Brenda Kulola Wakio

Empowering Inclusion through Governance and Literacy: Unraveling the Role of Social Capital in Kenya’s Digital Finance Landscape

Introduction

Empowering inclusion through governance and literacy: unraveling the role of social capital in kenya’s digital finance landscape. Explore how governance, internet penetration, trust, digital literacy, and social capital enhance digital financial inclusion in Kenya. Offers policy insights for inclusive growth.

Abstract

Aim: This study investigates the impact of governance quality and internet penetration on financial inclusion in Kenya, emphasizing the mediating roles of perceived trust in digital financial services and digital literacy, and the moderating role of social capital. The research aims to develop a comprehensive framework that integrates institutional, technological, and behavioral dimensions influencing digital financial inclusion across urban and rural contexts.Methodology: A quantitative research design was employed using data collected from 195 respondents across Kenya’s urban and rural regions. Validated measurement scales were adopted from previous studies, and data were analyzed using ADANCO 2.3 for composite-based Structural Equation Modeling (SEM). The analysis assessed reliability, validity, and structural relationships among constructs through path analysis and bootstrapping procedures.Findings: The results confirmed that both governance quality and internet penetration significantly enhance financial inclusion. Perceived trust and digital literacy mediate these relationships, while social capital moderates the effects of trust and literacy on inclusion. The model demonstrated strong reliability, validity, and explanatory power, with R² values exceeding 0.80.Implications/Novel Contribution: This study extends financial inclusion theory by integrating governance, technology, and social capital perspectives. It offers practical insights for policymakers to promote inclusive finance through governance reforms, digital literacy initiatives, and community-based trust-building strategies.

Review

This study presents a timely and highly relevant investigation into the complex dynamics of digital financial inclusion in Kenya, focusing on the interplay of institutional, technological, and behavioral factors. The authors successfully aim to develop a comprehensive framework that integrates governance quality, internet penetration, perceived trust, digital literacy, and, crucially, the moderating role of social capital. By bridging these diverse dimensions, the research significantly extends existing financial inclusion theory, offering a nuanced understanding of how these elements converge to shape access and participation in the digital finance landscape, particularly across urban and rural contexts. The methodology employed is robust, utilizing a quantitative research design with data collected from 195 respondents across Kenya. The use of validated measurement scales and composite-based Structural Equation Modeling (SEM) with ADANCO 2.3 ensures methodological rigor and confidence in the analytical approach. The findings are compelling, empirically confirming that both governance quality and internet penetration significantly enhance financial inclusion. Furthermore, the study effectively validates the mediating roles of perceived trust and digital literacy, and importantly, demonstrates how social capital moderates the effects of trust and literacy on inclusion. The reported R² values exceeding 0.80 underscore the model's strong explanatory power, reliability, and validity. The implications of this research are substantial, offering both theoretical advancements and practical insights for policymakers. By integrating governance, technology, and social capital, the study provides a holistic perspective on empowering inclusion. It offers actionable strategies for promoting inclusive finance through targeted governance reforms, scalable digital literacy initiatives, and community-based approaches to build trust in digital financial services. This comprehensive framework is particularly valuable for policymakers seeking to foster equitable access and participation in digital economies within Kenya and other developing nations, making this a significant contribution to both academic discourse and practical development efforts.

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