Effect of M-Shwari Loan Pricing on Uptake of Loans from NCBA in Meru County

Abstract

In the last decade, Kenya has witnessed remarkable growth in digital lending products and platforms. However, the impact of these digital lending products on uptake of loans remains under-researched. The purpose of the study was to determine the effects of M- Shwari loan pricing on uptake of loans from NCBA Bank Kenya PLC in Meru County. The study was guided by the financial intermediation theory. The study adopted a descriptive survey research design. The target population was NCBA Bank Kenya PLC Meru Branch customers who utilize the bank's M-Shwari digital credit. The sample size was 380 respondents who were selected using a simple random sampling technique. Quantitative data was analyzed through descriptive and inferential statistics. Qualitative data was analyzed thematically using conceptual content analysis. The study found that M-Shwari’s loan pricing was negatively and significantly related to the uptake of bank loans. The study concluded that M-Shwari’s loan pricing had a negative and significant relationship with uptake of bank loans among NCBA Bank Kenya PLC customers in Meru County. The study recommends that NCBA Bank Kenya PLC managers should charge lower interest to their customers, and should create awareness among their customers on considerations made in credit scoring of digital loans customers.