The Effects of financial inclusion on entrepreneurial venture formation in marginalized areas in kenya - a case of Chepyuk Ward, Mt. Elgon Sub-County
Date
2023
Authors
Kipnusu, T. K.
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Publisher
Strathmore University
Abstract
Financial inclusion has widely been touted as a vital tool in alleviating poverty and reducing income imbalance among the rural-poor in developing economies. The concept of financial inclusion (FI) has become popular and has been described as a means of easy and voluntary access to basic financial services. This study sought to determine the effect of financial inclusion on entrepreneurial venture formation in marginalized areas with focus on Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The highest financial exclusion of 29% is in marginalized areas compared to 2% in non-marginalized areas. Further, Commission for Revenue Allocation identifies Mt Elgon in Bungoma County, Western Kenya among 1,424 areas in 47 counties as most deprived and therefore marginalized. The overall objective of the study was to determine the effect of financial inclusion on entrepreneurial venture formation in marginalized areas with focus on Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The study had three specific objectives: The first specific objective was to establish the extent of access to financial services and its effects on entrepreneurial venture formation in Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The second specific objective was to establish the extent of usage of financial services and its effects on entrepreneurial venture formation in Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The third specific objective was to investigate the level of awareness of existence of financial services and its effects on entrepreneurial venture formation among the marginalized areas of Chepyuk Ward, Mt. Elgon Sub-County in Kenya. This study used two theories; Capabilities theory and theory of asymmetric information. Descriptive research design was applied and a sample size of 379 households from a target population of 7,274 households from Chepyuk ward was used in this study. Two research assistants were trained and supported data collection process. The study adopted a spearman`s rank correlation coefficients and binary logit regression model. Results of the study indicated that there was a positive and not significant effect of access to financial services on entrepreneurial venture formation. There was an inverse and not significant effect of usage of financial services on entrepreneurial venture formation. Moreover, there was an inverse and significant effect of level of awareness of financial services and entrepreneurial venture formation in Chepyuk Ward, Mt. Elgon Sub-County. The study concludes that extent of financial access, access to financial training and financial literacy are catalysts of entrepreneurial venture formation. There is need for cost benefit analysis by financial services providers so as to examine the costs of credit facilities, use of mobile financial services and micro insurance so as to match the need with costs incurred by service seekers, especially the low income earners in the marginalized areas. There is need for deployment of strategies that may alter the inverse effect of access of financial services, access of financial training and financial literacy. There is need for development of policy programs that would mitigate against the levels of information asymmetry and ultimately increase uptake of financial products and reverse the trend of entrepreneurial venture formation.
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Citation
Kipnusu, T. K. (2023). The Effects of financial inclusion on entrepreneurial venture formation in marginalized areas in Kenya—A case of Chepyuk Ward, Mt. Elgon Sub-County [Strathmore University]. http://hdl.handle.net/11071/15409