Factors Affecting Loan Repayment Performance Of Micro Finance Institution Beneficiaries (The Case Of Addis Credit And Saving Institution) In Addis Ababa Ethiopia

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.