Financial Inclusion and Financial Health of Registered Women Self Help Groups in Kakamega County, Kenya
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Date
2025-11
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Kenyatta University
Abstract
Women’s self-help associations played a pivotal role in alleviating poverty and fostering global economic progress. Despite numerous efforts over time, the objective of attaining financial stability among women remained unmet. As reported in the 2023 SME review, many female-owned enterprises in Kenya failed to reach the expansion phase of their business cycle due to inadequate and costly access to financial services. Strengthening the financial well-being of women’s self-help initiatives contributed to economic empowerment, broader financial inclusion, societal advancement, and transformative change. The primary objective of this study was to assess the effect of financial access on the economic stability of registered women's self-help groups in Kakamega County, Kenya. More precisely, the research sought to investigate the role of financial service availability, utilization, and the standard of financial products on the financial health of these registered collectives. The research framework was anchored in diffusion innovation theory, financial accelerator theory, and knowledge spillover theory. The study adopted a correlational research approach. The target population comprised 1,689 officially registered women’s self-help organizations in Kakamega County. A representative subset of 323 groups was selected based on industry categories, including food establishments, garment production, vegetable vending, fruit sales, cereal trade, kiosk operations, and dairy enterprises. Data were gathered through structured questionnaires. Descriptive statistics involved frequency distributions, percentage allocations, mean values, and standard deviations. Inferential statistical analysis applied Pearson correlation tests and linear regression modeling. The multiple regression equation was structured, and the moderation model was developed. Essential diagnostic evaluations such as normality assessments, multicollinearity diagnostics, and linearity tests were conducted. The study obtained ethical clearance before proceeding with data collection. The regression analysis revealed a moderate to strong positive relationship (R=0.654) between financial inclusion dimensions and women SHGs' financial health. The model explains 49.5% of variance (R²=0.495), which is acceptable for social science research. ANOVA confirmed the model's statistical significance (F=17.3, p<0.001). All predictors access, usage, quality of financial products, and group size significantly contribute to financial health, with access and group size showing strongest influence. Financial inclusion significantly enhances women SHGs' financial well-being in Kakamega County. Access to financial products is fundamental, while effective usage drives stability and growth. Quality services ensure sustained engagement and build institutional trust. Medium-sized groups optimize benefits by balancing operational efficiency with member participation. Therefore, comprehensive financial inclusion, supported by appropriate group structures and quality services, substantially improves registered women SHGs' financial health outcomes. Policymakers should expand rural financial infrastructure, simplify SHG account requirements, and promote tailored financial products with flexible terms. Comprehensive financial literacy programs targeting all members are essential. SHGs should diversify financial portfolios, participate in continuous training, and establish internal governance structures. Financial institutions must design SHG-specific products with collective guarantees, provide multilingual support, simplify processes, and train field officers to enhance women's financial system engagement.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment for the Award of a Degree in Master of Business Administration (Finance Option) of Kenyatta University, November 2025.
Supervisor
1. Farida Abdul