| dc.description.abstract | Over the past decade Kenya has experienced intense financial sector reforms with
extensive growth of technological advancements such as mobile banking and automatic
teller machines. Growth in financial inclusion has been cited as one of the pillars that are
expected to drive the economy towards a prosperous ten per cent growth rate as
envisioned in the vision 2030. Greater financial inclusion is expected to increase
household’s access to financial services, boost savings and investments, and lead to the
realization of the country’s development agenda. However, despite the efforts, access to
formal financial services remains low. The main intention of this research was to examine
the effect of financial literacy on financial inclusion of micro and small business owners
in Nairobi County. The following specific objectives were used to guide the study; to
determine the influence of saving practices on financial inclusion, to examine the effect
of debt management practices on financial inclusion, to determine the effect of financial
planning practices on financial inclusion and to establish the effect of investment
practices on financial inclusion of micro and small business owners in Nairobi County.
Information asymmetry theory, behavioral economics theory and financial education
theory were adopted to anchor the study. Both a descriptive and an explanatory research
design were used in this research. The target population comprised of all the 13,428
small and micro retail businesses owners operating in Nairobi City Central Business
District. Yamane formula was used to arrive at the sample size of 388. Primary data
obtained using questionnaires was collected. The questionnaire's validity and
effectiveness was tested in this study by randomly selecting 39 respondents to complete
it. The questionnaires were administered through Google forms. Upon collection of the
data, it was coded in quantitative format so as to enable analysing using version 24 of
statistical package for social sciences (SPSS). Inferential as well as descriptive statistics
generated included frequencies and percentages and simple and multiple linear regression
respectively. Descriptive and inferential statistics generated were presented in tables and
figures. 308 questionnaires were fully filled and returned giving a response rate of 79.4%
that was considered adequate. Findings revealed a positive and significant relationship
between various financial literacy practices – saving (β=0.225, p=0.000), debt
management (β=0.405, p=0.000), financial planning (β=0.198, p=0.000), and investment
(β=0.728, p=0.000)– and heightened financial inclusion. The study concludes that
business owners engaging in disciplined saving practices, effective debt management,
comprehensive financial planning, and active investment strategies were more likely to
experience increased access to formal financial services. The research underscores the
pivotal role of financial literacy in fostering financial inclusion among micro and small
businesses. Recommendations include the development of targeted financial education
programs, promotion of technology-driven financial solutions, and longitudinal studies to
assess the sustained impact of financial literacy interventions. These insights provide a
foundation for policymakers, financial institutions, and business support organizations to
enhance financial inclusion strategies tailored to the unique needs of micro and small
business owners in Nairobi County. | en_US |
