EFFECT OF ELECTRONIC BANKING ON FINANCIAL INCLUSION AMONG COMMERCIAL BANKS IN SOMALIA

Abstract

Purpose: The purpose of the study was to investigate the effect of automated teller machines and mobile banking on financial inclusion among commercial banks in Somalia. Methodology: A descriptive survey design was adopted targeting 6 commercial banks in Somalia that had successfully rolled out electronic banking while the respondents covered the Banks staff, like managers and officers from each institution respectively and census was used. Primary data was collected on automated teller machines, mobile banking and customer deposits with the aid of the questionnaire.  The analysis was conducted through the Statistical Packages for Social Sciences version 24 utilizing descriptive statistics (means and standard deviations) and inferential statistics (correlation and regression analysis) and presented through tables. Findings: The study found out that automated teller machines banking and mobile banking are significant predictors of financial inclusion among commercial banks in Somalia. Thus, electronic banking is a significant enabler of financial inclusion of commercial banks. Unique contributions to theory, practice and Policy: The study contributes to the extension of the views of financial intermediation theory and the diffusion of innovation theory. The study implies that the adoption of electronic banking as influenced by the diffusion of innovation theory allow financial institutions to effectively realize their financial intermediation role in the economy.  The senior management team of commercial banks in Somalia should allocate more resources towards financial innovation and enhancement of the existing electronic banking channels and infrastructures.  The policy makers at the Central Bank of Somalia need to develop progressive regulations and rules that would promote the adoption of financial innovation while boosting financial inclusion