The Sustainability of Continuous Access to Digital Loans and Its Effect on Household Welfare

Jul 18, 2026

Uploaded by Sage

Study investigates the sustainability of continuous access to digital loans and how they affect household welfare (HW) in Lagos, Nigeria. Survey research collected data from 648 households using structured questionnaires, and structural equation modelling (SEM) analysed relationships. Findings show digital loans significantly and positively predict HW, while interest payment negatively affects HW. Financial attitude and willingness to contract digital loans also positively influence HW. Sustainability depends on fair interest rates, ethical debt recovery, fair collateral, and flexible repayment, alongside borrowing willingness and financial education.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages16

Reading Time40 min

AccessFree to download

Introduction

COVID-19 impact and the rise of digital loans

Nigeria’s digital lending landscape and financial inclusion

Sustainability concerns and policy relevance

Methodology and Data

Survey design and sampling

Data analysis using SEM

Results and Discussion

Effects of digital loans on household welfare

Role of interest payment, financial attitude, and willingness

International Social Science Journal ARTICLE The Sustainability of Continuous Access to Digital Loans and Its Effect on Household Welfare Onyebuchi Iwegbu Oluwakemi Morenike Ademisola Department of Economics, University of Lagos, Lagos, Nigeria Correspondence: Onyebuchi Iwegbu ([oiwegbu@unilag.edu.ng](oiwegbu@unilag.edu.ng)) Received: 9 January 2025 Revised: 3 July 2025 Accepted: 10 July 2025 Funding: The authors received no specific funding for this work. Keywords: digital loans | household welfare | loans sustainability | structural equation modelling (SEM) ABSTRACT This study examines the sustainability of digital loans and its effect on household welfare (HW) in Lagos, Nigeria. The study also examines the effect of digital loan administration on HW. Survey research design, convenience sampling and structured questionnaires were used to collect data of 648 households. The data were analysed using the structural equation modelling. Digital loan is a significant and positive predictor of HW. However, interest payment has a negative effect on HW. Financial attitude and willingness to contract digital loans are positive predictors of HW. The benefits of digital loans on HW should be balanced with the potential risks of over-indebtedness and high interest rates, which undermine welfare if loans are not managed effectively. The sustainability of digital loans is hinged on the implementation of a fair interest rate on loans system by the digital loan providers, incorporation of a fair and ethical debt recovery process with favourable penalties, fair collateral on digital loans, flexible repayment plan, favourable financial attitude of digital loan seekers and the willingness of households to apply for favourable digital loans. Digital loan providers may consider implementing comprehensive financial education programs that emphasize on responsible borrowing and effective financial management. JEL Classification: G51, G53 1 Introduction The consequences of COVID-19 pandemic in 2020 had some unfavourable effect on the global economy and human existence, affecting the sub-Saharan region with countries like Nigeria with high population adversely impacted. To curtail the continuous spread of the disease, the federal government of Nigeria restricted human activities and movement which caused the closure of businesses; as a result, there were massive job losses and job cuts with adverse consequences on households’welfare and business profits (Utebor and Omidoyin 2023; Akinleye et al. 2023). During this period, households were unable to access funds due to financial institutions’ unwillingness to lend to businesses and individuals. However, amidst the pandemic, the quest to access loans birthed the emergence of digital loans. Financial institutions launched the access of loans through financial technology channels in a bid to address the financial challenges posed by the pandemic (Ewoi et al. 2023). Thus, the post-pandemic peri

FAQs

What is the main research focus regarding digital loans in Lagos, Nigeria?

The study examines whether continuous access to digital loans is sustainable and how digital loans affect household welfare (HW) in Lagos, Nigeria.

How do digital loans and interest payments relate to household welfare?

Digital loans significantly and positively predict household welfare, whereas interest payment has a negative effect on household welfare.

Which borrower or program factors influence household welfare alongside digital loans?

Financial attitude and willingness to contract digital loans are positive predictors of household welfare, and sustainability is tied to fair interest rates, ethical debt recovery, fair collateral, and flexible repayment plans.

Jul 18, 2026

Uploaded by Sage