Effect of Mobile Banking on the Asset Quality of Deposit:

Abstract

This study examined the impact of mobile banking adoption on asset quality in Deposit-Taking Savings and Credit Cooperative Organisations (SACCOS) in Nairobi County, Kenya. It assessed the influence of Unstructured Supplementary Service Data (USSD), digital wallets, and mobile applications on non-performing loans (NPL) ratios, a key asset quality indicator. A sample of 37 SACCOS was selected from a population of 46 using stratified sampling. Anchored in the Theory of Change, Task-Technology Fit Theory, and Technology Acceptance Model, the study found a strong negative correlation between mobile banking adoption and asset quality USSD (r = -0.52, p < 0.01), a moderate negative correlation between digital wallets and asset quality (r = -0.48, p < 0.01), and a moderate negative correlation between mobile applications and asset quality (r = 0.46, p < 0.01). Regression analysis revealed a significant combined effect (R² = -0.72, p < 0.05), linking higher mobile banking adoption to improved asset quality. The study recommends adopting mobile banking to reduce NPL ratios and enhance SACCOS financial health through improved asset quality.