in the 21st Century

266 Kenya’s Financial Transformation in the 21st Century
It is worth noting that the relationship between outputs and inputs is similar
to that which common sense would suggest. Table A2 in the Appendix reports
the correlation between the outputs and inputs. It shows that the ability to
stick to a budget and to manage spending and borrowing are highly correlated
with the two attitudinal variables, while having a budget and saving behaviour
are more closely related with initial endowments of education, income and
financial literacy. There is a causality concern in using the DEA approach
– it may be unclear whether it is the inputs (education, income) that make
people more financially capable, or the other way around. Table A2 shows
that the demographic variables of concern are only highly correlated with
saving variables, while other financial behaviour are controlled by psychological
variables only.
5 Estimation results: DEA as a measure of
conversion efficiency
Figure 1 presents the distribution of the DEA scores and Table A3 gives the
descriptive data. The mean score is 0.401 and the distribution shows that the
scores are skewed towards the lower end, although 9.5% have a score of 1,
representing perfectly efficient conversion.
Figure 1: Frequency histogram of DEA
400
300
Frequency
200
100
0
0 .2 .4 .6 .8 1
DEA