Determinants Of Loan Repayment Performance: The Case Of Vision Fund Microfinance Institution Ambo Town

Abstract

The aim of the study was to investigate the factors affecting loan repayment performance of vision fund microfinance institution in Ambo town, Oromia regional state, Ethiopia. Cross sectional data was gathered from 346 randomly selected borrowers. The study used descriptive statistics such as mean, standard deviation, frequency and percentage and binary logistic regression were employed to analyze the data using stata software. The results of descriptive statistics shows the majority (76.59%) of the respondents were non defaulters and 23.41% of them were defaulters. The result of binary logistic regression reveals that sex of and number of dependents members in borrowers’ family had negative and significant effect on loan repayment performance of vision fund microfinance institution. On the other hands, age, education status, loan supervision, and purpose of loan positively and significantly affected loan repayment performance of vision fund microfinance institution. The study recommends that vision fund microfinance institutions should enhance the loan repayment performance of the borrowers by providing financial educations; carefully supervising the borrower, offer financial counseling to assist borrowers who have several dependents before approving loans to reduce the borrowers from being defaulter