Thesis:

Antecedents of indebtedness level and their influence on Personal debt among employees of Kenya commercial banks in Nakuru county, Kenya

The purpose of this study was to examine the antecedents of indebtedness level of personal debt among employees of Kenya Commercial Banks (KCB) in Nakuru County. The objectives of the research were; to examine the effect of loan product portfolio on indebtedness level of personal debt among employees of KCB in Nakuru County; to assess the effect of demographic elements on indebtedness level of personal debt among employees of KCB in Nakuru County; to examine the effect of finance literacy on indebtedness level of personal debt among employees of KCB in Nakuru and; to assess the effect of behavioral elements on indebtedness level of personal debt among employees of KCB in Nakuru County. The study was underpinned by two theories which included consumer theory and Murray theory of behavior. The study used a descriptive design and targeted both managerial and clerical employees, approximately 187 employees from 7 KCB branches in Nakuru County. A sample size of 127 respondents determined by Yamane’s formula was drawn using proportionate stratified sampling method. Data collection entailed use of questionnaires while both descriptive and inferential statistics were applied in data analysis to help in drawing conclusions. The data was presented using tables and figures. The study established that loan product portfolio was significant to indebtedness level of personal debt among employees (β=0.173, p<0.05). Loan interest, lending platform and type of loan (unsecured/collateral) significantly influenced the borrowing behavior and indebtedness level of personal debt. Employees showcased high tendency of being indebted with personal debt when loan products required little or no collaterals with low interest rate per annum. On other end, employees reported increased popularity for digital loan provider like Zenka Loan App, credit card and mobile network operators such as Safaricom over traditional SACCOs and Commercial Banks. The study also established that there was significant association between demographic elements and indebtedness level of personal debt among employees (β=0. 155, p<0.05). The cases of indebtedness level of personal debt varied with age, gender, income level and family marital status. The study also established that there was significant association between finance literacy and indebtedness level of personal debt among employees (β=0. 149, p<0.05). Majority of the respondents exhibited mathematical skills for computation of loan interest which improved their debt borrowing, repayment behavior, budgeting, planning loan usage and choosing loans with fair interest rates. The study also established that behavioral elements were significant to indebtedness level of personal debt among employees (β=0.173, p<0.05). Risk perception, materialism and emotions were crucial in influencing a person decision to be indebted by acquiring a personal loan. Positive emotions, lowly risk perception and highly materialized individuals tend make irrational loan decision and mistakes while negative emotions, highly risk perception and lowly materialized individuals are cautious while mankind credit decisions. This study recommends similar studies to be done on the antecedents of indebtedness level of personal debt among employees of other commercial banks in other counties of Kenya to enlarge scope of the study outcomes apart from providing references sources for comparison.