DRIVERS INFLUENCING DIGITAL CREDIT AMONG RESIDENTS OF NYERI MUNICIPALITY, KENYA
Abstract
The purpose of the study was to establish the drivers that influence digital credit among the residents of Nyeri municipality Kenya. The study objectives were to determine how access to information influences digital credit and how ease of access to loans influences digital credit. To support the study objectives, neoclassical economics theory and behavioral economics theories were used. The target population was 46969 and the sample size comprised of 383 individuals who were 18 years of age. A pilot study was conducted in Nyahururu town where ten questionnaires were administered. Purposive sampling was utilized to identify respondents. A descriptive cross-sectional survey was undertaken. The primary data were collected using a structured questionnaire. Data were analyzed using descriptive and inferential statistics. The findings suggest that ease of access to digital credit has created flexibility in borrowing with a correlation of 0.689. This has eliminated costs such as travel and documentation. Additionally, digital credit has enabled borrowers to access credit they could not access through traditional banking with a correlation of 0.763. Respondents also noted that digital credit has streamlined their repayment discipline with a correlation of 0.653, making borrowing smoother. To improve digital credit use in Nyeri municipality, lenders should work to enhance borrower education. This will ensure that borrowers understand the costs associated with borrowing on digital platforms. Lenders should also consider providing flexible repayment options and ensuring borrowers have access to support services when needed. Further studies on digital credit in Kenya can build on this study by exploring the influence of other factors such as age, education, and income level on digital credit use. Additionally, studies can focus on the impact of digital credit on household financial stability and the broader economy.
Key Words: drivers that influence digital credit, access to information, ease of access to loans, digital credit
Full Text:
PDFReferences
Babu, N., (2020) Effects of digital credit on reduction of poverty among low-income borrowers, a case study of major digital credit providers in Kenya. USIU Africa Nairobi Kenya
Bharath, S., (2014) Bank Exam Pedia. Rapid Academy of Competitive Exams (RACE) Institute. Understanding the fall of largest microcredit industry in India P 67
Bill & Melinda Gates Foundation, (2017) Financial services for the poor. https://www.gatesfoundation.org/our-work/programs/global-growth-and-opportunity/financial-services-for-the-poor retrieved on September 2021
Central Bank of Kenya (2019) Finaccess household survey. (CBK publication P. No. 8-10.) Central Bank of Kenya, Kenya National Bureau of Statistics & Financial Sector Deepening Kenya. https://www.centralbank.go.ke/uploads/financial_inclusion version. Pdf retrieved in August 2021
Diniz, E., Birochi, R., & Pozzebon (2012) Triggers and barriers to financial inclusion: The use of ICT-based branch less banking in an Amazon County, volume 11 issue 5 September-October 2012 pages 484-494 retrieved in May 2021
Duffy, E. (2019 November 12) 86400 launches all digital home loans. https://www.savings.com.au/home-loans/86-400-launches-all-digital-home-loans retrieved in May 2021
InnoHub Team, (2019) Bankok Bank: Leveraging technology to drive financial inclusion. https//www.bangkokbankinnohub.com/leveraging-technology-to-drive-financial-inclusion retrieved in May 2021
Johnen, C., Parlasa, M., & Mubhoff, O., (2021 July 23) Promises and pitfalls of digital credit: EmpiricalevidencefromKenya.https://journals.plos.org/plosone/article?id10.1371/journal.pone.0255215 retrieved in May 2021
Kashangaki, J., (2020) Nation, Mobile loans fills information gap. https://nation.africa/Kenya/blogs-opinion/opinion/mobile-loans-fill-information-gap-211434?view=htmlamp retrieved in August 2021
Keffenberger, M., & Totolo, E., (2018) CGAP, FSD Kenya, working paper: A digital credit revolution: Insights from borrowers in Kenya and Tanzania pages 1-2 https://www.cgap.org/sites/default/files/publications/Working-Paper-A-Digital-Credit-Revolution-Oct-2018.pdf retrieved in October 2021
Kibicho, N., K., & Mungai, J., (2019). Mobile banking and financial adoption and financial credit accessibility in Wote sub county, Makueni County, Kenya. International journal of current aspects,volume3issueIVpage6579.http://journals.ijcab.org/journals/index.php/ijcab/article/view/47/43 retrieved in November 2021
Lore, M., & Minudi, O., (2019) factors affecting the growth of mobile phone loan uptake among small and medium traders in Nairobi central business district. United States International University of Africa Nairobi. http://erepo.usiu.ac.ke/handle/11732/5006?show full retrieved in August 2021
Mader, P. 2017 Contesting Financial Inclusion; Development and change. Volume 49, issue 2/p461-483.https://onlinelibrary.wiley.com/doi/full/10.1111/dech.12368casa_token retrieved in September 2021
Muturi, R., (2020) Influence of credit information sharing on customer borrowing behaviour in Kenyan commercial banks: a case study of HFC bank digital lending https://su-plus.strathmore.edu/handle/11071/10440 retrieved in October 2021
Nanda K. and Kaur M. (2016) Financial Inclusion and Human Development: Boston: A Cross-country Evidence Management and Labour Studies Irwin McGraw-Hill. vol. 41, issue 2, 127-153 retrieved in October 2021
Owuor O. (2019 October 3) The conversation; Mobile based lending is huge in Kenya: but there is downside too. https://theconversation.com/mobile-based-lending-is-huge-in-kenya-but-theres-a-downside-too-124195 retrieved in October 2021
Ponce de león M., G., C., (2021), Centre for financial inclusion; Digital lending in Kenya: willingness versus capacity to repay https://www.centerforfinancialinclusion.org/digital-lending-in-kenya-willingness-vs-capacity-to-repay retrieved in October 2021
Schmidt, K., & Sandner, P., (2014) Solving Challenges in Developing Countries with Blockchain Technology. Poverty and economic disparities in underdeveloped countries http://explore-ip.com/2014_Solving-Challenges-in-Developing-Countries-with-Blockchain-Technology.pdf retrieved in October 2021
Suri, T., Bharadwas, P., Jack, W., (2021) Fintech and household resilience to shocks: Evidence from digital loans in Kenya. Volume 153 https://doi.org/10.1016/j.jdeveco.2021.102697 retrieved in November 2020
Tileke & Gibbins, (2020 October 8) Insights; Bank of Thailand introduces personal loans https://www.tilleke.com/insights/bank-Thailand-introduces-digital-personal-loans/ retrieved in October 2020
Totolo, E., (2018) FSD Kenya; The digital credit revolution in Kenya: an assessment of the market demand 5 years on http://fsd-circle.s3.amazonaws.com/wp-content/uploads/Digital-credit-survey-Kenya-presentation-CGAP 2018/06/05091602/18-03-04-f retrieved in October 2020
Trader, E., Narcis B., Roman, A., & Gabriel, S., (2018) Impact of Information and Communication technology infrastructure on economic growth; An empirical assessment for the EU countries retrieved in May 2021
Wamalwa, P., Rugiri, I., & Lauler J., (2019) Kenya bankers Association: Digital credit, financial literacy and household indebtedness pages 2-7 https://www.kba.co.ke/downloads/WPS-08-2019.pdf retrieved in November 2021
World Bank, (2018 April 19) Financial inclusion on the rise, but gaps remain, Global findex database shows. https://www.worldbank.org/en/news/press-release/2018/04/19/financial-inclusion-on-the-rise-but-gaps-remain-global-findex-database-shows retrieved in November 2021
Refbacks
- There are currently no refbacks.