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Kenneth Kiarie - Student, Department of Accounting and Finance, Mount Kenya University, Kenya

Dr. Ruthwinnie Munene - Lecturer, Department of Accounting and Finance, Mount Kenya University, Kenya


The rapid adoption of digital technologies has transformed the banking industry globally, with digital loan products becoming increasingly prominent. In Kenya, commercial banks have embraced these technologies to expand their market reach and enhance financial performance. This study embarked on an exploration to assess the impact of digital loan products on the financial performance of commercial banks in Kenya, spanning from 2012 to 2022. The investigation specifically targeted the effectiveness of digital lending through mobile network operators (MNOs), website-based platforms, and mobile applications, aiming to discern their influence on the financial metrics of selected Kenyan commercial banks. Employing a descriptive survey methodology within a positivist framework, the study analysed data from five banks that had been active in providing digital-credit services for over a decade, using information from the Central Bank of Kenya and publicly available financial records. Both descriptive and inferential statistical methods, including correlation and regression analyses, were used to explore the nuanced relationships between digital lending channels and bank performance. The findings indicate a strong preference for MNO-based loans, with website-based and app-based loans also utilized but to a lesser extent. There was a significant positive correlation between the financial performance of banks and the uptake of MNO-based and website-based loans. In contrast, app-based loans, despite increasing usage, did not show a statistically significant impact on financial metrics. This highlights the varied influence digital-credit platforms have on bank financial health, with MNO-based loans playing a critical role and website-based loans also contributing positively to bank performance. The study recommends that banks further integrate and enhance MNO-based services and improve the user experience for website-based loans to capitalize on their financial benefits. Despite the lesser impact of app-based loans, there remains potential for innovation in this area. Additionally, the research suggests future studies could broaden their scope to include other financial institutions and compare these findings with the digital lender market to deepen understanding of digital-credit adoption and its impacts.

Full Length Research (PDF Format)