Factors Affecting Loan Repayment Performance: The Case of Oromia Credit and Saving Share Company in Abuna Gindeberet Branch.

Abstract

This study was conducted with the aim of analyzing the factors that influence loan repayment performance of borrowers of Oromia Credit and Saving Share Company in Abuna Gindeberet Woreda. A total of 290 respondents were involved in this research, of this 273 were borrowers and 17 were employees of this branch. In order to give due emphasis for the generalization of the research the sample size was determined by using proportion method to draw representative samples. Primary data were collected from respondents through structured questionnaire and secondary data were collected from different literature sources. The result demonstrated that age, educational level, additional income from other activity and loan diversion were factors they showed significant association with loan repayment performance. Compared to male borrowers, females’ borrowers were found to be better in terms of loan repayment performance. It is also found, number of borrowers has no effect on loan repayment. Regarding institution related factors, the study results revealed that supervision made for loan utilization and loan repayment by credit officers was inadequate and borrowers 'feeling toward repayment period in this study, market problem, lack of adequate man power and shortage of resources were identified as the main repayment challenges from the forgoing it can be concluded that both barrowers and institution related factors are affecting loan repayment performance in this branch. Hence the institution is recommended to see into these factors with great care and should take a corrective action accordingly.