Determinants of Approval and Repayment Performance of Housing Finance in Addis Ababa; in Case of Zemen Bank S.C
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Date
2024-03-03
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A.A.U
Abstract
This study was conducted on the topic of determinants of approval and repayment
performance of housing finance in case of Zemen Bank S.C. with the objective of
assessing the determinants of Approval and Repayment Performance of Housing
Finance in Addis Ababa city. To conduct this study, the researcher used descriptive
and explanatory research design and primary and secondary data were used. Primary
data were collected using questionnaires and the secondary data were collected
through verifying documents. The total population of the study was 655 which include
637 borrowers and 18 employees and the total sample size was 78. Stratified and
judgmental sampling techniques were employed to select a sample from borrowers
and employees of the bank respectively. In this study the data obtained from
borrowers and the bank was analyzed using descriptive statistics analysis and Binary
Logit Model was used to measure the variables those are determining loan repayment
performance of housing finance. In the logistic regression model, a total of thirteen
explanatory variables representing three dimensional namely demographic factors,
socio-economic factors and institutional factors were considered to analyze loan
repayment performance. Based on the findings of this study, the researcher concludes
that employment status, income from other sources, spouse income sources, interest
rate, change of inflation and loan utilization have found to be significant effect on
loan repayment performance of housing finance. On the other hand, average house
hold income, saving culture, loan size, loan repayment schedule, timeliness of loan
release, loan supervision and loan diversion have found to be insignificant effect on
loan repayment performance of housing finance. Finally, possible recommendations
were suggested that, the bank might consider the significant variables such as
employment status, income from other sources, spouse income sources, interest rate,
change of inflation and loan utilization as the basis for loan approval and to minimize
loan default rate.