Factor Influencing Of Non-Performing Loan In Micro Financial Institution The Case Study Of Siinqee Bank Share Company In West Shoa Zone Some Selected District.

Abstract

The contributions of Micro Institutions to the economy can never be overemphasized. However, most of these institutions are faced with various challenges including non-payment of loans which constantly affect their operations and subsequently survival. Consequently, this study would be to determine factor that influencing of non-performing loan in micro-financial institution the case of Siinqee Bank Share Company in west shoa zone focusing on the three districts namely Toke kutaye branch, Ambo branch and Dandi branch. The main objective of the study was to formulate in order to gain better understanding of factor that influence of non performing of the organization. The study used descriptive and explanatory research design. The study used both primary and secondary data sources. To achieve the objective the primary data was collected through questionnaires and interview from a sample of 113 employees’ selected from the total population of 190 using purposive and simple random sampling techniques. The data collected from the respondents were analyzed using statistical software (SPSS V 20) such as mean, frequency, standard deviation and multiple linear regression analysis. Results of coefficient determination indicated that, except diversion of fund variable all five independent variables (inadequate monitoring, high interest rate, weak of credit policy, lack of security and lack of income of households has positive and significance effect of non-performing loan. The results of adjusted R-square is 0.775 the value indicated that the model was perfectly predicts values in the target field and the results of Anova shows that the significance of value is 0.000 which is less than 0.06. Based on the findings of the study, the researcher forwards recommendation to the Siinqee Bank Share Company branches management and concerned body. Therefore management of the Siinqee Bank Share Company pays attention on non performing loan. Furthermore, the Siinqee Bank Share Company should give training to employee how to manage non-performing loan and enhance the profitability of the organization. Additionally, Siinqee Bank Share Company should put in place a vibrant credit process that would encompass issues of proper customer selection, healthy credit analysis, genuine sanctioning process, proactive monitoring, follow up and clear recovery strategies for unwell loans.