The Effect of Consumer Loans on Sustainable Development in Kenya

Abstract

This paper examines the usefulness of consumer loans in predicting sustainable development in Kenya. The research on the effect of consumer loans is of cardinal importance as it aims to establish compounded effect on future generations. The conversation on the value add to the economy is becoming increasingly important on two fronts to individuals and country. The popularity of consumer loans having skyrocketed with the introduction of the fintech’s would be irresponsible to keep a blind eye on the topic. We therefore need a critical consideration on its contribution to date and the projected impact in future. Consumers in difficult financial situations have a trend of sustaining their excess financial demand by use of consumer loans. This reliance on consumer loans leads us to the important aspect of expected future impact on the Kenyan economy. The continuous increase in uptake of consumer loans by households requires a precise investigation on the real impact to the future generations. The research relied on comprehensive samples from private household loans, consumer durable loans and real-estate loans. The results indicate that consumer loans in the current setup have a negative effect on sustainable development in Kenya. Furthermore, consumer debt lead to high levels of anxiety, depression and mental health. Moreover, consumer debt led to sharp decline on investment growth, consumption and GDP while increasing the risk of bankruptcy.