DIGITAL CREDIT AND PERFORMANCE OF COMMERCIAL BANKS LISTED ON THE NAIROBI SECURITIES EXCHANGE, KENYA
Abstract
The purpose of this study was to establish how digital credit adopted by commercial banks listed on the Nairobi Securities Exchange, relate to the performance of these banks over the past five years between 2018- 2022 in the challenging business environment of pre, during and post Covid-19 pandemic, industry tight regulations and tough micro-economic environment. The study was based on technology acceptance theory. The study adopted correlational research design to test the relationship between variables of study. The target population for the study was the 11 commercial banks listed on the Nairobi Securities Exchange with a population of 1044 senior managers. The sample size of 88 respondents was selected using stratified random sampling. The sample size was arrived at by use of Fisher, Laing, and Stoeckel’s formula. The study used both primary and secondary data. Primary data was collected by use of questionnaires that were administered to 88 senior management employees from sampled from across the branch network of the eleven commercial banks listed on the Nairobi securities. Secondary data was obtained using document analysis guide from documented financial statements published by the listed banks on NSE, CBK journals, media circulations, newsletters and internal circulars. The research instruments were checked by three experts to determine the construct validity of the research instrument. Pilot testing was done to determine the accuracy of the research instrument while reliability of the research instrument was done using split-half method and the results compared by spearman’s’ brown prophecy formulae. Data collected from the study was analyzed using descriptive and inferential statistics. In descriptive statistics, the study used frequencies, mean and standard deviation while in inferential statistics the study used simple regression model. The findings of the study revealed that Digital credit(R=.836a; R2=.673; β= .914; p=.000,<0.05) had a statistically significant positive relationship with performance of commercial banks. The study concluded that digital credit significantly influenced the performance of commercial banks listed on the Nairobi Securities Exchange. It was therefore recommended that there is a need to enhance app-based loan service, STK-based loans, and partnerships with mobile network operators in terms of accessibility, user experience, and risk management. Coupling advanced data analytics tools with AI in assessing creditworthiness, banks can speed up the application and approval processes so that loans can be instantly disbursed. Strategic partnerships could lead to more coverage, especially in unserved and underserved areas, although the terms and conditions under this partnership must be transparent to the customers for building trust.
Keywords: Digital credit, Performance of Commercial Banks, Nairobi Securities Exchange
CITATION: Simiyu, B. N., Wanza, L., Githinji, R. (2024). Digital credit and performance of commercial banks listed on the Nairobi Securities Exchange, Kenya. The Strategic Journal of Business & Change Management, 11 (4), 121 – 142. http://dx.doi.Org/10.61426/Sjbcm.v11i4.3071
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3071
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