EFFECTS OF DIGITAL FINANCIAL INCLUSION ON FINANCIAL GROWTH OF MICRO,SMALL & MEDIUM ENTERPRISES IN KENYA
Abstract
Digital financial services offer wider scale, scope and reach of financial services, and are essential to closing the remaining gaps in financial inclusion. Digital financial inclusion involves the deployment of the cost-saving digital means to reach currently financially excluded and underserved populations with a range of formal financial services suited to their needs that are responsibly delivered at a cost affordable to customers and sustainable for providers. The purpose of this study was to determine the effect of digital financial inclusion on financial growth of MSMEs in Kenya. The specific objectives weare: to determine the effect of mobile phone banking on financial growth of MSMES in Kenya, to establish the effect of electronic money banking on financial growth of MSMES in Kenya, to assess the effects of agency banking on financial growth of MSMES and to determine the effect of digital banking apps on financial growth of MSMES in Kenya. The study was anchored on four theories namely: The financial intermediation theory, the theory of innovation, the agency theory and the technology acceptancy theory. The study used both descriptive survey and inferential statistics. The research used Secondary data collection method , sourced from the Kenya National Bureau of Statistics (KNBS) economic survey 2021, The CBK Micro Small & Medium Enterprises (MSME) and FinAcess Business survey 2021. The researcher piloted on a census data of a five year period (2016-2020) on financial performance of the MSMEs in Kenya. Research hypothesis was used and tested the significance of the independent variables to the dependent variable.The data collected was coded, entered and analyzed descriptively using Statistical Package for Social Sciences (SPSS 25). The results revealed that the independent variables (mobile banking, electronic banking, agency banking and banking apps) affect growth of MSMEs in Kenya. From ANOVA it was established that mobile banking, electronic banking, agency banking and banking apps affected growth of SMEs in Kenya significantly. Policy makers were recommended to take note of the findings of the study. Though the study explored four components of digital financial inclusion; it was recommended for further studies to be done to assess the other contributing factors of financial inclusion.
Key Words: Mobile Phone Banking, Electronic Money, Agency Banking, Digital Banking
CITATION: Kambi, E. N., & Onyiego, G. (2022). Effects of digital financial inclusion on financial growth of micro,small & medium enterprises in Kenya. The Strategic Journal of Business & Change Management, 9 (4), 476 - 493.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i4.2425
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