Factors Influencing Loan Repayment Performance Of Micro And Small Enterprises - A Case Of Liban Jawi District, Oromia Regional State, Ethiopia

Abstract

The purpose of this study was to identify factors influencing loan repayment performance of MSEs, in Liban Jawi District. The study was designed to conduct in descriptive and explanatory research design. Both quantitative and qualitative (mixed) research approaches were performed to minimize limitations attached to each of the approaches. The target population of the study was 600 that were consisted of 6 kebeles of borrowers of MSEs. The study employed simple random sampling, stratified sampling and purposive with a sample size of 193 respondents and the sample size was determined by using Yamane formula. The primary and secondary data were used to address the research objectives and the data which were collected through questionnaire and interview were analyzed through descriptive statistics and inferential (correlation & multiple regression) analysis, using Statistical Package for Social Sciences (SPSS) version 26. The finding of Pearson’s correlation indicates that loan size and supervision & follow up which was statistically insignificant and negative relationship, while other collateral group, application cost, marketing skill and loan experience found to be statistically significant and negatively affect (influences) while rule and regulation, interest rate, loan payback period and market accessibility was significantly and positively affect and financial skill & planning and loan experience insignificantly and positively affects the loan repayment performance of MSE in the District. The study has established that loan repayment performance in the District are not effective in achieving the loan objectives. Consequently, the Liban Jawi District office of Job Opportunity and Skill should apply its effort on the most indicators and the most significant factors (contributors) to improve the loan repayment performance of MSEs and thus, to achieve value of government policy and strategies to be achieved.