Abstract:
The main objective of this study was to examine major determinants of loan repayment performance in the
AdCSI branch. Primary data was collected from 168 sample borrowers using a questionnaire. Substantial
primary data was also collected from the manager and loan officers of the AdCSI using interviews.
Secondary data was collected through reviewing documents. Descriptive statistics including mean,
frequency, and percentage were used to describe borrowers’ socio-economic, business, and loan-related
characteristics. T-test and chi-square analyses were also used to compare the variation in some selected
socioeconomic, business, and loan-related factors between borrowers. Moreover, a binary logistic
regression analysis was used to analyze the socio-economic, business, and loan-related factors that
influence loan repayment performance. The findings showed that all the socio-economic independent
variables borrowers’ gender, age, place of residence, marital status, educational level, family size, source
of income from activities not financed by the received loan, and monthly income level earned from activities
financed by the loan significantly determine loan repayment performance. The findings also revealed that
business-related factors like having saving account experience, financial records experience, business
experience, and business information significantly determine loan repayment performance, but conducting
market studies before starting a business has no significant influence on the loan repayment performance of
borrowers. Among the loan related independent variables included in this study, the analysis revealed that
except for training conducted before taking loans significantly determine the loan repayment performance
of borrowers. The study recommended that Addis credit and saving institutions must take steps to reduce
their bad debts since it affects their lending abilities and financial performance. Also, an effort must be
made by this institution to empower their credit staff with the necessary skills and tools to enhance credit
administration within the institution to significantly. In order to solve the internal and external problems of
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the institution, the main thing might be improve the financial capacity of the institution and expand the
services..
