with the constitution of Kenya
(2010), equality distribution of income for all and also in line with the United Nations
sustainable development goals number one and two; no poverty and hunger.
Description
A Research Project Submitted to the Department of Applied Economics in the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Economics (Finance) of Kenyatta University, May 2024.
Supervisor
Isaac Kimunio