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Metropolitan Journal of Academic Multidisciplinary Research

DIGITAL BANKING ADOPTION AND LOAN PERFORMANCE OF SELECTED MICROFINANCE INSTITUTIONS IN MUKONO DISTRICT

Authors: AKANKWATSA ANNITAH

Journal: Metropolitan Journal of Academic Multidisciplinary Research (MJAMR)

Volume/Issue: Volume 5 - Issue 3

Published: 01 Jan 1970


Abstract

This study investigated the influence of digital banking adoption on loan performance in selected microfinance institutions (MFIs) in Mukono District, Uganda. The research specifically examined the effects of Mobile Banking Services (MBS), Management Information Systems (MIS), and Digital Loan Processing Systems (DLPS) on loan repayment efficiency, portfolio quality, and overall financial performance. A descriptive cross-sectional survey design was employed, targeting 92 respondents,including branch managers, credit officers, IT/digital banking staff, and active clients. Data were collected using structuredquestionnaires and analysed using both descriptive and inferential statistics, including means, standard deviations, Pearsoncorrelation, and regression analysis via SPSS. The findings revealed that respondents generally agreed that MBS, MIS, and DLPS significantly enhance loan performance. Descriptive statistics indicated mean scores ranging from 4.05 to 4.25, reflecting a high level of agreement among respondents.Pearson correlation analysis demonstrated positive and significant relationships between each digital banking variable and loan performance (p < 0.05). Regression analysis showed that digital banking adoption explains 68% of the variance in loan performance, highlighting its critical role in enhancing operational efficiency and customer satisfaction. The study concludes that digital banking technologies are essential tools for improving loan repayment compliance, minimizing defaults, and enhancing the overall performance of MFIs. Recommendations include expanding mobile banking platforms, integrating advanced MIS for predictive credit monitoring, and enhancing digital loan processing systems to ensure efficiency and reliability. The study provides empirical evidence to guide policymakers, MFI management, and stakeholders in leveraging digital innovations to strengthen financial inclusion and loan performance. Keywords: digital banking adoption, mobile banking services, management information systems, digital loan processing, loan performance, microfinance institutions, Mukono District
Keywords

Digital Banking Adoption and Loan Performance in Selected Microfinance Institutions in Mukono District

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