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Analyzing the relationship between institutional framework and financial inclusion in rural Uganda

Author

Listed:
  • George Okello Candiya Bongomin
  • John C. Munene
  • Joseph Mpeera Ntayi
  • Charles Akol Malinga

Abstract

Purpose - The purpose of this paper is to report the findings on the mediating effect of social network in the relationship between institutional framework and financial inclusion in rural Uganda. Design/methodology/approach - The study employs a cross-sectional research design to collect data used to test for mediation under this study. Structural equation model (SEM) through use of bootstrap in the Analysis of Moment Structures (AMOS) was adopted to establish the existence and type of mediation by social network in the relationship between institutional framework and financial inclusion. Findings - Social network had a partial mediating effect in the relationship between institutional framework and financial inclusion. In addition, institutional framework through its regulative, normative and cultural-cognitive pillars also exhibited a significant direct effect on financial inclusion. Besides, social network had a positive and significant effect on financial inclusion. This suggest that there exist both a direct effect of institutional framework on financial inclusion and an indirect effect of institutional framework through social network on financial inclusion. Research limitations/implications - While the sample for this study was big enough, it limited itself to only poor households in rural Uganda. Besides, the current study adopted cross-sectional design, thus, leaving out longitudinal design to investigate the characteristics in the sample over time. Practical implications - The study makes significant empirical contribution and implications to financial inclusion policy makers on evidence of the critical role played by social network in indirectly enhancing the relationship between institutional framework and financial inclusion of the poor who are vulnerable to exclusion by main stream financial services’ providers. Originality/value - The study recommends that social network, which acts as a conduit through which useful information flow and can be shared, plays a critical role in mediating the relationship between institutional framework and financial inclusion in rural Uganda. Therefore, the study contributes to existing body of literature by highlighting the mediating influence of social network in the relationship between institutional framework and financial inclusion, especially in rural Uganda.

Suggested Citation

  • George Okello Candiya Bongomin & John C. Munene & Joseph Mpeera Ntayi & Charles Akol Malinga, 2018. "Analyzing the relationship between institutional framework and financial inclusion in rural Uganda," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 13(4), pages 606-630, September.
    • Handle: RePEc:eme:ijoemp:ijoem-02-2017-0057
    DOI: 10.1108/IJoEM-02-2017-0057
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    Citations

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    Cited by:

    1. Fisayo Fagbemi & Adeyemi Fajingbesi & Geraldine Ejiaka Nzeribe, 2024. "Trade–Finance Nexus: The Centrality of the Quality of Institutions in Sub-Saharan African Leading Economies," Foreign Trade Review, , vol. 59(1), pages 7-25, February.
    2. Shahid Manzoor Shah & Amjad Ali, 2022. "A Survey on Financial Inclusion: Theoretical and Empirical Literature Review," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 310-330, December.
    3. Ali Awdeh & Chawki EL-Moussawi, 2021. "Capital requirements, institutional quality and credit crunch in the MENA region," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 17(8), pages 1909-1925, January.

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