The Role of Financial Literacy on Financial Inclusion of Women in Isiolo County, Kenya.

Abstract

Purpose: This study aimed to investigate how knowledge and understanding of financial concepts, such as budgeting, saving, borrowing, and digital banking, influence the ability of women in Isiolo County, Kenya, to access and effectively use formal financial services. Methodology: This study used a descriptive design to examine 279 women entrepreneurs from a population of 920 in Isiolo County, selected via proportionate random sampling. Data were collected using structured questionnaires. The study used for descriptive and multiple regression analysis. Diagnostic tests confirmed data suitability for regression analysis. Results: The study found a statistically significant positive relationship between financial literacy and financial inclusion among women in Isiolo County. A correlation coefficient of 0.487 indicated a moderate positive link, while an R-squared of 0.237 showed that financial literacy explained 23.7% of the variance in financial inclusion. The regression coefficient (B = 0.558) revealed that each unit increase in financial literacy led to a 0.558-unit rise in financial inclusion. The model was significant (F = 72.345, p < 0.05). Unique Contribution to Theory, Policy, and Practice: This study offers valuable insights into how financial literacy drives women’s financial inclusion, particularly in underserved communities. It strengthens Financial Literacy Theory by demonstrating that women with financial knowledge, budgeting skills, and confidence are better positioned to engage with formal financial services. At the policy level, it encourages institutions like the Central Bank of Kenya and Women Enterprise Fund to incorporate tailored, gender-sensitive financial education into development initiatives. Practically, it advocates for targeted training by financial institutions and NGOs on key topics such as digital banking, credit, savings, and budgeting. To enhance reach, mobile learning and peer-based education are recommended, especially for low-literacy populations. The co-design of user-friendly financial products with local women is also emphasized to improve accessibility and impact.