This new paper examines this question, focusing on relationships with different types of financial service provider to see how these compare in yielding outcomes for users. We consider traditional financiers such as banks, SACCOs and MFIs as well as more recent digital services– mobile banking, mobile money and digital apps- and informal services – chamas and social networks. We find that traditional financiers have the strongest outcomes on ability to manage day to day needs, manage risk and invest in the future. Chamas also emerge as yielding stronger benefits for women, especially in terms of investing in the future. Digital apps and social networks were disproportionately associated with financial stress and exhibited weaker outcomes for financial health.
The analysis in this paper uses a simple statistical model drawing on three rounds of nationally representative survey data to generate observational estimates of the influence that six of Kenya’s most common financial providers have on outcomes spanning people’s ability to manage day-to-day needs, cope with risk and invest for the future.