Determinants of Loan Repayment Performance in Small And Medium Sized Enterprise: The Case of Addis Ketema Sub-City, Addis Ababa, Ethiopia.
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Date
2023-06-09
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AAU
Abstract
The Loan Repayment Performance of Small and Medium-Sized Enterprises (Smes) Is Influenced By Various Factors Such As Borrower And Loan Characteristics. Hence, This Study Aims To Examine The Determinants Of Loan Repayment Performance Of Small And Medium Sized Enterprise In Addis Ketema Sub-City, Ethiopia. The Research Used Both Primary and Secondary Data Types. The Primary Data Was Collected Through Questionnaires from Smes Owners Operating in Addis Ketema Sub-City. The Study Determined the Sample Using Taro Yamane Formula, And A Sample Size Of 258 Smes Was Selected from The Total Population Of 726 With 95% Confidence Level And 5% Sample Error. Simple Random Sampling Methods Were Used to Select the Respondents. Data Is Collected Through a Questionnaire Survey, With The Dependent Variable Being Loan Repayment And The Independent Variables Being Borrower And Loan Characteristics. The Study Applied A Quantitative Approach And Uses Descriptive And Inferential Statistics. Binary Logistic Regression Analysis Was Used To Model The Relationship Between The Loan Repayment And Independent Variables. The Study Finds That Gender, Age and Business Experience of the Borrower Do Not Significantly Affect Loan Repayment Of Smes, While Short-Term Loan Has A Significant Effect. Loan Size and Interest Rate Negatively Affect Loan Repayment, With High Loan Size Having a Significant Impact. The Study Conclude That Loan Size, Interest Rate, And Repayment Period Were Significant Predictors Of Loan Repayment Status For Smes. The Study Recommended That Smes with Larger Loans, Shorter Repayment Periods, And Higher Interest Rates Need Additional Support To Ensure Successful Loan Repayment.
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Keywords
Loan Repayment, Small and Medium Enterprises, Binary Logistic Regression, Borrower Characteristics, Loan Characteristics