Abstract:
Rural saving and credit cooperatives in Ethiopia are playing an important role in collects saving and providing credit to their members at reasonable interest rate which is initiated by the government of Ethiopia. It has a mission of saving mobilization from their members and facilitating credit to their members and to enhance self-employment opportunities and poverty reduction by the amount of they save to their RuSACCOs. To address the main objectives of the study, three rural Saving and credit cooperatives were selected for the study purpose. In the course of this study, primary data were collected from 117 sample respondents and secondary data also collected from the selected rural saving and credit cooperative, key informant, necessary data from woreda cooperative agency and published documents related to loan repayments. The study was specifically aimed to assess the loan repayment mechanism or method, To identify factors influencing loan repayment performance, To identify other sources of credit prevalent among RuSACCOs members in Dire Enchini Woreda. The overall assessment of factors that affects repayment performance of borrowers using the structured questionnaires and semi-structured interviews. Accordingly, in order to achieve this objective 117 sample borrowers’ members were selected by using simple random sampling method from the total of 165 borrower’s members served by those rural saving and credit cooperatives. The descriptive statistics analysis and binary logistic regression model was employed to estimate and analyze the results of findings. The result of descriptive statistics shows that out of sixteen independent variable, Ten independent variable Family size, Education level, Duration of membership, Credit experience, Amount of loan, Farm income, Nonfarm income, Timely credit allowed, period of repayment and Supervision were statistically significant. Whereas out of Nine independent variables entered in Binary Logistic regression six variables including: Education level, Credit experience, Amount of loan, Nonfarm income, period of repayment and Supervision are found significant and positively and negatively influence loan repayment performance of borrower. The extensive involvement and interference of third parties on the decisions of loan approval processing to lending institute were found as a contribution for high defaulting. Thus, it is recommended that the RuSACCOs needs to focus on monitoring loan repayment systems of RuSACCOs members and technical support needs of the target borrowers through delivering better awareness creation to their members, close supervision and follow-ups and strengthening the internal and external weakness of their members
