Antecedents of Technology Adoption and Financial Inclusion among Micro Enterprises in Machakos County, Kenya

Abstract

The increased levels of mobile and internet banking has enabled the Micro Enterprises (MEs) to save, undertake transactions and access low cost credit without necessarily having security for their loans. Many micro-enterprises are not included in the mainstream financial system and hence they cannot access credit. However, with the increased level of antecedents of technology adoption (mobile and internet banking), the micro enterprises have not fully adopted this new innovation to increase their levels of financial inclusion. The aim of the study was to examine the antecedents of technology adoption (mobile and internet banking) on financial inclusion among the micro enterprises in Machakos County. The study adopted a descriptive research design since it seeks to build a profile about the relationship between antecedents of technology adoption (mobile and internet banking) to financial inclusion in Kenya. The study was targeting micro enterprises operating in Kenya with a special focus to Machakos County. Purposive sampling technique was used to select the sample for the study. Questionnaire was used for data collection as it was cost effective as opposed to other instruments. Pilot testing involved60 businesses which were not included in the final sample. To enhance validity in this study, content related validity of the questionnaire was used. On the other hand, reliability was assessed using the test-retest method and was done alongside the pilot study. The researcher selected a pilot group comprising 10% of the sample. The research instruments were tested for reliability using the split half method. This was done by collecting data from 60 respondents. Data was verified and edited for completeness and consistency. Content analysis and descriptive analysis was employed. Regression analysis was applied to establish the relationship between the variables. Regression results showed that convenience and financial inclusion are positively and significantly related (β=0.201, p<0.001). Transaction cost and financial inclusion were also found to positively and significantly related (β=-0.091 p<0.002). Perceived value and financial inclusion are positively and significantly related (β=0.233, p<0.001).Collateral and financial inclusion are positively and significantly related (β =0.154, p<0.002) while technology adoption and financial inclusion are positively and significantly related (β=0.573, p<0.001). The study further found that financial services technology innovation moderates the relationship between transaction cost, perceived value and convenience and financial inclusion of micro enterprises. The study concludes that collateral, transaction cost, convenience, perceived value and technology adoption have a positive and significant relationship with financial inclusion of micro enterprises. It was further established that mobile and internet banking have improved the access to financial services by micro-enterprises. This is seen through improved business growth among the enterprises as they can access low cost credit for business growth. The low cost of credit for the micro-enterprises has improved the level of financial inclusion. It’s recommended that owners of micro enterprises should use mobile banking since it makes it easier for them to carry out their businesses operations. According to the study, use of internet banking makes it easier for owners of micro-enterprises to carry out their businesses operations. The study recommends that owners of micro enterprises should adopt use of internet banking since it does not require a lot of technical knowledge for it is simple to use hence convenient for business owners. The owners of micro-enterprises should use mobile and internet banking to accomplish their banking tasks anytime and anywhere since it is efficient for them.