Behavioural determinants of financial inclusion in Uganda

Katoroogo, Rachel Mindra
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Financial Inclusion seeks to overcome the friction that hinders markets from expanding access and use of formal financial products and services to a broad number of people. Despite the significant policy efforts and increased presence of formal financial service providers, the Ugandan economy still bears low levels of financial inclusion, especially in the rural areas. The finance growth and decision-behaviour theories substantiate the importance of understanding the psychological processes underlying observed individual judgments or choices regarding the use of formal financial services. Using Sen’s capability approach, this study examined the personal and societal capabilities that influence financial inclusion of individual financial consumers. Specifically, this study assessed whether the capabilities an individual possessed actually contributed towards their likelihood of financial inclusion. The hypothesized study relationships with financial inclusion were realized, following a positivist and quantitative approach using a cross sectional research design. The sample of 400 individuals to whom the survey questionnaire was delivered were drawn from two distinct regions of Central and Northern Uganda. The two regions represented varying levels of financial inclusion - high inclusion (urban Central) and low inclusion (rural Northern). In this study, besides the traditional regression models, structural equation modelling using Analysis of Moments (AMOS), were used to establish the causal relationships between the hypothesized study variables. The study results revealed that financial self-efficacy, financial literacy, social networks and the interaction of the personal and societal capabilities significantly contributed to an individual’s financial inclusion across the two regions. The results further revealed that the personal and societal capabilities independently, and when combined, contribute towards an individual’s financial self-efficacy. Through an assessment of the mediation effect, this study demonstrated how financial self-efficacy can boost individuals to confidently undertake financial tasks and decisions and consequently, financial inclusion in relation to their capabilities, respectively. The results provide support to Sen’s capability theory as a tool for explaining financial inclusion from a demand side perspective within the Ugandan context.
Thesis (Ph.D.)--University of the Witwatersrand, Faculty of Commerce, Law and Management, Wits Business School, 2016
Katoroogo, Rachel Mindra (2016) Behavioural determinants of financial inclusion in Uganda, University of the Witwatersrand, Johannesburg, <>