Relationship between Information Communication Technology Adoption in Microfinance Institutions and Access to Financial Services

Abstract

Access to financial services is limited to the large population worldwide. This study mainly intended to examine a relationship between ICT adoption in microfinance institutions and access to financial services, particularly availability, convenience and affordability in Tanzania. A cross-section study design was conducted in two regions on 11 selected microfinance institutions. An exploratory factor analysis was employed to reduce variables to a manageable size, while retaining original information. The study used structural equation modelling with the help of Analysis of Moment Structures version 21. SEM was used to determine multiple relationships between ICT adoption and access to financial service variables simultaneously. The analysis included 303 customers from 77 microfinance institutions from Kilimanjaro and Dar es Salaam regions. Five factors were grouped from 29 variables. Only one path leading from ICT adoption to availability of financial services was found statistically significant. This implies ICT plays a key role in financial service delivery to clients via electronic delivery channels. Hence, services become available to everybody regardless of location and time.