Abstract:
Microfinance institutions in Ethiopia are playing an important role in poverty reduction
strategies initiated by the government of Ethiopia. These institutions have a mission of creating
and facilitating credit and other financial service to enhance self-employment opportunities and
poverty reduction. This study was conducted with the objective of factors affecting loan
repayment performance beneficiaries of microfinance institution the case of Addis credit and
saving institution in Addis Ababa Ethiopia.the study adopted descriptive research design and
mixed research approach is used. A sample of 291 from total population 1076 which
comprimesd addis credit and saving institution was calculating simple random sampling
technquies using yeman’s formula.In order to achieve this objective, primary data were collected
from 291 selected respondents(167 defaulters and 124 non-defaulters) by using structured and
semi-structured questionnaires and also key informant interviews. In addition to this, secondary
data were gathered from Addis credit and saving instutuion office and other related relevant
published documents. data were analyzed by descriptive statistics and binary logistic regression
model using SPSS version 25.Furthermore, a chi-square test was used compare the relationship
between dependent and independent variables. The model total tewlve (12) explanatory variables
were included in the regression, Out of these, seven (7) variables were found to be significant for
loan repayment performance of borrowers.These are age, marital status, level of education,
source of income, business experience, loan from other source, interest rate. The remaining five
(5) variables, gender, saving habit, loan size, time interval, collateral security, were insignificant
for the loan repayment. From these to conclude the ouputs of binary logistic regression model
done age ,marital statu,educational level,source of income,business experience and loans from
other source positively related and significantly at 1% and 5%,whereas interest rate is
negatively affect and 1% significantly.The study to recommend that it should be Addis credit and
saving institutuion needs to focus on monitoring loan repayment system and technical support
needs of the target borrowers through delivering better awareness creation to their customers,
close supervision and follow-ups and strengthening weaknesses through better training.
