Effect Of Financial Literacy On Uptake Of Digital Credit Amongst Proprietors Of Micro-enterprises In Kiambu County

Abstract

Different scholars have emphasized the importance of financial literacy to shareholders and stewards of micro-enterprises. Financial literacy is the mastery of financial concepts namely knowledge, attitudes towards money and behaviors. The study aimed to establish the effect of financial literacy on the uptake of digital credit amongst micro enterprise proprietors in Kiambu County, Kenya. Specifically, the study aimed was to establish the effects of financial knowledge, financial behavior, and financial attitude on the uptake of digital credit among proprietors of micro-enterprises in Kiambu County, Kenya. The study adopted a correlational research design. The target population for the study was 12,460 Micro Enterprises in Kiambu County, from which a sample of 201 respondents was randomly selected. The study collected primary data by administering questionnaires. Quantitative data gathered was analyzed through descriptive and inferential statistics and presented in form of frequencies, percentages, sample means and standard deviations. The information was presented by use of pie charts, tables and in prose form. The study applied multiple regression analysis models to establish the strength and direction of the association between the predictor and independent variables. The study established a moderate positive correlation between financial knowledge and uptake of digital credit by micro-enterprise proprietors in Kiambu County. However, no significant relationship between financial behaviour and financial attitude on uptake of digital credit amongst the proprietors of micro enterprises in Kiambu county was noted. The model was found to be moderately significant with an R2 =0.247, which implies that 24.7% of the variation of uptake of digital credit by micro-enterprises in Kiambu County is attributed to financial literacy. The findings of this study are relevant to the proprietors of micro-enterprises, policy makers, academicians, and scholars. The study recommends that the proprietors of micro-enterprises should formulate and implement effective strategies of financial literacy to enhance the uptake of digital credit by micro-enterprise proprietors in Kiambu County additionally, recommends further studies on the research topic in different counties and seek exploration on other factors impacting to a larger extent uptake of digital credit.