Loan Provision, Degree of Collectiblity and Reason for Default: A Case Study in Wise Saving and Credit Cooperatives Union for Women
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Date
2008-01
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Addis Ababa University
Abstract
This paper entitled “Loan Provision, Degree of Collectiblity and Reason for Default in
case of WISE Saving and Credit Cooperatives Union for Women” examined the loan
provision, collection procedures as well as the default rate of this SAC.
Today a number of Saving and Credit Cooperatives(SACs) are established to give a
saving and loan service to clients and much emphasis is given for those women who
wants to run SME. WISE’s major clients are women who would have an impact on
changing their own life as well as their families. The study attempted to identify and
assess the loan provision criteria’s, collection procedures, the reason for default, the
impact of interest on the cooperatives and clients, and last but not the least the benefits
and challenges of the SAC under WISE.
Data for the study was collected through questionnaire, interview and discussions with
four cooperatives members and credit officers who are situated in Nefas Silk sub-city.
Results of the study indicate that in order to give loan to a woman WISE have set
criteria’s so as to decrease the default rate. A woman has to save money and has to
provide a business plan in order to be given the requested loan, after being a member of
the SACs. The study revealed that the level of education of the borrowers reduces the
default rate in turn facilities heavily the collection procedures. The study also indicates
that the interest charged has a great impact on clients which makes them to reduce the
amount of loan they want to take
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Keywords
Cooperatives Union, Saving and credit