Effect of Devolution on Financial Deepening in Kwale County, Kenya

Abstract

This study was conducted with the objective of establishing the effect of devolution on financial deepening in Kwale County. Research design in this study was a causal study adopting both descriptive and explanatory designs. A case study was employed and of utmost importance was the fiscal programmes of the county government from the beginning 2013 to mid 2016.Data was collected using secondary means from national and county government offices which formed the basis of the study, the data was then analyzed by carrying out descriptive statistics, correlation analysis and finally the regression model was ran to establish the relationship between financial deepening and the core aspects of the county government that affect it. Data was gathered from the beginning of 2013 to June 2016 for the purposes of doing descriptive statistics and regression analysis. The model was designed to take into account three variables which are; county government spending, employment level and the county government revolving funds. There were forty two months in the period of interest. F test was conducted to find out the reliability of the model by establishing whether there is a relationship between the dependent variable and the independent variables. The null hypothesis was rejected and the alternative hypothesis upheld showing that there is a relationship between financial deepening and independent variables of study. From the relationship in the model, it is evident that the county government’s revolving fund has improved access and provision of financialservices in Kwale County to a great extent, since it contributes 112.4 units to financial deepening. The study concludes that devolution affects financial deepening and recommends that financial literacy programmes be increased so that more people benefit from the increased financialservices and not a repeated few.