DETERMINANTS OF LOAN REPAYEMENT PERPORMANCE OF WISDOM MICROFINANCE INSTITUTION

Abstract

Microfinance institution are important tools in poverty alleviation through employment creation and income generation for low income groups with limited opportunities. This study would be conduct to show the direct relation effect of socio-economic, institutions and demographic on loan repayment performance of wisdom microfinance institution. In the study the explanatory research design would be used to examine the relationship of the dependent and independent variables. In order to achieve this objective primarily data was be collected from clients and manager of wisdom microfinance institution by using interview, questionnaires. The data would be collected from active total population of 1379 by using yemane formula take 94 simple size of population of wisdom microfinance institution. The result of the cross tabulation analysis show that sex, age, educational level, family size, income level, loan size, interest rate were found influencing loan repayment performance. Based on the findings of the study, some recommendations were made to improve loan repayment performance in the study area. Wisdom microfinance institution should be strengthen and support the poor women and should provide trainings to the borrowers before they deliver the loan, the Youngers aged group has more defaulters compared to elders. It is not recommended to exclude the youngers age groups but the institution should give special attention to those borrowers by providing awareness creation training, continuous follow up and supervision, provide loan for those borrowers who have small family sizes with proper supervision, Provide loan for those borrowers who have higher education level with proper supervision, reduce the timeliness of loan release to increase loan repayment performance, encouraged to take up loan and taught how to save and boost their income levels for those borrowers who have low level of income, to give enough time to clients so that they will be able to work with the loan they have borrowed and arrange the time to collect loan that will be suitable for them and give balance of interest rate to borrowers