The Transformative Influence of Digital Finance on Rural Women's Financial Inclusion: Evidence from Kenya |Chapter 6 | New Advances in Business, Management and Economics Vol. 10

 

Financial inclusion refers to the process of ensuring access to financial services and providing timely and adequate credit when needed by vulnerable groups like the weaker sections and low-income groups at an affordable cost. Over the past decade, significant progress has been made in increasing financial inclusion worldwide; however, disparities still exist. Digital finance has emerged as a transformative solution to address this critical issue. This chapter explores the significant impact of digital finance on the financial inclusion of rural women, a group that has historically been underserved by traditional banking services due to geographical and socio-cultural barriers. Using a cross-sectional descriptive design with a sample of 961 rural Kenyan women, the chapter utilized Partial Least Squares Structural Equation Modeling (PLS-SEM) and the Chi-Square test of independence to assess the relationship between digital finance adoption and financial inclusion. The findings reveal a strong positive relationship between the use of digital financial systems and increased financial inclusion. The PLS-SEM analysis produced a path coefficient (β) of 0.728, indicating a significant direct influence. The R-squared (R2) value was 0.530, which means that digital finance accounts for 53% of the variance in financial inclusion. Additionally, the chapter found a very substantial effect size (f2) of 1.129, far exceeding the threshold for a large effect, confirming the practical significance of this relationship. The Chi-Square test of independence further reinforced these findings with a Pearson Chi-Square value (χ2) of 158.715 and a p-value of .000. This value is significantly higher than the critical values of 3.841 (α=0.05) and 6.635 (α=0.01) at one degree of freedom, leading to the rejection of the null hypothesis and confirming a statistically significant association between digital finance and financial inclusion. Despite these positive findings, the average digital finance score among rural women was 6.609, which is below the target threshold of 8, indicating low overall adoption. However, the study also found that over half of the respondents (70.27%) owned a mobile device and a significant majority (66.14%) had mobile money accounts, highlighting the widespread nature of mobile money in the region. Overall, the study demonstrates that digital finance provides a secure and convenient way to save and transact, serving as a gateway to formal financial services and entrepreneurial opportunities for rural women. The results emphasize the need for targeted digital literacy programs and supportive policies to empower rural women and ensure equitable financial inclusion.

 

 

Author(s) Details

Mildred Amugune
School of Business, Economics, Hospitality and Tourism Management, Machakos University, Kenya.

 

Josephat M. Kiweu
School of Business, Economics, Hospitality and Tourism Management, Machakos University, Kenya.

 

Charles Ombuki
School of Business, Economics, Hospitality and Tourism Management, Machakos University, Kenya.

 

Please see the book here :- https://doi.org/10.9734/bpi/nabme/v10/6294