Formal Operating Mechanisms of Financial Institutions, Business-Users and Financial Inclusion in Mbeya City-Tanzania

Abstract

Kaula Stephen, Gwahula Raphael and France Shayo

The study investigates on the contribution of formal operating mechanisms of both financial services providers and users on financial inclusion. To reveal the reality behind the scene the study employed a quantitative research approach and causal research design. Furthermore the study used a systematic sampling to derive to 100 respondents from which 90 were financial users and 10 were financial service providers in Mbeya City. The study used questionnaires and documentary reviews for data collection. The collected and cleaned data were analyzed by employing rotated component matrix, multi-co linearity testing, and partial correlation coefficient data analysis tools. From the analysis it was revealed that formalization of firms both the financial services providers and users found to be positive and significant causal of financial inclusion. Moreover formal operating mechanisms of financial (business) users revealed to contribute positively and significantly towards satisfactory access to adequate, affordable and quality financial products important for sustaining financial inclusion. From the positivism and significant determination regarding financial inclusion revealed the study recommends that financial institutions, micro finances as well as financial users (individuals and firms) are to formalize their businesses.

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