Determinants of Loan Repayment Performance the Case of Micro and Small Enterprises in Dire Dawa Adminstration

Determinants of Loan Repayment Performance the Case of Micro and Small Enterprises in Dire Dawa Adminstration

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Title: Determinants of Loan Repayment Performance the Case of Micro and Small Enterprises in Dire Dawa Adminstration
Author: Salem, Abera; Dr. Endrias, Geta
Abstract: Loan repayment has a paramount importance to have viable financial institutions. Financial institutions are extending loanfacilities to Micro and Small Enterprises in order to narrow the gap between the capitals that is required and that the enterprises possess that would increase production and productivity.However, there is a serious loan repayment problem in the Dire Dawa Administration, which discourages urban financeinstitutions from promoting and extending loan.This study was aimed at examining the loan repayment performance of micro and small enterprises and identifying determinants of loan repayment performance of micro and small enterprises in Dire Dawa Administration. A multi-stage sampling technique was employed to select120 micro and small enterprises. Data werecollected through face-to-face interview and observation, and analyzed using descriptive and inferential statistics as well as econometric model. An econometric model known as two limit tobit regression model was used to identify factors that affect loan repayment performance. The result indicated thatsufficient loan size and repayment periods were negatively and significantly related to loan repayment performance of enterprises. Follow up and supervision, access to market, business experience, and trade and service sector types were important factors which affected loan repayment performance of the enterprises positively and significantly. Therefore, the studysuggests the identified significant variables to be a spring board for further interventions by financial institutions, stakeholders and policy makers so as to come with a breakthrough to significantly decrease defaulting problems.
Description: 76p.
URI: http://hdl.handle.net/123456789/3026
Date: 2016-05


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