Impact of Financial Inclusion on Consumption Expenditure in Kenya

Isaac Mwangi and Rosemary Atieno

International Journal of Economics and Finance, 2018, vol. 10, issue 5, 114-128

Abstract: The main agenda of this study is to explore the impact of both single (transactionary, credit, savings and investment, insurance and pension) and composite (portfolio usage) measures of financial inclusion on household welfare in Kenya. To address this, the study makes use of repeated household Financial Access datasets over 2009-2016 to apply dynamic panel regression methods. The results show that the observed differences in welfare varies by financial product with the credit channel taking the lions share. A zero to one change from non-usage (control) to usage (treatment) of credit, transactionary and insurance products among Kenyan households was found to be statistically significant in raising household welfare ceteris paribus. Similarly, the coefficient of the constructed index of financial inclusion was found to be both positive and statistically significant in explaining household welfare. Given the significant role financial inclusion plays in enhancing welfare, the study recommends a reduction in transactionary costs through an increase in the range of formal financial products to raise competition in financial markets. Policies targeting welfare improvement through finance should also be aligned to specific financial inclusion transmission channels to be more effective as opposed to policy formulation based on economic aggregates.

Keywords: welfare; endogeneity; financial inclusion; consumption (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://ccsenet.org/journal/index.php/ijef/article/view/67462 (application/pdf)
http://ccsenet.org/journal/index.php/ijef/article/view/67462 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:10:y:2018:i:5:p:114-128

Access Statistics for this article

More articles in International Journal of Economics and Finance from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().