Impact of financial literacy on access to credit by households in informal settlements in Nairobi
Abstract
Over the years, there has been the notion that financial illiteracy highly affects households'
financial decision, access to credit and financial services. However, the extent to which financial
illiteracy affects credit access, financial services and how household finances are utilized
remains to be unknown. The concept of financial literacy has got more policy attention in many
countries and more funding from all sources is being provided to assist in the development of
financial education programs initiatives in informal settlements. The need to evaluate such
programs is also increasing, but little evaluation is currently taking place and the unanswered
question is on the effectiveness of the financial education, its effect on credit access, people's
living standards mostly in informal settlements and its effect on credit access. The objective of
this study was to evaluate the impact of financial literacy on access to credit by households in
informal settlements in Nairobi. It also sought to gather information on the financial management
skills used to manage personal finance by households in informal settlements, their financial
literacy levels and its impact on credit access.
To achieve this objective, the study involved four slums in Nairobi, which included Mathare,
Kibera, Mukuru Kwa Njenga and Korogocho. The research design utilized was survey method
and convenience sampling was carried out based on the relative number of households willing to
participate. Data was organized, coded and analyzed using descriptive statistics and presented in
form of ratios, tables, charts and graphs
The study found out that households in the informal settlements in Nairobi have low financial
literacy which largely hindered them from accessing credit from financial institutions,
government and Nongovernmental institutions.
The study gathered vital information to help the policy makers and patties concerned with
financial education programs in decision making in solving challenges facing households in
informal settlements, and also recommended further research in other formal and informal
settlements in Kenya.
Citation
Irene Wanjiku Mwangi (2013). Impact Of Financial Literacy On Access To Credit By Households In Informal Settlements In Nairobi. Master of Business AdministrationPublisher
University of Nairobi