Testing the financial capability framework: Findings from YouthSave-Impact study Kenya

Abstract

In sub-Saharan Africa (SSA), youths (23 years or younger)—who account for almost half the population—are particularly vulnerable to poverty and exclusion from financial markets and intermediaries. In addition, a significant factor in the financial instability of the region appears to be the economic functioning of its youths. In recent years, social work interventions throughout the region have focused on investing in the economic functioning of youths. This study looked at baseline data from one such intervention in Kenya (N = 3,965), using the financial capabilities framework to evaluate the factors related to youths’ saving behaviors. Authors investigated the association between youths’ financial literacy (that is, knowledge, socialization), financial access, and financial capabilities and savings behaviors. Results indicate that adolescents who rate themselves as financially literate and those living in close proximity to a bank are more likely to report higher capabilities. Furthermore, financial capabilities in turn partially mediate the relationship between financial literacy, access, and savings. Overall, the study’s findings point to the positive effect of enhanced financial capabilities among youths and offer support for asset-based interventions targeting youths in SSA.