Abstract: The current study sought to assess the effect of reduced overall costs by agency banking in the financial inclusion of small and medium enterprises in Kenya. The study was guided by four theories: Theory of Financial Intermediation; Transaction Cost Theory; Agency theory and the Theory of Financial Inclusion. The study employed a descriptive research design. The target population of the study were the SME’S operating within the Nairobi North Tax District and are legally registered by KRA as taxpayers on the category of SMEs. Nairobi North District has a total of 1840 SMEs, (KRA, 2014). All the 1840 SMEs formed the target population for the study. Questionnaires were the main research instruments that were used in this study. Data was analysed using quantitative technique. Inferential statistics included Analysis of Variance (ANOVA), Pearson correlation and Multi linear regression analysis. These were used to establish the relationship among the study variables and to test the formulated hypotheses at 95% confidence level and 5% level of significance. It is evident from the finding table that 87% of variation or change in the financial inclusion is explained by the overall cost of banking. This implies that this factor is very significant (since the p-values< 0.05) and therefore need to be considered as a strategy in increasing the financial inclusion of SMEs. More agent banking outlets should be opened to offer more services to increase the geographical coverage.
Keywords: Small and Medium Enterprises, Reduced Overall Cost, Financial Inclusion.
Title: Effect of Reduced Overall Costs by Agency Banking in the Financial Inclusion of Small and Medium Enterprises in Kenya
Author: Lucy Margaret Andeso, Dr. Assumpta Kagiri
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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