Mobile Banking Innovation and Performance of Micro and Small Enterprises in Kwale County, Kenya
DOI:
https://doi.org/10.53819/81018102t70102Abstract
Micro and small enterprises (MSEs) constitute Kenya's economic backbone yet face persistent fragility due to limited access to affordable financial services. Mobile banking innovation, which enables financial transactions via mobile devices without visiting bank branches, has been proposed as a practical remedy to these structural challenges. However, existing Kenyan studies have concentrated on urban and inland counties, and frequently conflate mobile banking with broader mobile money services. This study examined the effect of mobile banking innovation on MSE performance in Kwale County, a semi-rural coastal region with Kenya's lowest small business survival rate and comparatively weak digital financial infrastructure. Guided by positivist philosophy and an explanatory cross-sectional design, the study tested the null hypothesis that mobile banking innovation has no significant effect on MSE performance. Data was collected from 401 MSE operators using structured questionnaires. Results revealed a strong positive and statistically significant association between mobile banking innovation and MSE performance (B = .801, β = .853, p < .001), with mobile banking accounting for 72.7% of the variance in performance (R² = .727), leading to rejection of the null hypothesis. These findings support the Resource-Based View, indicating that mobile banking can serve as a strategic operational resource enhancing competitiveness in underserved settings. The study recommends expanding mobile telecommunications infrastructure, providing digital literacy training, and promoting mobile banking as an integral financial management tool for MSEs in digitally underserved counties.
Keywords: Mobile banking innovation; micro and small enterprises; MSE performance; Resource Based View; Kwale County; Kenya.
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