Exploring the Financial and Psychological Consequences of Digital Loan App Usage among Students in Andhra Pradesh

Author

Shaik Khaja Hashim, Dr Kanaka Durga Hanumanthu


Abstract

 Digital loan apps have revolutionized the borrowing system and made small loan borrowing instant, without any collateral, and without any paperwork. And college students are a key user base. The present study explores the loan app use among students in Andhra Pradesh along with their motivations for borrowing loans, their difficulties in repaying the loan and the relationship between loan borrowing and psychological distress. A closed-ended questionnaire was filled out by 300 student borrowers. Descriptive statistics, chi-square tests of association, one-way ANOVA with Tukey post-hoc comparisons and multiple linear regression were used to analyse data.

The psychological distress scores were significantly higher for students who used three or more apps compared with those who used only one app (F(2, 297) = 57.057, p < .001, eta-squared = .278). There was a strong relationship between number of apps used and repayment difficulty. The regression model accounted for 60.1% of the variance in distress (adjusted R-squared = .592); the more number of apps, the higher amount of the loan, the greater the harassment from the recovery agents and the more the repayment delayed, the higher the distress; and the more financial literacy, the lower the distress. The paper concludes with suggestions for the responsible use of digital loan apps by the students, institutions and regulators.

Relevance: For financial education, loan apps, psychological distress and students, relevance is the digital lending.Cause and effect: Cause and effect is digital lending with relevance to financial education, loan apps, psychological distress and students.


Keywords

Instant microloans,Student borrowers, Student debt accumulation, Over-indebtedness & debt traps, Financial anxiety & stress, Mental health impacts



Full Text:

Download Paper PDF


References


Add all sources cited at the [cite] markers in Chapter 3 in your institution's citation style (APA / Harvard). Verified starting points:

Reserve Bank of India (2021). Report of the Working Group on Digital Lending including Lending through Online Platforms and Mobile Apps. Mumbai: RBI.

Reserve Bank of India (2022). Guidelines on Digital Lending. Mumbai: RBI.

Appendix A: Questionnaire

Dear participant, this survey is anonymous and voluntary and is used only for academic research. Please do not write your name or phone number.

Section A: Profile

  • Gender: Male / Female / Other
  • Age (years): ____
  • Course: Undergraduate / Postgraduate
  • Residence: Hostel / Home / Rented room
  • Region: Coastal Andhra / Rayalaseema / North Andhra
  • Monthly pocket money: Up to Rs. 3,000 / Rs. 3,001-6,000 / Above Rs. 6,000

Section B: Usage

  • How many loan apps have you used? One / Two / Three or more
  • How often do you borrow? Rarely / Occasionally / Frequently
  • Largest single amount borrowed (Rs.): ____
  • Purpose (tick all): Academic fees / Phone or gadgets / Food and outings / Rent or hostel / Medical / Shopping / Repaying another app

Section C: Reasons (1 = strongly disagree, 5 = strongly agree)

  • Instant approval and quick disbursal
  • No collateral or guarantor required
  • Minimal documentation
  • Reluctance to ask parents for money
  • Unexpected expenses or emergencies
  • Peer influence and advertisements
  • Lack of access to bank loans

Section D: Repayment

  • Have you had difficulty repaying on time? Yes / No
  • Longest delay in repayment (days): ____
  • Have recovery agents harassed you or contacted your family or friends? Yes / No
  • Challenges faced (tick all): high interest or fees / hidden deductions / short repayment period / penalties / harassment / contacting family / borrowing to repay

Section E: Financial literacy (score 1 point per correct answer, 5 questions)

Include five factual questions, for example on simple versus compound interest, effective annual cost, the effect of late penalties, the meaning of a processing fee deducted upfront, and the RBI's role in regulating lenders.

Section F: Financial stress (5 items) and psychological distress (6 items), 1 to 5 scale

Suggested distress items: felt anxious or panicky about repayment; had trouble sleeping; found it hard to concentrate on studies; felt ashamed or embarrassed; felt isolated from friends or family; felt hopeless about my situation. If you use a validated tool (for example, the K6 or DASS-21 scale), cite it and adjust the scoring accordingly.

If any question in this survey has made you feel distressed, please talk to a counsellor or a trusted person, or contact a helpline such as Tele-MANAS (14416)…

 

 

 

Share your valuable work from Social Media Buttons