Abstract:
Development Bank of Ethiopia plays vital role in supporting the national development agenda by
providing loan to viable projects. The study assessed Development Bank of Ethiopia Adama
district, with the objective of assessing the determinants of loan repayment performance of
borrower’s financing. The study employed explanatory research design and quantitative research
approach. Both primary and secondary data was collected from 98 projects financed at the end of
June 30, 2023 G.C. Primary data were collected using questionnaires and the secondary data
were collected through verifying documents or each individual files and from data base of the
bank. The total population of the study was 98, of which 43 (43.90%) were non-defaulters and
55(56.10%) were defaulters borrowers. In this study the data obtained from borrowers was
analyzed using descriptive statistics analysis and Binary Logit Model was used to measure the
variables those determining loan repayment performance. In the logistic regression model, a total
of thirteen’s explanatory variables representing four dimensional factors namely borrowers’
related factors, lender-related factors, project and loan related factors, and external factors were
considered to analyze loan repayment performance. As per the results of binary logistic
regression revealed that, credit experiences of borrower’s, project follow-up, given grace period,
business sector and accessibility of infrastructures have found to be significant effect on loan
repayment performance. On the other hand, rests have found to be insignificant effect on loan
repayment performance. Finally, based on the descriptive and econometric results/analysis, the
researcher has recommended to the bank to undertake proper screening, disbursing loan at the
right time, conduct proper follow-up, provide sufficient amount of loan as per the feasibility study
of the project, solve other difficulties as identified in this study and work on all factors affecting
loan repayment performances and to minimize loan default rate.
