Effect of Digital Mobile Loan Usage on Academic Performance of University Students in Nairobi County, Kenya

Abstract

The rapid growth of digital financial technologies has increased access to mobile-based credit among university students in Kenya, raising concerns about its potential implications for academic outcomes. Guided by the Theory of Planned Behavior, this study examined the effect of digital mobile loan usage on the academic performance of university students in Nairobi County, Kenya. Specifically, the study assessed the effect of accessibility of digital mobile loans, cost of borrowing, and digital loan dependency on students’ academic performance which was measured using GPA, attendance, or assignment completion. A descriptive survey research design was adopted, targeting undergraduate students from 27 public and private universities in Nairobi County. Using stratified random sampling, a sample of 399 students was selected, out of which 327 valid responses were obtained, representing an 82% response rate. Data were collected using structured questionnaires and analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis with the aid of SPSS. The findings revealed that accessibility of digital mobile loans had a significant negative effect on academic performance (β = −0.262, p < 0.05), indicating that ease of access encouraged frequent borrowing that reduced academic focus. Overall, the variable jointly explained 58.1% of the variation in academic performance. The study concludes that while digital mobile loans enhance financial access, excessive accessibility, high borrowing costs, and loan dependency negatively affect students’ academic performance. The study recommends strengthening financial literacy programs in universities, enhancing regulation of digital mobile lending, and promoting responsi