Consumer Perceptions and Behaviour toward Credit Usage in Kenya

Consumer behaviour and perceptions evolve over time and affect credit usage from the financial service providers. We use the 2016 FinAccess Household survey data of 2015 from 8665 households to examine how perceptions and behaviour of un(der) banked consumers can shape their dynamics towards credit usage. The perceptions and behaviour are based on source of financial advice, trust of the institutions, characteristics of the financial instrument and cost of credit. The multinomial logistic regression model predicts the odds of credit usage based on perceptions and behaviour of the consumers. The categories for the credit usage are: have credit, used to have credit and never had credit. Consumer perceptions and behaviour based on cost of credit and trust increase credit usage, while source of financial advice had minimal influence on credit usage. The characteristics of the financial instrument are catering to emergencies and being safe to use increased credit usage. The Savings and Credit Cooperative Organizations and microfinance are the most trusted financial institutions by the consumers, while shylock has the highest cost of credit. Radio as a source of financial advice reduced credit usage. The dynamics of credit usage are shaped by the perceptions and behaviour of the consumers.