Determinants of Loan Repayment Performance in Microfinance Institutions: Case of OMO Microfinance (OMFI) in Hadiya Zone

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Date

2019-06

Journal Title

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Publisher

Addis Ababa University

Abstract

This study was conducted with the aim of analyzing and identifying the factors that influence omo microfinance loan repayment performance of the clients of omo microfinance institution. In order to achieve this objective, primary data were collected from 277 respondents using stratified sampling (110 defaulters and 167 non-defaulter). the population was divided into Urban and Rural based on settlement area. The primary data has been collected by interviewing 116 urban borrowers and 161 rural borrowers‟ respondent using a structured questionnaire with the help of trained enumerators. The questionnaire includes both open- and closed-ended questions. In addition, secondary data were gathered from the OMFI head office, OMFI branch office, and other related relevant publications. A binary logit model was used to analyze the socio-economic factors that influence loan repayment. Furthermore, a chi-square(X2) analysis was employed to compare the defaulters and non-defaulters group. A total of sixteen (16) explanatory variables were included in the regression. Out of these, eleven (11) variables were found to be significant for the probability of being a defaulter. The remaining five (5) variables were found to be insignificant for the probability of being a defaulter.

Description

A thesis submitted to the department of accounting and finance, in partial fulfillment of the requirements for the master of science degree in accounting and finance

Keywords

Defaulters, Loan repayment, OMO microfinance

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