Kinship networks and financial inclusion nexus: the mediating effect of extended social cohesion among poor microentrepreneurs post COVID-19

Financial inclusion has been a major tool for poverty alleviation in Africa and, as such, it has become a topic of great interest among scholars working on the difficulties of African microentrepreneurs to access financial resources. Thus, this research examines whether extended social cohesion mediates the relationship between kinship networks and financial inclusion of poor microentrepreneurs post COVID-19 in the unbanked rural sub-Saharan Africa. Analyzing data from a sample of 304 microentrepreneurs of Uganda, we find that extended social cohesion resulting from social capital significantly affect the relationship between kinship networks and financial inclusion as it acts as substitute for the lack of physical collateral. The theoretical contribution of this research is that, it introduces the social cohesion theory, a theory developed in sociology, in the literature of microcredit finance and shows that social cohesion can serve as collateral, of which the absence has often prevented microentrepreneurs from having access to microcredit.