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Local digital lending development and the incidence of deprivation in Kenya

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  • Godsway Korku Tetteh

    (University of Strathclyde
    Maastricht University)

Abstract

In the developing world, vulnerable communities often lack access to regular income sources to cope with unforeseen events. Recent advancements in financial technology have enabled microcredit to be delivered via digital platforms. Although digital credit may quicken remote access to consumer credit without the need for collateral, little is known about its contribution to the welfare of underserved communities. This study examines the effects of local digital lending development on deprivation and explores the implications of these effects on rural inhabitants. The results show a negative association between local digital lending development and food deprivation on one hand and health deprivation on the other. The evidence suggests that local digital lending development can reduce the probability of food and health deprivation. Furthermore, the evidence reveals that inhabitants of rural communities benefit more from digital lending development. This study recommends the decentralization of financial inclusion policies as a pathway to promote digital lending at the local level.

Suggested Citation

  • Godsway Korku Tetteh, 2023. "Local digital lending development and the incidence of deprivation in Kenya," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-26, December.
    • Handle: RePEc:spr:fininn:v:9:y:2023:i:1:d:10.1186_s40854-023-00507-0
    DOI: 10.1186/s40854-023-00507-0
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    More about this item

    Keywords

    Microfinance; Fintech; Digital lending; Deprivation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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