| dc.description.abstract | The aim of the study was to investigate the effect of digital finance on the growth of
Jua Kali enterprises in Makueni County, Kenya, focusing on four key tools: mobile
money, mobile banking, internet banking, and digital loans. The study was guided by
the four specific objectives: to examine the effect of mobile money transfers on the
growth of the Jua Kali enterprises in Makueni County; to assess the effect of mobile
banking on the growth of the Jua Kali enterprises in Makueni County; to determine the
effect of internet banking on the growth of the Jua Kali enterprises in Makueni County;
and to investigate the effect of digital loans on the growth of Jua Kali enterprises in
Makueni County. Anchored on the Technology Acceptance Model (TAM),
Schumpeter’s Innovation Theory, Transaction Cost Theory, and Financial Inclusion
Theory, the research adopted a descriptive design and employed stratified random
sampling to select 266 respondents. Data were collected through structured
questionnaires and analyzed using descriptive statistics, Spearman correlation, and
ordinal regression analysis. The ordinal regression results revealed that mobile money
had the strongest and statistically significant positive association with enterprise
revenue growth (β = 1.628, Exp(β) = 5.10, p < 0.001). This indicates that enterprises
utilizing mobile money were over five times more likely to achieve higher growth levels
than those that did not, emphasizing its pivotal role in enhancing transaction efficiency,
liquidity management, and market access within the informal sector. Digital loans also
exhibited a significant positive effect (β = 0.833, Exp(β) = 2.30, p < 0.001), suggesting
that access to digital credit facilities substantially improves short-term liquidity and
operational performance. Similarly, internet banking had a positive and statistically
significant influence (β = 0.501, Exp(β) = 1.65, p = 0.008), reflecting its growing
importance in promoting financial management and supporting enterprise
modernization. Conversely, mobile banking showed a positive but statistically
insignificant relationship (β = 0.050, Exp(β) = 1.05, p = 0.736), implying its limited
impact on growth among informal businesses, possibly due to minimal integration with
enterprise financing tools. The model’s goodness-of-fit tests confirmed that the data
met the proportional odds assumption, while the Nagelkerke R² value of 0.288 indicated
that the digital finance variables collectively explained approximately 29% of the
variation in enterprise growth levels. Overall, the findings affirm that digital financial
inclusion, particularly through mobile money, internet banking, and digital lending,
plays a critical role in enhancing the performance and sustainability of informal
enterprises. The study concludes that strengthening Kenya’s digital finance ecosystem
through innovative financial products, flexible credit systems, enhanced digital literacy,
and infrastructure development is vital for promoting inclusive growth and enterprise
resilience. | en_US |
