Kumela Gudeta (PhD)Teshome Kebede2024-01-222024-01-222023-05https://etd.aau.edu.et/handle/123456789/1439This study has identified effects of social capital and other socio economic factors on loan repayment performance in the study MFI(OCSSCO)in Sendafa branch. The study was conducted on a sample of 127 customers selected both from rural and urban customers of the MFI at the rate of 60% and 40% respectively. Both qualitative and quantitative methods were employed to conduct this study. Results of Probit regression have shown that most of the coefficients are consistent with relationships and their tests of significance indicate their importance in explaining the repayment performance of borrowers in the groups. Gender, household size, distance from the MFI office, experience in group borrowing, number of visits by loan officers, pressure in the group, meeting attendance frequency, and heterogeneity in group membership were found to be significant in the model. The results also revealed a positive relationship between loan repayment and socioeconomic factors, with the majority of explanatory variables being statistically significant. However, the distance between borrower's home and the MFI office has a negative coefficient that is statistically significant. From the analysis, it can be said that social capital, shared liability and repayment performance had a very strong positive association. Social capital was found to have a significant impact on repayment performance due to the strong bonds between borrowers and the MFI and trust among the group members. The study has concluded that if the essence of self-help and cooperation is fostered and monitored properly, the poor can fulfill his/her repayment obligations.enMicrofinance InstitutionLoan RepaymentSocial CapitalDefaulters and NondefaultersThesis