“Factors Affecting Loan Repayment Performance: The Case Of Siinqee Bank, Selected Branches Found In Burayu Town”

Abstract

The contributions of financial institution to the economy can never be overemphasized. However, most of these institutions are faced with various challenges including non-payment of loans which constantly affect their operations and subsequently survival. Consequently, this study was to investigate the factors affecting loan repayment performance of selected siinqee bank customers found in burayu town focusing on the three branches namely Burayu Branch, Gefersa Nono Branch and Gefersa Guje Branches. To achieve this objective descriptive and explanatory research design is used in order to analyze the topic thorough giving a narration of their relationship and influence often via surveys to describe or measure a phenomenon so as to answer the questions of who, what, where, when, how and data was collected by using primary from both borrowers and staffs of the banks. The study was used mixed research approach to set the objectives as well as the study was used purposive and simple random sampling technique. The respondents comprised 1 customer service manager, 3 branch managers, 3 loan officers, 5 customer relation manager and 119 borrowers from the total population of 517, then the total respondent was 131. The primary data was collected by using open and closed ended questionnaires and interview by using structural. The researcher used SPSS and STATA software to analyze the data. The study was used both descriptive and explanatory study design and used mixed research approaches. The combination of qualitative and quantitative approaches provides the most complete or insightful understanding. Correlation analysis of the study variables; credit controls and monitoring, interest rates, guarantees, credit growth, inflation, and political instability are positively related to loan repayment performance. Correlation coefficient estimates were 0.617, 0.193, 0.509, 0.675, 0.201 and 0.130. From the results, it can be seen that loan size and loan supervision and follow up have Strong and positive relationship with loan repayment performance. Regarding on the findings, banks and its borrowers are recommended to take corrective action on relevant factors affecting the loan repayment performance of the bank borrowers.