Effect of Mobile Network Operator Facilitated Digital Credit on the Financial Health of Youth Borrowers in Kibera, Nairobi County, Kenya

Purpose: The increased advancements in technological integration within the financial sector has led to development of new credit platforms which improve access to borrowing among the youth. Further, with proliferation of digital lending platforms which provide unsecured loans has led to a debt chokehold among the youth. This has resulted in poor financial health among the youth. The general objective of the study was to analyze the effect of mobile network operator facilitated digital credit on the financial health of youth borrowers in Kibera, Nairobi County, Kenya. Methodology: The study employed a correlational research design. The population of interest for this study was youth borrowers who live and work in Kibera, Nairobi County. The sampling frame for this study was active users of digital credit who are between 18 and 35 years, residing in Kibera. The list was obtained from the Independent Electoral and Boundaries Commission's (IEBC) voter register for Kibera Ward. A stratified sampling technique was used to select the respondents. The sample size was 399 respondents. Data was collected using structured questionnaires. SPSS was used to aid in the data analysis. A descriptive statistical technique of analysis was used and shall entail the determination of the mean and frequency distribution of the datasets. Further inferential analysis was conducted using both correlation and regression analysis. The data was presented in tables and figures. Findings: The study was able to obtain an 88 percent response rate, signifying high degree of accessibility of the youth in the area. Of these, most were male, while only 107 of the responses were from female respondents. The study established that mobile-facilitated digital credit on youth borrower's financial health has a positive and significant effect on youth's financial health. The study concludes that mobile network operator facilitated digital credit has a significant and positive effect on the borrower's financial health. The study concludes that mobile operator facilitated loans are fast and easily accessible which increases their effectiveness to the user. Unique Contribution to Theory, Policy and Practice: The study recommends that mobile money operators that provide digital loans reduce their operation rates considering they have high interest rates for the small loans they offer. The study also calls for the development of progressive peer to peer regulations that would improve the penetration of these loan devices that have been identified as key to young entrepreneurs.