DETERMINANTS OF LOAN REPAYMENT PERFORMANCE IN MICROFINANCE INSTITUTIONS: CASE OF OMO MICROFINANCE (OMFI) IN EMDIBER BRANCH

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-defaulters). 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-ended 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.