Digital Credit Terms and Loan Default among University Students in Uganda: A Case Study of COBAMS, Makerere University

Abstract

The purpose of this study is to investigate the relationship between credit terms and loan default of Digital Credit Providers (DCPs) in Uganda. This study was mixed sequential explanatory. Data were collected through a questionnaire survey of 254 students in Makerere University. Results indicate that there is a significant relationship between credit terms and loan default among clients of DCPs. This study’s regression model predicts 24% of the variance in loan default of DCPs in Makerere University students. The study is relevant to persons who borrow money and managers of DCPs and Savings and Credit Cooperatives (SACCOs). Managers may need to flex their credit terms and borrowers may have to identify those DCPs that are ready to discuss credit terms if the microfinance industry in Uganda is to help in reducing poverty. The study confirmed credit terms as a significant predictor of loan default Key words: Digital Credit Providers (DCPs), credit terms, loan default