The Effect of Mobile Banking on Loans Granted by Commercial Banks in Kenya

Abstract

The commercial banks face many challenges with the major one being default. Banks earn majority of their incomes from interests from the loans advanced to their clients. This forces the banking institutions to come up with measures to help reduce default risk. The study objective was to establish how mobile banking and loans issued by commercial banks were related. The type of design adopted was descriptive research design. A total of 43 commercial banks were covered. Data was mainly obtained from secondary sources of information. Means, standard deviations and regressions were used in analysis. It was revealed that mobile banking and size of the banks have direct and significant link with loans issued by commercial banks. As a conclusion, the study holds that mobile banking and size of commercial banks positively influence their ability to grant loans to customers. The study recommends that the top management team of all commercial banks should increase investment in mobile banking and sizes to improve on their ability to offer loans to customers. The study also recommends that the central bank of Kenya should come up with sound regulations that encourage the use and adaption of mobile banking platforms among commercial banks for growth in loans granted by commercial banks.