Factors Influencing Loan Repayment Performance Of Clients In Busa Gonafa Saving Institution

Abstract

The objective of this study was to determine factors affecting borrower’s loan repayment performance in BGMFI four branches which includes Jeldu, ginci, ejere and Ambo. This study contributes significantly to the knowledge of microfinance program at large, where it explains that repayment performance plays an important role to ensure that BGMFI can continue providing microfinance to the micro entrepreneurs without depending on subsidies. The frame work of this study was built by four factors namely borrowers characteristics, business characteristics, loan characteristics and lenders characteristic. The study used mixed methodology combining between quantitative and qualitative data through survey questionnaires and in depth interview. One hundred fifty six questionnaires (156)were distributed to the employees of the staff the BGMFI and their clients who are considered for the study. The data obtained through questionnaires, and interviews were analyzed and interpreted. Consequently based on the responses obtained from the sample respondents and conducted interview with the concerned bodies the analysis and interpretations of the data were presented in tabular form by using percentage and regression model. The findings of the study show that there were different factors that related to poor loan repayment in BGMFI like institutional factors, client factors. The study Shows that the percentage of loan repaid by respondents in the study where 78.3% repaid whereas 21.7% where the outstanding loan which need to improvements and awareness by the organizations to make high repayment performances in the study areas. The correlation results of the study show that there was a positive relationship or positive significance among the independent variable and dependent variable. The BGMFI should be actively improving that the institutional factors, Clint factors and economic factors that affects the loan repayment performances and The BGMFI provides comfortable time schedules or programs of loan repayment.