Investigating the Socio-Cultural Dimensions of Financial Practices in the Fragile States
Lessons from Somalia
Bibliographic Data
| ID | 22007036 |
|---|---|
| Authors | Mohamed Ibrahim Nor (0000-0002-3695-9657, SIMAD University, corresponding author) |
| Year | 2025 |
| Volume | 15 |
| Issue | 4 |
| Publication date | 2025-10-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | SAGE Open (JOURNAL) |
| Journal identifiers | ISSN: 2158-2440 • E-ISSN: 2158-2440 |
| Publisher | SAGE Publications (PUBLISHER • US) |
| DOI | 10.1177/21582440251407528 |
| OpenAlex | W7117577575 |
| Language | EN |
| References cited | 55 |
This study aims to investigate how sociocultural factors shape financial practices in fragile contexts such as Somalia. This study employs structural equation modeling (SEM) to analyze survey data collected from various sectors of Somali society in March 2024. The measurement model was tested for validity and reliability, whereas the structural model examined the hypothesized relationships among sociocultural factors, financial practices, and regulatory environments. The analysis reveals a statistically significant positive relationship between sociocultural factors and financial practices, affirming the centrality of trust, communal norms, and informal institutions in shaping financial behavior. The regulatory environment was found to play a mediating role, either facilitating or constraining the influence of sociocultural dynamics. Furthermore, communal financial perceptions and participation were strongly linked to broader socioeconomic outcomes. The findings underscore the need for culturally attuned financial policies that legitimize and integrate informal financial systems. This study proposes a novel multitheoretical framework in the context of Somalia, urging policymakers in fragile states to design hybrid regulatory systems that align financial inclusion efforts with the social and cultural embeddedness of financial behavior. By situating informal finance within its sociocultural and institutional context, mainstream development narratives that marginalize informal systems as transitional or deficient are challenging. The research extends the theoretical discourse by empirically validating the interplay between sociocultural dimensions, institutional environments, and financial practices in fragile states. It also advances methodological rigor in the field by applying SEM to model latent relationships in an underresearched context such as Somalia
Embeddedness · Financial inclusion · Financial services · Mainstream · Sociocultural evolution · Socioeconomic status · Structural equation modeling · Culture, Economy, and Development Studies · Islamic Finance and Banking Studies · Microfinance and Financial Inclusion
Beyond Ujamaa in Tanzania
Socio-cultural factors and entrepreneurial activity
Knowledge Management
The Predictive Validity of Multiple-Item versus Single-Item Measures of the Same Constructs
Network Analysis in the Social Sciences
Bowling alone
A new criterion for assessing discriminant validity in variance-based structural equation modeling
When to use and how to report the results of PLS-SEM
PLS-SEM or CB-SEM
Sampling for qualitative research
Comparison of Convenience Sampling and Purposive Sampling
Informal Institutions and Democracy
Institutions, Institutional Change and Economic Performance
Markets of Dispossession
Adaptation of Assessment Scales in Cross-National Research
Covid-19 palaver
Poverty reduction as a local institutional process
The “hidden hand” behind the resilience of the stateless economy of Somalia
Profiting from the failed state of Somalia
Governance without Government in Somalia
Embeddedness and Immigration
Financing governance beyond the state
Social Capital
State Failure, State-Building, and Prospects for a "Functional Failed State" in Somalia
The Rotating Credit Association
Cents and Sociability
The Early-Morning Phonecall
Between Tradition and Modernity
Economic Institutions as Social Constructions
African Famines and Food Security
Social Capital in the Creation of Human Capital
| Citation velocity | historical |
|---|---|
| Highly cited | No |