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Research Paper | Business and Finance | Rwanda | Volume 10 Issue 10, October 2021
Effect of Financial Inclusion Policy on Saving in Microfinance Institutions, Case of COPEDU PLC
Murwanashyaka Alfred | Rusibana Claude [3]
Abstract: The study examined the effect of financial inclusion policy on saving in Microfinance Institutions in Rwanda. The specific objectives were to analyse the effect of bank account on saving for beneficiaries of COPEDU Plc; to determine the extent to which the bank location (distance between client and financial service provider) influences the savings of beneficiaries in COPEDU Plc; to analyse the effect of financial literacy on saving of beneficiaries of COPEDU Plc; and to determine the relationship between financial inclusion policy and saving in MFIs in Rwanda. Target population was 2, 871 beneficiaries of COPEDU Plc; and the study applied stratified random sampling technique to select 107 respondents (97 respondents from target population and 10 staffs from COPEDU Plc). The various instruments were used by the researcher for gathering information from respondents including Questionnaire and Interview. Descriptive statistics and regression methods were used for analysis. Findings showed that ownership of bank account have positive and significant effect on Saving on a bank account, and use of bank loan for beneficiaries in MFIs in Rwanda (?1= 0.071, t=.707; p - value=.481 less than 5%); that means Ho1 which stated that Bank Account does not affect saving for beneficiaries of COPEDU Plc was rejected. The Findings showed that bank location (distance between client and financial service provider) has positive and significant effect on Saving on a bank account, and use of bank loan for beneficiaries in MFI in Rwanda (?2=.521, t= 4.760 and p - value=.000 less than 5%); Ho2 which stated that the bank location (distance between client and financial service provider) does not influence savings of beneficiaries in COPEDU Plc was rejected. Findings showed that financial literacy has positive and significant effect on Saving on a bank account, and use of bank loan for beneficiaries in MFIs in Rwanda (?3=.007, t=.077 and p - value=.939 greater than 5%); Ho3 stating that there is no significant effect of financial literacy on saving of beneficiaries of COPEDU Plc. was rejected. Based on findings, we conclude that there is positive relationship between financial inclusion policy and saving in Microfinance institutions in Rwanda. Strong retail institutions committed to outreach and sustainability are essential for extending the permanent reach of financial services and to have a significant impact on poverty reduction. Thus, building the capacity of institutions with a commitment to reach the poor is vital. This is particularly true for institutions that target potential clients in resource - poor areas and the poorest of the poor. We strongly recommend to COPEDU Plc to approach the rural area because some of their clients are located in rural area. Because microfinance is primarily targeting the poor who are disadvantaged, social mobilization is necessary to introduce them to a formal or semi - formal, market - oriented institutional environment. This is particularly true for women, youth and the poorest of the poor.
Keywords: Financial inclusion, Savings, Microfinance Institutions
Edition: Volume 10 Issue 10, October 2021,
Pages: 1495 - 1503