Financial Inclusion and Stock Market Developmentin Kenya; ACase of Kajiado County

Abstract

The Group of Twenty (G20) recognizes that financial inclusion as a key enabler in the fight against poverty. In effort to alleviating poverty in Kenya, the government identified the stock market as a key avenue in mobilizing resources. The Development of its stock market is thus vital avenue that could be used to mobilize investment funds required for implementation of vision 2030 projects. However, the stock market is contributing less than one percent of growth financing against the government expectation of ten percent. This study therefore, sought to investigate the effect of financial inclusion on stock market development in Kenya. The specific objectives were to determine the effects of access to financial services, usage of financial services, quality of the products and the service delivery on stock market development in Kenya. Using stratified random sampling, a sample size of 482respondents was drawn from a target population.Multiple regression Model was employed in order to determine the relationship between financial inclusion and stock market participation in Kenya. The study found out there was a strong positive relationship between financial access, usage and product quality and stock market development.Also, financial access(β=.061, p<0.05), usage(β=.083, p<0.05)and product quality(β=.476, p<0.05)has a positive and statistically significant effect on stock market development in Kenya.In addition, the study found that most of the responses on advanced financial literacy questions were performed below average indicating low financial literate levels among the respondents.The study recommends that the county government initiate programs that will enhance financial inclusion in the county, this will not only enhance stock market development but also other market sectors.