Unsecured Personal Loans and Financial Vulnerability: A Case Study of Seventh-Day Adventist Church Employees in Western Kenya

Abstract

The purpose of this article is to examine the impact of unsecured personal loans on the financial health of Seventh-day Adventist (SDA) Church employees in Western Kenya. This study focused on 291 SDA Church employees of the West Kenya Union, selected through stratified random sampling across sixteen counties. This study employed quantitative research methods utilising both descriptive correlation and regression research designs. Krejcie and Morgan's table of sample size was used to sample 221 respondents. This was shared proportionally, based on the number of employees, among the 16 organisations within the West Kenya Union. The study mainly used primary data obtained through the administration of a questionnaire to the selected employees. The research data was analysed using both descriptive statistics, correlation and regression analysis. Findings indicate that most SDA Church employees in Western Kenya receive salaries through banks, with few through SACCOs or direct cash from the employer, and access loans with minimum security. The study found that employees use unsecured personal loans almost every time but are somewhat unable to manage day-to-day needs, cope with shock/risk, and are neutral on their ability to invest in future goals and opportunities. A significant, negative, and weak relationship was established between the usage of unsecured personal loans and financial health, with increased loan usage associated with a decline in financial health. The significance of this study lies in highlighting the financial challenges faced by SDA Church employees in Western Kenya, recommending further studies on other loan uptake variables and in other Kenyan regions to confirm these findings.