Abstract:
The overall objective of the study was to determine factors affecting financial inclusion
among owners of small and medium enterprises in Nairobi County, Kenya. Specifically, the
study sought to establish the effect of financial literacy, demographic characteristics and
information asymmetry on financial inclusion among owners of small and medium-sized
enterprises in Nairobi County, Kenya. The analysis adopted descriptive research design. The
study population was all of Nairobi County's registered SMEs owners which were 312,981.
The sample was 384 SMEs owners who were selected using stratified random sampling. The
study used primary data that was collected using structured questionnaires. Data was
analysed using descriptive statistics (mean and standard deviation), correlation analysis as
well as simple and multiple linear regression analysis. The SPSS software was used to
analyse the data. The results also showed that financial literacy and demographic
characteristics had a positive correlation with financial inclusion of (r=0.613) and (r=0.552)
respectively while information asymmetry was strongly and negatively correlation with
financial inclusion (r=0.626). Financial literacy and demographic characteristics were found
to have a positive and significant effect on financial inclusion among SMEs owners (adjusted
R2=0.374; F=172.706; β=0.706; P=0.000<0.05), adjusted R2=0.302; F=125.734; β=0.804;
P=0.000<0.05) respectively, while information asymmetry has a negative and significant
effect on financial inclusion among SMEs owners (adjusted R2=0.390; F=184.896; β=-0.751;
P=0.000<0.05). Combined, financial literacy, demographic characteristics and information
asymmetry were significant (adjusted R2=0.678; F=202.750; P=0.000<0.05). Based on the
results, the study concluded that demographic characteristics have the greatest effect on
financial inclusion among SMEs owners in Nairobi County. Based on the findings, the study
recommends that SMEs owners should strengthen their financial literacy skills; the County
government should ensure that everyone whether old or young has equal access to financial
credit; financial institutions should disclose all relevant information pertaining to financial
services to business owners. Further studies should also be carried out on other factors
affecting financial inclusion not included in the study to determine whether they have a
significant influence on financial inclusion among small and medium enterprises owners in
Nairobi County, Kenya
