The Determinants of Micro enterprise Loan Repayment in Addis Ababa: A Case Study of Gulele Sub-City.
No Thumbnail Available
Date
2007-02
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
The purpose of the study is to look into the determinants of microenterprise loan
repayment in Addis Ababa particularly to Gulele sUb-city.
Loan repayment has paramount importance for most developing countries, because lack
of financial resources is usually regarded as a major obstacle to the development of such
countries.
In addition good repayment performance is an important measure for the success of
microfinance institution and microenterprises.
Hence, it is advisable to credit scheme initiatives to make more attention to investigate
factors that influence loan repayment performance which enables the programs to reach
millions of the poor.
The objective of the study is to investigate the determinants of microenterprise loan
repayment in Addis Ababa with respect to Gulele Sub-city.
The study is based on descriptive statistical analysis and identification of the
determinants of microenterprise loan repayment in beneficiaries by using binomialprobit
model. The data used in descriptive statistical analysis is primary data collected from a
structured questionnaire from a sample of 220 borrowers who benefited from Gulele sibcity
credit and saving office .
The estimated binomial probit model indicates that, loan amount, household income, age
of borrower, sex of borrowers and role of group leader are negatively related to loan
repayment performance. On the contrary, suitability of installment period, supervisory
vi sit, number of activities provide source of income, expectation of another loan, house
hold income, availability of other source of income, social ties, frequency of loan, living
distance among group members and high school and above high school level of education
are positively related to loan repayment performance.
Hence, factors that enhance and hinder loan repayment performance should be considered
by Gulele sub-city credit and saving office in designing a more effective loan repayment
mechanism for its borrowers.
Description
Keywords
Determinants of Micro enterprise Loan Repayment, Gulele Sub-City