Examining the Impact of Youth Financial Capability on Financial Innovations in Uganda

Financial innovations are transforming financial well-being and inclusion in Uganda, but their effectiveness hinges on young people's financial capability which comprises of financial behaviours, knowledge and attitudes. This thesis examined the impact of Ugandan youth's financial capability on adopting financial innovations in Wakiso District. Wakiso District is a blend of urban and non-urban environments bordering Uganda's capital, Kampala, and therefore serves as a microcosm of Uganda's diverse population. The research aimed to understand the current level of financial capability among Ugandan youth and how it influences their adoption of financial innovations. Recent literature notes that mobile device-based financial tools and other FinTech services are rapidly growing. Yet a significant portion of the youthful population still lacks the financial knowledge and skills necessary to effectively use these services. The study uses a positivist approach with a multi-theoretical lens, integrating the Technology Acceptance Model (TAM) and the Family Financial Socialisation (FFS) model. It also uses a deductive approach with a cross-sectional survey design, collecting data from 364 youths in Wakiso. The empirical analysis is executed using a combination of Multiple Regressions and Partial Least Squares Structural Equation Modelling (PLS-SEM) to analyse relationships between the main study variables (financial behaviours, knowledge, attitudes, and family financial socialisation). The findings from the regression analysis show that financial behaviours and knowledge are significant predictors across all models, underscoring their pivotal role in adopting financial innovations. Similarly, the influence of financial attitudes and family financial socialisation was significant. However, it is less pronounced in influencing the adoption rates. Additionally, the findings from the PLS-SEM analysis found that financial behaviours and knowledge emerged as consistent drivers across the adoption of all innovations. Similarly, the influence of financial attitudes was positive albeit weak. Notably, the study found limited support for the mediating role of the family financial socialisation model in terms of financial capability and the uptake of financial innovations. Overall, the findings in this study underscore the importance of individual, family, and socio-economic contextual factors in shaping financial innovation adoption among Ugandan youth. This highlights the need for targeted interventions to enhance financial capability and create an enabling environment for broader innovation adoption. The study recommends the implementation of tailored financial education programmes, youth-centric financial products, and supportive regulatory frameworks to enhance financial capability and promote the adoption of financial innovation. More specifically, the study recommends policies that focus on early financial literacy and intentional youth personal financial management interventions to foster a financially inclusive and empowered youth population in Uganda.