Effect of Mobile Banking on Financial Inclusion in Kenya

Abstract

The speedy acceptance of mobile financial services in Kenya has proven the possibility of reaching the underprivileged by means of mobile technology and caused interest globally about what is conceivable with these kind of technologies. This study attempts to establish the effect of mobile banking on financial inclusion in Kenya. The researcher used descriptive design. The researcher used quarterly secondary data for the period between 2007 and 2016. Data on the registered number people on mobile subscriptions on mobile banking and number of mobile banking was accessed from Communication Commission of Kenya, while data on number of transactions effected through mobile banking and number of banks which provide mobile banking services and the was accessed from Central Bank of Kenya (CBK) and Kenya National Bureau of Statistics (KNBS) respectively. Data collected was analyzed by use of descriptive statistics and inferential statistics. Descriptive statistics included trend analysis over the years for the variables under study. Inferential statistical techniques that were applied included Pearson‟s correlation and regression analysis which were used to draw a causal relationship between mobile banking and financial inclusion. Data was investigated by means of a statistical software - Statistical Package for Social sciences (SPSS) in order to assess and determine the correlation and regression analysis between the dependent variable (financial inclusion) and each independent variable. Data was presented using tables and figures. The correlation results show the association between the number of number of mobile money subscribers, number of mobile money agents, number of mobile money transactions and value of mobile money transactions and deposit bank accounts was strong and positive. Regression results show that there is a positive relationship between number of mobile money subscribers and the dependent variable (financial inclusion). It can be concluded that the number of mobile money transactions is a good predictor of deposit financial inclusion. The researcher recommends that mobile regulators to review the existing regulatory structure to come up with clear regulations to all mobile operators, for example on transaction volumes, business use of services, and security. Another research study combining mobile banking with other forms of financial innovation can be conducted also to assess if in fact mobile banking has a higher effect or is superior in terms of inclusion.