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Effects of Financial Literacy on Individual Choices Among Financial Access Strands in Kenya

Received: 11 February 2016     Accepted: 21 February 2016     Published: 4 March 2016
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Abstract

This paper investigates effects of financial literacy on individual choices among formal financial services, informal financial services, and complete financial exclusion in Kenya. The study employed cross-sectional analysis using FinAccess national surveys 2009 and 2013 for 6,598 and 6,449 individuals, respectively. Multinomial probit regressions show that financial literacy is a strong predictor of individual demand for financial services. Financial literacy scores increases with increasing level of formality and average performance on financial literacy tests is generally lower than those reported in extant studies for developed countries. The findings suggest importance of policy efforts to promote financial literacy to expand individual access to formal financial services. To our knowledge this is the first paper in developing countries context to use both objective and self-reported measures of financial literacy and its role in individual choices among different financial access strands.

Published in International Journal of Business and Economics Research (Volume 5, Issue 1)
DOI 10.11648/j.ijber.20160501.12
Page(s) 10-18
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Financial Access, Literacy, Probit, Sub-saharan Africa, Kenya

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  • APA Style

    Adan Guyo Shibia, Joseph Kieyah. (2016). Effects of Financial Literacy on Individual Choices Among Financial Access Strands in Kenya. International Journal of Business and Economics Research, 5(1), 10-18. https://doi.org/10.11648/j.ijber.20160501.12

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    Adan Guyo Shibia; Joseph Kieyah. Effects of Financial Literacy on Individual Choices Among Financial Access Strands in Kenya. Int. J. Bus. Econ. Res. 2016, 5(1), 10-18. doi: 10.11648/j.ijber.20160501.12

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    AMA Style

    Adan Guyo Shibia, Joseph Kieyah. Effects of Financial Literacy on Individual Choices Among Financial Access Strands in Kenya. Int J Bus Econ Res. 2016;5(1):10-18. doi: 10.11648/j.ijber.20160501.12

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  • @article{10.11648/j.ijber.20160501.12,
      author = {Adan Guyo Shibia and Joseph Kieyah},
      title = {Effects of Financial Literacy on Individual Choices Among Financial Access Strands in Kenya},
      journal = {International Journal of Business and Economics Research},
      volume = {5},
      number = {1},
      pages = {10-18},
      doi = {10.11648/j.ijber.20160501.12},
      url = {https://doi.org/10.11648/j.ijber.20160501.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20160501.12},
      abstract = {This paper investigates effects of financial literacy on individual choices among formal financial services, informal financial services, and complete financial exclusion in Kenya. The study employed cross-sectional analysis using FinAccess national surveys 2009 and 2013 for 6,598 and 6,449 individuals, respectively. Multinomial probit regressions show that financial literacy is a strong predictor of individual demand for financial services. Financial literacy scores increases with increasing level of formality and average performance on financial literacy tests is generally lower than those reported in extant studies for developed countries. The findings suggest importance of policy efforts to promote financial literacy to expand individual access to formal financial services. To our knowledge this is the first paper in developing countries context to use both objective and self-reported measures of financial literacy and its role in individual choices among different financial access strands.},
     year = {2016}
    }
    

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  • TY  - JOUR
    T1  - Effects of Financial Literacy on Individual Choices Among Financial Access Strands in Kenya
    AU  - Adan Guyo Shibia
    AU  - Joseph Kieyah
    Y1  - 2016/03/04
    PY  - 2016
    N1  - https://doi.org/10.11648/j.ijber.20160501.12
    DO  - 10.11648/j.ijber.20160501.12
    T2  - International Journal of Business and Economics Research
    JF  - International Journal of Business and Economics Research
    JO  - International Journal of Business and Economics Research
    SP  - 10
    EP  - 18
    PB  - Science Publishing Group
    SN  - 2328-756X
    UR  - https://doi.org/10.11648/j.ijber.20160501.12
    AB  - This paper investigates effects of financial literacy on individual choices among formal financial services, informal financial services, and complete financial exclusion in Kenya. The study employed cross-sectional analysis using FinAccess national surveys 2009 and 2013 for 6,598 and 6,449 individuals, respectively. Multinomial probit regressions show that financial literacy is a strong predictor of individual demand for financial services. Financial literacy scores increases with increasing level of formality and average performance on financial literacy tests is generally lower than those reported in extant studies for developed countries. The findings suggest importance of policy efforts to promote financial literacy to expand individual access to formal financial services. To our knowledge this is the first paper in developing countries context to use both objective and self-reported measures of financial literacy and its role in individual choices among different financial access strands.
    VL  - 5
    IS  - 1
    ER  - 

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Author Information
  • Kenya Institute for Public Policy Research and Analysis, Nairobi, Kenya

  • Kenya Institute for Public Policy Research and Analysis, Nairobi, Kenya

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