Gender and Physical Location Disparities in Financial Inclusion in Kenya
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Date
2025-03
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Kenyatta University
Abstract
The economic growth of a country relies heavily on an all-inclusive working population with financial inclusion being a prerequisite to economic development. The United Nations Capital Development Fund has acknowledged that increasing financial inclusion can help reduce poverty and promote inclusive economic growth. It also plays a vital role in improving household well-being and reducing poverty levels while advancing a number of Sustainable Development Goals. Significant progress has been made in Kenya in terms of financial inclusion. Data from the Kenya National Bureau of Statistics through the 2019 Fin Access Household Survey report shows that financial inclusion statistics has increased from 75.3% in 2016 to 82.9% in 2018. While there has been progress in lowering gender, wealth, and geographical inequality, it is critical to remember that the report is cognizant of the existence of gender-specific and geographical disparities in addressing financial inclusion. Therefore, it's not enough to only provide financial services; we must also work to eliminate the disparities that prevent certain individuals from using them. This research examined gender and location-based disparities in Kenyan financial inclusion. This study aims to understand more about the gender gap in financial inclusion in Kenya by looking at how different socioeconomic variables affect it, how socioeconomic characteristics affect it, and what factors lead to geographical disparities in financial inclusion in Kenya. Secondary data for this research was sourced from the Kenya National Bureau of Statistics' 2021 Fin Access Household Survey. The Oaxaca-Blinder decomposition methodology was utilized to decompose the differences in average outcomes between the two groups (males and females) into portions that are due to observable characteristics (like education and experience) and portions that are unexplained. The study highlights that despite progress, gender and geographic disparities in financial inclusion persist, necessitating focused research and targeted interventions in Kenya. The Oaxaca Blinder decomposition regression showed significant gender and geographic disparities in financial inclusion, which were notably influenced by socioeconomic characteristics such as education and wealth quintile. By examining these disparities, the study reveals that factors such as education and wealth play crucial roles in bridging the inclusion gap, advocating for policies that promote education, financial literacy, and accessible financial services for disadvantaged groups. It is hoped that the findings from this research will play a big role in helping the country develop more robust strategies towards overcoming gender and geographical-related disparities and thus achieving financial inclusion for all the population through enabling all-inclusive access to financial services that go a long way in promoting sustainable economic growth. As such, the country will as well be achieving and realizing the economic-related Sustainable Development Goals geared towards achieving Kenya Vision 2030.
Description
A Research Project Submitted to the Department of Economic Theory in the School of Business, Economics, and Tourism in Partial Fulfillment of the Requirements for the Award of Degree of Master of Economics of Kenyatta University, March 2025.
Supervisor
Isaac Kimunio