| dc.description.abstract | This study was carried out to analyze the factors influencing loan repayment
in micro-finance institutions. This was after the observation that despite
various mechanisms being put in place, the level of loan defaults in mfis was
still high thus threatening growth, existence and even their survival. The
research covered the mfis within the Meru municipality. Three independent
variables were analyzed which were: business characteristics, borrowers’
characteristics and lenders characteristics that influence loan repayment.
Loan default was discussed as the dependent variable. Descriptive survey
was employed with the target population being 39 Loan Officers of
registered micro finance institutions and 5280 registered mfi clients from
various groups in Meru Municipality. A census of 39 loan officers was
targeted and a sample size of 360 respondents from registered group
members. The sampling was done using stratified proportionate sampling
and simple random sampling methods. Data was collected by use of
questionnaires and interviews and analyzed using both descriptive and
inferential statistics. Frequency tables were used for presentation of the study
findings. The study established that education level, number of dependants,
and hobbies were individual characteristics influencing loan repayment.
Business characteristics influencing loan repayment were: how long the
business had operated, its management and type. The lenders characteristics
that influenced loan repayment were: groups handled, period taken to qualify
new members and the criteria used to evaluate credit worthiness. The study
recommends that the government and other stakeholders in the finance sector
should ensure that the borrowers have access to formal education and
adequate relevant training in the business area. Furthermore, the mfis should
aim at reducing the time it takes to process a loan application and develop
models that are more effective in evaluating credit worthiness of their clients | |
