Work

Financial inclusion and energy access: Evidence from Kenya

Year: 2025

Type: article

Abstract: This paper examines the relationship between financial inclusion and energy access, leveraging micro-level survey data from Kenya (2016–2018) and employing propensity score matching to establish causal linkages. The analysis reveals that financial inclusion significantly enhances energy access, with distinct variations across financial institutions and energy types. Financial inclusion operates through three critical mechanisms: increasing households’ willingness to pay for energy, alleviating upfront connection costs via flexible payment schemes, and enabling seamless energy-related transactions through digital platforms. These findings underscore the importance of inclusive financial policies and the role of formal and informal financial institutions as intermediaries in addressing energy poverty. • This paper examines the link between financial inclusion (FI) and energy access. • FI facilitates greater energy access. • However, its effect varies by type of financial institution and energy type. • FI boost households' willingness to pay and increases flexible payment options. • FI also facilitates the payment of energy costs through digital platforms.

Source: Innovation and Green Development

DOI: 10.1016/j.igd.2025.100219

Authors: Michael Mbate, El Hadji Fall

Institutions: London School of Economics and Political Science, United Nations Development Programme

Language: English

Topic: Microfinance and Financial Inclusion

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences