Digital Lending Practices and Financial Inclusion: A Case Study of MobiBank in Lagos, Nigeria

Thesis Abstract

Digital lending platforms have proliferated in Lagos, Nigeria, reshaping access to credit but also raising concerns about consumer protection, risk, and perceived inclusion; this study investigates how MobiBank’s digital lending practices influence financial inclusion among low- and middle-income households. The aim is to assess the extent to which digital lending facilitates access to credit, enhances financial literacy, and influences repayment behavior, while identifying risks and governance gaps that may undermine inclusion. Specific objectives are (1) to evaluate the reach and usage patterns of MobiBank’s digital lending among targeted populations; (2) to examine the impact of digital lending on credit access, savings, and payment behavior; (3) to analyze consumer protection, privacy, and data-risk management within the platform; (4) to test the mediating role of financial literacy and digital trust in the relationship between lending access and inclusion outcomes; and (5) to formulate governance and policy recommendations to optimize inclusive outcomes. The study adopts a mixed-methods design, combining a cross-sectional survey of 600 adult customers of MobiBank in Lagos with 20 in-depth interviews of frontline agents, compliance officers, and micro-entrepreneurs. The population comprises active MobiBank digital lending users and potential non-users within the metropolitan area. Data collection instruments include a structured questionnaire measuring access to credit indicators, financial literacy (using the OECD/INFE framework), trust in digital financial services, and inclusion outcomes (credit availability, utilization, and welfare effects), alongside interview guides exploring governance, risk controls, and user experiences. Validity and reliability are ensured through content validation by a panel of five banking, financial inclusion, and consumer protection experts and a pilot with 40 respondents, with Cronbach’s alphas above 0.78 for multi-item scales. Quantitative data will be analyzed using descriptive statistics, chi-square tests for association, and multiple regression to assess determinants of inclusion outcomes, complemented by structural equation modeling (SEM) to test the hypothesized paths among digital lending access, financial literacy, trust, and inclusion. The qualitative data from interviews will undergo thematic analysis to extract patterns related to consumer protection, privacy, risk management, and platform governance, with triangulation to corroborate quantitative findings. It is anticipated that digital lending access by MobiBank will positively influence credit availability and utilization among underserved groups, but that benefits are contingent on consumer financial literacy and trust, with risks related to data privacy and pricing transparency moderating inclusion gains. The study expects to identify differential effects across gender and income subgroups, and to uncover governance gaps in credit scoring, disclosure practices, and complaint resolution. The theoretical framework integrates the Technology Acceptance Model (TAM) to explain user adoption, the Financial Inclusion Theory of Access, and the Information Asymmetry and Privacy Risk perspective to contextualize data-handling concerns. The anticipated contribution to knowledge includes (i) empirical evidence on how digital lending platforms in a high-urban Nigerian context affect financial inclusion outcomes; (ii) a nuanced understanding of how financial literacy and trust mediate inclusion benefits; (iii) an assessment of governance, risk, and consumer-protection mechanisms in digital lending ecosystems; and (iv) policy and managerial recommendations for scaling inclusive digital credit responsibly. The study concludes that digital lending can advance financial inclusion in Lagos when accompanied by robust consumer protection, transparent pricing, and targeted financial education, while highlighting the necessity for enhanced regulatory oversight of data practices, credit scoring fairness, and grievance mechanisms to sustain inclusion gains. Recommendations include strengthening regulatory guidelines on transparent disclosure of terms, implementing standardized financial literacy programs for digital borrowers, enhancing data privacy safeguards, and embedding impact-monitoring systems within lending platforms to track inclusion outcomes over time.