The Relationship Between Financial Literacy and Access to Credit Among Youth in Rural Areas: a Case of Kimilili Constituency

Abstract

Access to credit has grown tremendously in the last decade and so has been the focus on youth. Access to credit has been touted as one of the tools for economic growth. While most studies have focused on the urban youth, the rural youth face unique challenges compared to their urban counterparts. This study’s objective was to determine whether there is a relationship connecting financial literacy and access to credit among the rural youth. The study had a target population of 41,181 youth in Kimilili Constituency out of which a sample of 384 was selected. Primary data was used for data collection through use of questionnaires matching the research objective and analyzed through regression model, mean, standard deviations and analysis of variances. The study found an affirmative connection between financial literacy and credit accessibility.From the data analysis, majority of the sampled respondents paid their bills on time, they are able to evaluate financial products by different financial institutions, they save and in general were financially literate and therefore as a result they were able to access credit. The study further revealed that the youths could access credits from financial institutions but this was limited by lack of collateral but whenever they accessed the credits it led to an improvement in their economic status. The study recommends that more educational programs be put in place especially in rural areas to ensure that the unbanked can access credit.