Effect of Mobile Banking on Financial Inclusion among Small-Medium Enterprises in Kakamega County, Kenya

Benard Omae Ouncho; Benedict Alala Ondiek; Dennis Morara Bulla

doi:10.51867/ajernet.4.2.46

Authors

Benard Omae Ouncho MBA Finance Student, School of Business and Economics, Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0000-0002-6123-9926
Benedict Alala Ondiek PhD, Associate Professor School of Business and Economics, Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0000-0001-9672-8984
Dennis Morara Bulla PhD, Lecturer, School of Business and Economics, Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0000-0003-2530-8012

DOI:

https://doi.org/10.51867/ajernet.4.2.46

Keywords:

Financial Inclusion, Mobile Banking, Small and Medium Enterprises

Abstract

At the end of 2016, adults to the tune of 25 percent had not attained inclusion in financial matters. The general objective was to determine the effect of mobile banking on financial inclusion among SMEs in Kakamega County, Kenya. This study was founded on the diffusion-innovation theory. The descriptive research design was adopted for a population of 9116, comprising 5108 small businesses and 4008 small-medium businesses in Kakamega County, Kenya. This study sampled 369 SMEs, who formed the respondents for the study. This study used questionnaires, so primary data was obtained. Data analysis was done using descriptive and inferential statistics. The study found a positive correlation coefficient of financial innovation parameter, mobile banking (t= 5.060, p<0.005) on financial inclusion among small-medium enterprises. The study findings have shown that mobile banking is significant; hence, banks should subscribe to small-medium enterprises to enable convenient operations and timely transactions. The study findings have shown that mobile banking is significant; hence, banks should subscribe small-medium enterprises to mobile banking to enable affordable access to funding and easier operational transacting, thereby promoting financial inclusion among small-medium enterprises.

References

ADB. (2014). Cooperation with Civil Society Annual Report 2010. ADB Reports. RePEc:asd:wpaper:rpt124429.

Argamo, H. H. (2016). The Effect of Agency Banking on The Financial Performance of Commercial Banks in Kenya in 2014: A Case Study of Chase Bank (Doctoral dissertation, United States International University-Africa).

Biju, M., & Joseph C. (2016). Financial Management: Theory and Practice (Eleventh Edition). South Western: Thomson.

CBK. (2022). Annual Report and Financial Statements 2021/2022. Central Bank of Kenya.

CBK. (2015). Annual Report and Financial Statements 2014/2015. Central Bank of Kenya.

Dermiguc, H., & Klapper, D. (2016). Adoption of financial innovation in the Ghanaian banking industry. African Review of Economics and Finance, 6(2), 88-114.

KNBS. (2021). 2021 FinAccess Household Survey. Nairobi, Kenya: FSD Kenya.

Government of Kenya. (2022). The systematic small medium enterprises financing measures. Government Printers Papers on Economic Activity, 2010(2), 261-297.

Goldfarb, A., & Tucker, C. (2019). Digital Economics. Journal of Economic Literature, 57(1), 3-43. DOI: https://doi.org/10.1257/jel.20171452

https://doi.org/10.1257/jel.20171452

Grandolini, A. (2015). Relationship between bank innovations and financial performance of commercial banks in Kenya. International Journal of Education and Research, 3(5), 443-456.

Idowu, A. A., Ngumi, P., & Muturi, W. (2020). Financial Innovation Adoption and Turnaround Time. Journal of Research in Economics and International Finance, 5(2), 014-028.

Kakamega County Ministry of Trade. (2016). The SMEs Statistics. County Government of Kakamega Business Records. County Government of Kakamega.

Kambua, B. D. (2015). The effect of agency banking on financial performance of commercial banks in Kenya (Master's Thesis, University of Nairobi).

Kenya National Bureau of Statistics. (2019). The Balanced Scorecard: Translating Strategy into Action. Kenya National Bureau of Statistics.

Kothari, C. R. (2013). Research Methodology: Methods and Techniques (2nd Edition). New Delhi, India: New Age International (P) Limited.

Krejcie, R.V., & Morgan, D.W. (1970). Research Methods for Business: A Skill Building Approach (4th Edition). John Wiley & Sons, New York.

Marus, E., Mwosi, F., Obura, O., Turyehebwa, A., & Uwonda, G. (2021). Financial inclusion and the growth of small medium enterprises in Uganda: empirical evidence from selected districts in Lango sub-region. Journal of Innovation and Entrepreneurship, 10(1), 23. DOI: https://doi.org/10.1186/s13731-021-00168-2

https://doi.org/10.1186/s13731-021-00168-2

Mwania, M., P. (2018). The antecedents of financial services technology (mobile and internet banking) adoption and their influence on Financial inclusion in Kenya (Thesis, Kenya Methodist University).

Oburu, K.N. (2018). The effect of agency banking on financial performance of commercial banks in Kenya (Master's Thesis, University of Nairobi).

Njagi, J., & Njoka, C. (2021). Microfinance Reforms and Financial Inclusion in Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 3(1), 54-72. https://doi.org/10.35942/ijcfa.v3i1.181 DOI: https://doi.org/10.35942/ijcfa.v3i1.181

Nair, H. M. (2017). The effect of financial innovation on the financial performance of commercial banks in Kenya (MSc. Project, University of Nairobi).

Oshora, B., Desalegn, G., Hegyes, G., Farkas, G., & Zeman, Z. (2021). Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia. Journal of Risk and Financial Management, 14(7), 286. https://doi.org/10.3390/jrfm14070286 DOI: https://doi.org/10.3390/jrfm14070286

Pierrakis, Y., & Collins, L. (2013). Crowdfunding: A New Innovative Model of Providing Funding to Projects and Businesses. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2395226 DOI: https://doi.org/10.2139/ssrn.2395226

Qamruzzaman, G., & Wei, J. (2021). Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel investigation. International Journal of Financial Studies, 7(4), 61. https://doi.org/10.3390/ijfs7040061 DOI: https://doi.org/10.3390/ijfs7040061

Rogers, E.M. (2003). Diffusion of innovations (5th Ed.). New York: Free Press.

Samuel, H. M., & Mbugua, D. (2019). Effect of financial inclusion initiatives on the financial performance of women-owned small and medium-sized enterprises in Kenya. The Strategic Journal of Business & Change Management, 6(2), 2052-2064. https://doi.org/10.61426/sjbcm.v6i2.1238 DOI: https://doi.org/10.61426/sjbcm.v6i2.1238

World Bank. (2022). The Small Medium Enterprises financial inclusion criteria. Journal of Research in Economics and International Finance, 5(2), 015-028.