Determinants of loan repayment performance of micro and small enterprises: the case of Oromia credit and saving share company branches under Oromia special Zone around Addis Ababa
Creators: name: Gobena, Geleta
Publisher: name: National Academic Digital Repository of Ethiopia
Year: 2018

description: The study was conducted in three special zones of Oromia regional states around Addis Ababa. It was intended or aimed to analyze the determinants of loan repayment performance of MSE's sectors that were financed by Oromia Credit and Saving Share Company operating in these three zones and this is because the loan repayment performance of MSE sectors for the successive past five years analyzed and the last year loan repayment status indicated that 9.2% default rate and averagely the last five years loan performance indicated that 7.9% default rate in the study area. In this study the determinants of loan repayment were categorized as enterprises related factors, lenders related factors and the external related factors and that were analyzed in study separately. The study employed ex planatory and descriptive research design with quantitative and qualitative methods. This study was applied multi stage sampling design in order to select the enterprise leader respondents of MSE's sectors financed by three branches operating in the study area. Structured and interview based questionnaires were used in order to collect primary data whereas secondary data were used from published and unpublished documents of their office. Out of 310 total number of MSE's sectors leaders 144 sample size were selected and all the sampled respondents were filled the questionnaire properly. The collected data were analyzed by employing descriptive statistics and logit model by using STATA software version 12. This result indicates that out of 18 predicting variables used in this study 11 variables were found being significant and out of these variables, group leader's education level, Training offered by the loan officers of OCSSCO , loan follow up or loan supervision, market accessibility and technology advancement were positively influence loan repayment while loan interest rate, internal rules and regulations , loan accessibility( the chance for additional loan ) , lack of group leaders experience in business, enterprise size and enterprise group formation were negatively influenced the loan repayment performance of MSE's sectors in the study area. On the basis of this study, some conclusions and recommendations were drawn and forwarded respectively .The borrowers who attained higher level able to pay better than the borrowers who were in lower level schooling .therefore ,OCSSCO should motivate educated people and also easy to provide training. If unreasonable and high interest rate charged by lenders it leads to default, so the loan interest rate charged by OCSSCO should be reasonable and affordable for the borrowers. The higher level of market access results the higher probability of getting profit and the greater level of enterprises loan repayment performance . So MSE should work hard to have market demand by Preparing of different market exhibitions which help enterprises to get market access and market linkages for their products and services as well as share good habits of work among them that leads enterprises to sustain in the business.