The Effect of Personal Borrowings and Savings on the Economic Empowerment of Households in Nairobi County

Abstract

The government is not able to provide efficiently for its citizens, therefore there is need to empower households economically as this will create economic growth and stability within the county. This study aimed at finding the effects of personal borrowings and savings on economic empowerment of households in Nairobi County. The survey covered Nairobi county residents working or doing business within the Nairobi City County. According to KNBS 2013, there were 985,016 households in Nairobi County. This was the group from which the sample was drawn. The study used simple sampling technique in coming up with the study‟s sample. Random sampling was used in choosing the sample within the strata. To get a representative sample of Nairobi residents a stratified random sample of some 200 households was selected, considering households which were headed by men as well as those headed by women. The primary data was through administering questionnaires. The data collected was analyzed using descriptive statistics. Data obtained was analyzed using multiple linear regression techniques. The study found that respondents were economically empowered by financial seminars attended occasionally for updates and necessary advice due to frequent change in technology and competition purposes to a great extent. According to the findings various financial institutions were available to provide and promote borrowings, which influenced respondents‟ decision to borrow in order to improve their household‟s economic status to a great extent. The study concludes that holding all factors (personal borrowings and personal savings) constant, factors affecting economic empowerment of households will be 0.116. The findings presented also shows that taking all other independent variables at zero, a unit increase in personal borrowings will lead to an increase in the scores of the economic empowerment of households. On the other hand a unit increase in personal savings will lead to an increase in economic empowerment of households. This infers that personal borrowings influence the economic empowerment of households most followed by personal savings. The study also established a significant relationship between economic empowerment of households and the independent variables; personal borrowings and personal savings as shown by the p values. Policy recommendations are that households should consult financial experts to help make better investment decisions. The government should partner with micro financial institutions to foster financial training for households even as they as they are encouraged to take loans for economic growth.