Digital technologies and financial inclusion amongst small and medium-sized enterprises in Nairobi county, Kenya

Abstract

The main focus of this study was to establish the effects of digital technologies on financial inclusion amongst small and medium-sized enterprises in Nairobi County, Kenya. The study was specifically centered on establishing the effect of online banking services, digital lending platforms, agency banking platforms and mobile money services on financial inclusion amongst small and medium-sized enterprises in Nairobi County, Kenya. The theories anchoring the study comprised of Diffusion Innovation Theory, Credit Rationing Theory, Financial Intermediation Theory and Theory of Financial Innovation. A descriptive research design was employed and the target population comprised of 21100 SMEs operating in Nairobi City County Central Business District. Fishers sampling formula was utilized in deriving a sample size of 96 SMEs. Stratified sampling technique was used in distributing the sample size across the SMEs’ categories. The units of observation comprised of owners or managers of the businesses. The instrument for collecting data were closed-ended questionnaires structured in a five-point Likert scale. The gathered data was analysed using both descriptive and inferential statistics. The mean and standard deviation were examples of descriptive statistics, whereas regression analysis and correlation were examples of inferential statistics. The results of the analysis were presented using tables and figures. The study established that digital technologies comprising of online banking services, digital lending platforms, agency banking platforms and mobile money services positively and significantly correlates with financial inclusion amongst SMEs. Consequently, the study established a positive and significant effect of digital technologies (Online Banking Services, Digital Lending Platforms and Mobile Money Services) on financial inclusion as shown by beta values of 0.285, 0.465 and 0.501and significant values of 0.024, 0.001 and 0.003 respectively. The results implied that increasing any of the aspects of the digital technologies with one unit would result to an increase in the levels of financial in SMEs with respective beta values. Agency Banking Platforms however had a positive but insignificant effect on financial inclusion. The study concluded that online banking services, digital lending platforms, and mobile money services bears a positive effect on financial inclusion amongst SMEs. From the findings, the study recommended the SMEs to leverage on the digital technologies in their business operations since the technologies contributes significantly to financial inclusion and business growth.