Socio-Economic Determinants of Digital Financial Inclusion in Kenya

Abstract

Empirical studies and data from the Global Findex show that financial inclusion varies widely across regions, income levels, and individual characteristics. This study examines the influence of socio-economic and demographic factors on the accessibility, usage, and well-being of digital financial inclusion in Kenya by using World Bank's 2017 Global Findex survey on Kenya, a microdata dataset with 1000 observations to meet research expectations. Given the dichotomous nature of dependent variables, this study uses binary probit analysis to draw the implications. The results show that factors like being a man, young, educated, employed, and rich are significant in determining the accessibility and utilization of digital financial services in Kenya. Furthermore, this research also revealed that the elements affecting financial inclusion and well-being include education level, gender, and income status. The result suggests that policymakers should focus on empowering women and the poor, adopting measures to enhance workforce and income growth, and addressing differences in individual characteristics on age and education to promote the inclusion of the poor into the formal financial system in Kenya.