Factors affecting borrowing among households in urban areas of Uganda

Abstract

Borrowing in Uganda plays a pivotal role in the country's economic landscape, serving as a vital means for individuals, businesses, and the government to access funds for various purposes. Uganda, located in East Africa, has a diverse financial sector with a range of borrowing options, including traditional banking, microfinance institutions, and emerging fintech solutions. The objective of the study was to assess the factors affecting borrowing among household heads in urban areas of Uganda. The study utilized secondary data of the Finscope Data set that was carried out in Uganda, 2018. A binary logistic regression was used to determine the factors affecting borrowing among household heads in urban areas of Uganda. The results show that the factors that significantly affect borrowing among household heads in urban areas were marital status specifically being single, whereby the single respondents were 3.84 times more likely to borrow than divorced, married and widowed respondents, as well as age whereby, younger respondents are 1.43 times more likely to borrow than older respondents. The researcher therefore recommends the government and other concerned parties to engage with communities to raise awareness about the impact of age and marital status on borrowing behavior