Institutional Conditions and Equitable Access to Digital Credit: The Differential Roles of Accessibility, Affordability, Financial Literacy, and Regulatory Environment in Nairobi City County

Abstract

The purpose of this article is to assess the effect of institutional characteristics of digital credit provision, specifically accessibility, affordability, financial literacy, and regulatory conditions, on equitable access to digital credit in Nairobi City County. Institutional factors, system-level conditions shaping digital credit provision, use, and experience, are examined as direct and indirect predictors of equitable access through users' decision to use digital credit. The study employed a quantitative, cross-sectional survey design with a sample of 415 digital credit users in Nairobi City County. Data were analysed using Covariance-Based Structural Equation Modelling (CB-SEM) in AMOS 27.0, which was selected for its suitability in simultaneously testing multiple direct and indirect relationships among latent constructs. Findings indicate that accessibility, affordability, and financial literacy demonstrate significant direct effects on equitable access (? = 0.174, p < .001; ? = 0.238, p = .009; ? = 0.341, p < .001, respectively), while the regulatory environment influences digital credit use behavior (? = 0.621, p < .001) but not directly on equitable access. These results refine Financial Inclusion Theory by distinguishing between behavioural determinants and structural conditions in shaping equitable access outcomes. The study concludes that structural and institutional factors play a decisive role in determining equitable access, operating through both direct pathways and indirect mechanisms via borrowing decisions. This finding has important policy implications for digital credit regulation and financial inclusion initiatives in Kenya.