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Article
Publication date: 4 December 2017

George Okello Candiya Bongomin, John C. Munene, Joseph Mpeera Ntayi and Charles Akol Malinga

The purpose of this paper is to examine the impact of individual components of financial literacy in promoting financial inclusion of poor households in rural Uganda.

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Abstract

Purpose

The purpose of this paper is to examine the impact of individual components of financial literacy in promoting financial inclusion of poor households in rural Uganda.

Design/methodology/approach

The study was cross-sectional combined with correlation and regression analyses. Data were collected from 400 poor households drawn from four regions in rural Uganda. Hierarchical regression analysis was used to test for the contribution of individual components of financial literacy on financial inclusion of poor households in rural Uganda. In addition, confirmatory factor analysis was used to establish existence of convergent validity between the items used to measure the different constructs under study. Furthermore, analysis of variance was also adopted to test for variation in perceptions of poor households on being financially included.

Findings

The results generated from the study revealed that only attitude as a component of financial literacy significantly and positively predicts financial inclusion of poor households in rural Uganda. Contrary to previous thinking and empirical studies, behavior, knowledge, and skills are not significant predictors of financial inclusion of poor households in rural Uganda. Overall, the combined effect of the different components of financial literacy explains about 11.2 percent of the variance in financial inclusion of poor households in rural Uganda.

Research limitations/implications

The study was not without limitations. The study adopted only cross-sectional study design, thus, leaving out longitudinal study. Therefore, future studies employing longitudinal research design worth undertaking. Furthermore, the sample although large enough focused only on poor households located in rural Uganda, therefore, ignoring peri-urban and urban areas in Uganda. Besides, the study used only quantitative data, thus, qualitative study using key informant interviews may be considered for further research.

Practical implications

The paper indicates that policy makers, advocates of financial inclusion and researchers, should reconsider investigating individual contribution of the different components of financial literacy in promoting financial inclusion of poor households in rural Uganda. For researchers, it is important to re-analyze the individual components of financial literacy of behavior, knowledge, skills, and attitude in influencing financial inclusion of poor households in rural Uganda.

Originality/value

This paper combines both functional components (behavior and attitude) and non-functional measures (knowledge and skills) of financial literacy to explain financial inclusion of poor households in rural Uganda. Most financial literacy studies have mainly adopted only non-functional measures of knowledge and skills. Besides, these studies ignore the individual contribution of functional components and non-functional measures of financial literacy in explaining financial inclusion of poor households. Thus, this study is the first to examine the impact of individual components of financial literacy in explaining financial inclusion of poor households in rural Uganda.

Article
Publication date: 30 June 2020

Nguyen Huu Thu, Pham Bao Duong and Nguyen Huu Tho

This study aims to examine the accessibility, loan purposes and effects of informal credits on poor households in Northern mountainous Vietnam.

Abstract

Purpose

This study aims to examine the accessibility, loan purposes and effects of informal credits on poor households in Northern mountainous Vietnam.

Design/methodology/approach

This study used primary data collected directly from surveying 402 poor households in Thai Nguyen province using a well-designed questionnaire. The probit model is employed to specify which factors affect access to informal credit, the tobit model is used to estimate the borrowing functions specified. In addition, descriptive statistical analysis is also used to describe the accessibility, purposes and effects of informal credit on poor households.

Findings

The results show that there is a considerably high proportion of informal borrowings from relatives, neighboring villagers, professional moneylenders, rotating saving and credit groups, trade credits and mortgages. Labor force ratio, social capital and residential land areas are the key determinants of poor households' informal borrowings. The purposes of borrowing are diverse. The informal loans also have certain significant effects on poverty reduction and the welfare of poor households.

Research limitations/implications

The effects of the informal loans on house welfare should be quantitatively evaluated.

Practical implications

The findings from these analyses allow us to draw relevant policy implications for the development of rural finance in other low-income, developing countries.

Originality/value

This research contributes to the body of published literature in several ways. Firstly, it provides understanding of the performance of the informal financial subsector. Secondly, the informal subsector of rural finance is evaluated in close relation to the formal subsector.

Details

Agricultural Finance Review, vol. 81 no. 1
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 7 November 2016

George Okello Candiya Bongomin, Joseph Mpeera Ntayi and John Munene

The purpose of this paper is to examine institutional frames for financial inclusion of poor households in a Sub-Saharan Africa context and provide policy implications in solving…

Abstract

Purpose

The purpose of this paper is to examine institutional frames for financial inclusion of poor households in a Sub-Saharan Africa context and provide policy implications in solving the persistent problem of limited inclusion of poor households into mainstream formal financial services in Uganda.

Design/methodology/approach

Cross-sectional research design was used in this study. Data were collected from a randomly selected sample of 200 poor households located in Mukono District. Statistical program for Social Scientists and Analysis of Moment Structures were used to generate results.

Findings

Results have revealed the presence of regulative, normative, and procedural and declarative cognitive institutional frames, which affect financial inclusion of poor households in rural rural Uganda. The findings and policy implications are discussed in detail in the paper.

Originality/value

This study parallels the World Bank Global Findex survey (2012) on general aspects of financial inclusion around the world. It examines frames, which structure behaviours and actions of poor households towards their financial decisions and choices in attempting to improve financial inclusion with a major focus on rural Uganda.

Details

International Journal of Social Economics, vol. 43 no. 11
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 17 April 2020

Aregawi Gebremedhin Gebremariam

It is widely believed that ICT has a significant influence on the daily life of the poor and has positive spillover effects in their livelihoods. Mobile phones are one of the few…

Abstract

Purpose

It is widely believed that ICT has a significant influence on the daily life of the poor and has positive spillover effects in their livelihoods. Mobile phones are one of the few ICT innovations that have found their way into the hands of the poor residing in remote and rural areas. In Ethiopia, mobile phones are recently introduced but got an acceptance from everyone including the rural poor; in five years’ time, mobile phones subscription has increased from less than 4% to more than 40%. Empirical evidence generally documents the positive role mobile phones play in facilitating the development efforts of poor households. However, using panel data from Ethiopia, the current paper explores a less investigated issue of the possible effects of mobile phone adoption on the credit uptakes of the rural poor who are mostly neglected from the formal credit markets but finance their credit demand from informal sources including relatives/friends.

Design/methodology/approach

To investigate the relationship between mobile phones and credit uptake and/or loan size, one can use different empirical strategies. For partly unleashing the endogeneity problem, an instrumental variable estimation approach is adopted in this paper. To deal with the endogeneity problem, one may consider using the linear IV approach or the control function. But the outcome variable and the endogenous variable are binary in nature, and the usual trend is to use the linear IV models or control functions, which do not consider these binary natures of the variables. To this end, a special regressors estimator is adopted, mostly used when both the dependent and the endogenous variables are binary in nature.

Findings

The econometric results suggest mobile phones are positively associated with the credit uptake of rural households, especially credit uptake from informal sources. Households with mobile phones are found to have 4%–14% higher probabilities of credit uptake and about 6%–17% in the case of credit from informal sources. Besides, households with mobile phones are found to have about ETB 65 (USD 3.42) higher loan size and about ETB 78 (USD 4.11) higher amount of loan in the case of a loan from the informal sources. Thus, policy-makers and financial providers working on providing credit in rural areas need to exploit the use of mobile phones in reaching out to the rural poor.

Originality/value

The author attests the fact that the work described has not been published previously and that it is not under consideration for publication elsewhere. Besides, it is the original work of the author.

Details

African Journal of Economic and Management Studies, vol. 11 no. 3
Type: Research Article
ISSN: 2040-0705

Keywords

Article
Publication date: 22 June 2010

M. Mizanur Rahman and Fariduddin Ahmad

This paper describes a scheme which aims to alleviate rural poverty by providing small and microinvestment to the agricultural and rural sector for generating employment and to…

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Abstract

Purpose

This paper describes a scheme which aims to alleviate rural poverty by providing small and microinvestment to the agricultural and rural sector for generating employment and to raise the income of the rural poor.

Design/methodology/approach

To assess the impact of rural development schemes on rural poor's livelihood, primary data were collected from 1,020 clients working across the country. Multistage random sampling method was followed to select the clients. Tabular, graphical, and econometrical methods were followed to analyze the data.

Findings

Results show that household income, productivity of crops and livestock, expenditure, and employment had increased significantly due to the influence of invested money. Results of the Logit‐model showed that clients' socio‐economic factors like age, number of family members in farming, total land size and clients' ethics and morals had a positive and significant influence on household income.

Practical implications

Client's opined that the microinvestment program had provided them with the opportunity to perform their economic activities in a more organized way, leading them to the higher quality of life and also develops their awareness towards health care, proper sanitation, and drinking safe water.

Originality/value

The paper recommends the replication of this program in other rural areas of the country with the increment of investment size, demand‐led effective training on different income generating activities and monitoring on more shariah compliance of the investment mode.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 3 no. 2
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 11 October 2018

George Okello Candiya Bongomin, John C. Munene, Joseph Mpeera Ntayi and Charles Akol Malinga

The purpose of this paper is to establish the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural

Abstract

Purpose

The purpose of this paper is to establish the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.

Design/methodology/approach

The paper uses structural equation modeling (SEM) through bootstrap approach constructed using analysis of moment structures to test for the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. Besides, the paper adopts Baron and Kenny’s (1986) approach to establish whether conditions for mediation by collective action exist.

Findings

The results revealed that collective action significantly mediates the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. The findings further indicated that the mediated model had better model fit indices than the non-mediated model under SEM bootstrap. Furthermore, the results showed that both collective action and financial intermediation have significant and direct impacts on financial inclusion of the poor in rural Uganda. Therefore, the findings suggest that the presence of collective action boost financial intermediation for improved financial inclusion of the poor in rural Uganda.

Research limitations/implications

The study used quantitative data collected through cross-sectional research design. Further studies through the use of interviews could be adopted in future. Methodologically, the study adopted use of SEM bootstrap approach to establish the mediating effect of collective action. However, it ignored the Sobel’s test and MedGraph methods. Future studies could adopt the use of alternative methods of Sobel’s test and MedGraph. Additionally, the study focused only on semi-formal financial institutions. Hence, further studies may consider the use of data collected from formal and informal institutions.

Practical implications

Policy makers and managers of financial institutions should consider the role of collective action in promoting economic development, especially in developing countries. They should create structures and design financial services and products that promote collective action among the poor in rural Uganda.

Originality/value

Although several scholars have articulated financial inclusion based on both the supply and demand side factors, this is the first study to test the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda using SEM bootstrap approach. Theoretically, the study combines the role of collective action with financial intermediation to promote financial inclusion. Financial intermediation theory ignores the role played by collective action in the intermediation process between the surplus and deficit units.

Details

International Journal of Bank Marketing, vol. 37 no. 1
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 7 August 2018

George Okello Candiya Bongomin, John C. Munene, Joseph Mpeera Ntayi and Charles Akol Malinga

The purpose of this paper is to test for the predictive power of each of the dimensions of social network in explaining financial inclusion of the poor in rural Uganda.

Abstract

Purpose

The purpose of this paper is to test for the predictive power of each of the dimensions of social network in explaining financial inclusion of the poor in rural Uganda.

Design/methodology/approach

The study employed a cross-sectional research design and data were collected from a total of 400 poor households located in Northern, Eastern, Central and Western Uganda. The authors adopted ordinary least square hierarchical regression analysis to test for the predictive power of each of the dimensions of social network in explaining financial inclusion of the poor in rural Uganda. The effects were determined by calculating the significant change in coefficient of determination (R2) between the dimensions of social network in explaining financial inclusion. In addition, analysis of variance was also used to test for variation in perceptions of the poor about being financially included.

Findings

The findings revealed that the dimensions of ties and interaction significantly explain financial inclusion of the poor in rural Uganda. Contrary to previous studies, the results indicated that interdependence as a dimension of social network is not a significant predictor of financial inclusion of the poor in rural Uganda. Combined together, the dimensions of social network explains about 16.6 percent of the variation in financial inclusion of the poor in rural Uganda.

Research limitations/implications

The study was purely cross-sectional, thus, ignoring longitudinal survey design, which could have investigated certain characteristics of the variable over time. Additionally, although a total sample amounting to 400 poor households was used in the study, the results cannot be generalized since other equally marginalized groups such as the disabled persons, refugees, and immigrants were not included in this study. Furthermore, the study used only the questionnaire to elicit responses from the respondents. The use of interview was ignored during data collection.

Practical implications

Policy makers, managers of financial institutions, and financial inclusion advocates should consider social network dimensions of ties and interaction as conduits for information flow and sharing among the poor including the women and youth about scarce financial resources like loans. Advocacy towards creation of societal network that brings the poor together in strong and weak ties is very important in scaling up access to and use of scarce financial services for improving economic and social well-being.

Originality/value

Contrary to previous studies, this particular study test the predictive power of each of the dimensions of social network in explaining financial inclusion of the poor in rural Uganda. Thus, it methodologically isolates the individual contribution of each of the dimensions of social network in explaining financial inclusion of the poor. The authors found that only ties and interaction are significant predictors of financial inclusion of the poor in rural Uganda. Therefore, the findings suggest that not all dimensions of social network are significant predictors of financial inclusion as opposed to previous empirical findings.

Details

African Journal of Economic and Management Studies, vol. 9 no. 3
Type: Research Article
ISSN: 2040-0705

Keywords

Article
Publication date: 22 June 2018

George Okello Candiya Bongomin, John C. Munene, Joseph Mpeera Ntayi and Charles Akol Malinga

Premised on the argument that cognition structures the way how individuals think and make decisions, the purpose of this paper is to test the interaction effect of cognition in…

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Abstract

Purpose

Premised on the argument that cognition structures the way how individuals think and make decisions, the purpose of this paper is to test the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda.

Design/methodology/approach

The study used cross-sectional research design and quantitative data were collected and analyzed using Statistical Package for Social Sciences. Baron and Kenny guidelines were adopted to test for existence of moderating effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda. Furthermore, ModGraph excel software was used to establish the magnitude of moderating effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda.

Findings

The results revealed that cognition significantly moderate the relationship between financial literacy and financial inclusion of the poor in rural Uganda. In addition, both cognition and financial literacy also have direct effects on financial inclusion of the poor in rural Uganda.

Research limitations/implications

The study adopted cross-sectional research design and data were collected by use of only questionnaires. Future studies through longitudinal research design may be employed. Besides, further studies using interviews may be adopted. Furthermore, this study collected data from only tier 3 financial institutions, thus, ignoring the other financial institutions. Future studies could focus on financial institutions under the other tiers.

Practical implications

The findings from the study enlightens policy-makers, managers of financial institutions, and financial inclusion advocates on the importance of cognition in enhancing financial literacy among the poor, especially in rural Uganda. Cognition combined with financial literacy helps the poor to make wise financial decisions and choices toward consuming financial services and products provided by formal financial institutions. This leads to increased scope of financial inclusion of the poor in rural Uganda. Therefore, advocates of financial literacy should assess community cultural cognition and utilize them to design and fashion effective financial literacy interventions that can promote financial inclusion.

Originality/value

The study uses Baron and Kenny and ModGraph excel software to test for the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda. While several studies exist worldwide on financial inclusion, this study is the first to test the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural areas in a developing country context.

Details

International Journal of Bank Marketing, vol. 36 no. 7
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 7 August 2017

Abimbola Oluyemisi Adepoju and Oluwatofunmi Ibukun Akinluyi

The purpose of this paper is to examine the factors influencing the use of family planning and its link with multidimensional poverty in rural Nigeria.

Abstract

Purpose

The purpose of this paper is to examine the factors influencing the use of family planning and its link with multidimensional poverty in rural Nigeria.

Design/methodology/approach

The Alkire and Foster measure of poverty as well as the Logistic and Probit models were used to identify the factors influencing the use of family planning and its effect on the multidimensional poverty status of rural households in Nigeria.

Findings

The results indicate that 31.1 percent of rural households were poor with deprivations in health and education contributing the most to multidimensional poverty. The low use of contraception was closely linked to low level of literacy, lack of awareness of the different methods and high levels of poverty. The use of contraception reduced the level of poverty in the household.

Social implications

The intensity of poverty should be considered in the design of policies and programs. The wide and proper use of family planning is a sine qua non for any significant reduction in poverty. Potent and assertive family planning programs by government could be achieved through public-private sector partnership and assistance of international development partners.

Originality/value

This paper attempts to bridge the knowledge gap in the empirical literature on the link between multidimensional poverty and family planning. In particular`, its application to the rural context, often characterized by high rate of poverty and unmet needs for family planning employing nationally representative data is of immense value for social policy.

Details

International Journal of Social Economics, vol. 44 no. 8
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 4 December 2017

Arghya Kusum Mukherjee

The purpose of this paper is to find the determinants of participation and targeting efficiency of the following safety net programs in West Bengal: Mahatma Gandhi National Rural

Abstract

Purpose

The purpose of this paper is to find the determinants of participation and targeting efficiency of the following safety net programs in West Bengal: Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), self-targeted program; National Rural Livelihood Mission (NRLM), subsidy based livelihood program; Indira Awaas Yojona (IAY), targeted cash transfer program and Public Distribution System (PDS), targeted in kind transfer program.

Design/methodology/approach

The study is based on a household survey comprising 900 households across three Districts: Murshidabad, Nadia and Burdwan.

Findings

Benefits from MNREGA and PDS are not substantial, whereas financial benefits are substantial from NRLM and IAY. This paper shows that poor people have higher likelihood of participation in MNREGA and PDS. But, non poor get disproportionate benefits from IAY and NRLM both have been designed for the poor. Therefore, targeting cannot remove elite capture altogether. Socially down trodden section have higher participation in MNREGA and PDS, whereas people who are at upper tier of social hierarchy enjoy the benefits of IAY and NRLM. However, it cannot be said that these programs miss their target completely.

Practical implications

The study suffers from the usual limitations of sampling.

Social implications

Programs targeted for the poor are being appropriated by the non poor. If there is better targeting money will be channelized to the desired beneficiaries and welfare will be enhanced.

Originality/value

The study has unearthed the underlying reasons behind why some safety net programs have better targeting and some safety net programs have poor targeting.

Details

International Journal of Social Economics, vol. 44 no. 12
Type: Research Article
ISSN: 0306-8293

Keywords

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