Digital Lending and Loan Portfolio of the Listed Commercial Banks in Kenya
Ochieng’, Onyango Felix
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The inception of digital lending led to a rise in the number of credits provided through the mobile avenue. Nonetheless, various concerns have been raised concerning the constituents of the loan portfolio. Loan portfolio is essential in guaranteeing that banks generate maximum returns based on their lending activities. Banks had a high preference for secured loans as far as provision of credits was concerned before the emergence of digital lending. However, recent trends indicate that there has been an increase in the amount of unsecured loans accessed through the digital platform. However, there has been a rise in the number of institutions providing the loans since the onset of mobile lending. Several concerns have been raised including the need to regulate provision of the digital loans to safeguard the banks from making losses and preventing customers from exploitation. Besides, current studies have emphasized the effect of mobile lending on the Kenyan banks’ financial performance. Thus, this study aimed at deducing the effect of digital lending on loan portfolio of listed commercial banks with a specific interest on unsecured loans. This study utilized information spanning for seven years that is; 2013-2019. The study’s general objective involves analyzing the effect of digital lending on the loan portfolio of the listed commercial banks whereas the specific objectives include identifying the effects of mobile lending duration on loan portfolio of Kenya’s commercial banks that are listed, analyzing the effect of digital lending costs on loan portfolio of listed commercial banks and lastly determining the effect of digital lending risk profile on loan portfolio of listed commercial banks. The Bank focused, Innovation diffusion and Modern Portfolio theories were used in this study. The research embraced a descriptive research design. The target population involved listed commercial Banks that embrace digital lending. Also, a census sampling design was used given the relatively smaller number of the target population. The study’s target population entailed 10 listed commercial banks. The Central Bank of Kenya, and the listed Commercial Banks were integral in the acquisition of secondary data. A data collection sheet was used in the collection of the secondary data. The study applied descriptive statistics and panel multiple regression analysis to analyze the data. Besides, the data obtained for this study was only be used for study purposes. The findings revealed that the length of digital lending had a favorable but statistically negligible influence on the loan portfolio of listed commercial banks. Also, the findings revealed that that the correlation between digital lending duration and amount of non-secured loans was positive and significant (r = 0.578, P = .000.