Abstract:
An increase in formal financial access has been argued to be one of the fundamental factors
to increasing a household's capability to generate income, which is vital for the economic
growth of a nation. However, despite a significant rise in formal financial access from
75.5% in 2019 to 83.7% in 2022 in Kenya, household income generation has not improved
as anticipated, as over 50% of Kenyans compared to a proportion of only 25-40% in other
developing countries, still grapple with extreme poverty, falling below the international
poverty line of $1.90 a day as per a 2022 World Bank report. This indicates that the issue
at stake may not be financial access only. As a result, researchers needed to examine other
issues that might cause this adverse trend in household income generation. To shed light
on such issues, the study sought to examine the role of financial literacy on household
income generation among SACCO members in Narok County, Kenya. The specific
objectives were to determine saving literacy, investment literacy, financial technology
literacy, and risk literacy on household income generation among SACCO members in
Narok County, Kenya. The study was anchored on the lifecycle theory, behavioral finance
theory, technology acceptance model, and capital asset pricing model. Employing a
descriptive research design, the study targeted 3,050 registered SACCO members, from
which a sample of 217 respondents was selected using stratified and purposive sampling.
The study data was collected using a self-administered structured questionnaire and
analyzed through descriptive statistics (percentages and means) and inferential statistics
(regression and correlation) with the help of SPSS version 27. The simple linear regression
model was adopted for the study. The findings revealed that saving literacy (β = 0.46, p <
0.05), investment literacy (β = 0.225, p < 0.05), financial technology literacy (β = 0.386, p
< 0.05), and risk literacy (β = 0.090, p < 0.05), had a significant positive role on household
income generation. Thus, the study concludes that financial literacy is crucial for increasing
household income among SACCO members. By providing individuals with the necessary
knowledge and skills, financial literacy enables them to make informed decisions,
effectively manage their finances, and pursue opportunities to generate income. The study,
therefore, recommends that the government prioritize improving household savings,
investmentsliteracy, financial technology literacy, and risk literacy of its households, while
also working on improving financial access. This can be achieved through collaborations
with SACCOs, financial institutions, and academic entities. Future research could explore
the impact of financial behavior and knowledge on income generation across diverse
demographics and sectors, including cross-country comparisons, longitudinal studies,
qualitative methods, policy evaluations, digital literacy investigations, and industry specific analyses.