Loan Características and Loan Performance at Higher Education Loans Board in Kenya
Kwang’a Maureen Achieng, Dr. Ambrose Jagongo

Abstract
The aim of Higher Education Loans Board is to enhance access and retention of qualified needy students in university education through loans. The main objective of this study is to determine the loan characteristics and the effects they have on loan performance among students’ loanees owing Higher Education Loans Board. The study also seeks to study the specific variables which include effect of loan size, interest rate and loan tenure on loan performance and the moderating effect of unemployment on the relationship between loan characteristics and loan performance at Higher Education Loans Board in Kenya. The study adopted Moral Hazard Theory, Adverse Selection Theory and Financial Intermediation Theory to support the relationship between the study variables. A descriptive research design was adopted in this study since it gives an explanation to a subject through the creation of a pool of events, problems and people through data collection. The target population of the study comprised of loan performance data for the Tertiary, Undergraduate and Post Graduate loanees for the period 2009-2018. The study utilized secondary data to make inferences and conclusions about the study population. Document analysis of Higher Education Loans Board statistics (specifically financial data annual disbursement and recovery reports) was used. The data on unemployment rate was obtained from Kenya National Bureau of Statistics .The data was collected using a document review guide. The data was analyzed using Statistical Package for Social Sciences. The tests that were carried out in the study were Heterosedasticity, Mu1ticollinearity, and Autocorre1ation and pane1 unit root test. Descriptive and inferential (multiple regression) analysis were utilized in the study. The study determined that there is a significant relationship between loan sizes, loan tenure and loan performance of loans disbursed by Higher Education Loans Board. Interest rate is an area that was not conclusively studied hence; the study determined that interest rate does not impact loan performance because it is constant across the years of study. Unlike other studies conducted in the same field, this research determined the moderating effect of unemployment on loan characteristics and loan performance. The study determined that unemployment has a negative significant relationship with loan performance. The study recommends that loan characteristics (loan size and loan tenure) should be considered by Higher Education Loans Board and government policy makers. The unemployment rate should also be considered and beneficiaries given at least two years after completing school to start paying their loans.

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