The Effect of Digital Finance on Financial Inclusion in the Banking Industry in Kenya
Abstract
more convenient compared to keeping money at home traveling with the money. However,
the provision of digital finance involves the participation of different players such as
banks/financial institutions, mobile network operators, financial technology providers,
regulators, agents, chains of retailers and clients. Digital finance mechanisms also need
improvement of infrastructures to make the services user-friendly, secure, and costeffective
manner. My research aimed at determining digital finance effect digital finance
on financial inclusion in banking industry in Kenya. Digital financial services consisted of
agency banking, mobile banking and internet banking while financial inclusion was
proxied using credit penetration. The Research designed used in the research was
descriptive statistics. Target population for this study comprised 44 banking in Kenya,
comprising of 43 commercial banks and 1 mortgage financial institution as at 31/12/2015.
The study used a sample of 13 banking institutions in Kenya. The sample was purposively
selected to represent the 13 banking institutions in Kenya, which offer all the three digital
financial services. The research employed secondary data, which was analyzed using
regression and correlation analysis via the SPPS Version 21. Findings of the study found
an insignificant negative relationship between agency banking measured in term of the
number of agents, mobile banking measured by the number of mobile banking transactions
and internet banking measured in terms internet banking transactions with financial
inclusion in the banking industry in Kenya. The study concluded that digital finance
doesn’t have any correlation on financial inclusion in banking sector in Kenya since
banking institutions adopt digital financial services to lower operating cost associated with
opening and operating branches to improve their profitability and financial performance
and not to foster financial inclusion. The study recommended that to ensure the usage and
adoption of digital financial services bank should create more awareness of such services
and offer them at lower cost to enhance the usage of digital financial services
Publisher
University Of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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