ASSESSMENT OF THE DETERMINANT OFLOAN REPAYMENT PERFORMANCE OF MICRO FINANCE INSTITUTIONS. (IN CASE OF AGGAR MICRO FINANCE SHARE COMPANY)

Abstract

Microfinance institutions in Ethiopia are playing an important role in poverty reduction strategies to support lower income group ,to get funds to their business activities and to improve their lives to address the main objectives of the study, Aggar Microfinance were selected for the study purpose. The objective of this study looks to analyze and identify the determinants of loan repayment performance. Studies showed that there are many socio-economic and institutional factors influencing loan repayment performance in the MFIs. AMFSC is among the pioneer MFIs in the country providing services in and around the capital city, which also experiences considerable problem of default so that, to fill this gap. This study was aimed at examining socio economic factors that determinant of loan repayment performance in AMFSC. The researcher were used open end and close end questionnaires, 120 sample borrowers were selected from the total of 1557 borrowers served by the selected micro finance. A descriptive analysis was employed. Under this method of data analysis, descriptive statistics including mean, standard deviations, frequency, percentage, t-test, p-values chis-square test statistics etc. were used to compare defaulter and non–defaulter groups with respect to some explanatory variables. Ordinary least square (OLS) regression model used to study identify the dependent variables affects the loan repayment performance.