Determinants of Group Loan Repayment Performance of Micro and Small Scale Enterprises: Case Study Oromia Credit and Saving Share Company (Easternwollega Zone Branch)
September 30, 2019
The study was intended to analyze the determinants of group loan repayment performance of MSE’s sectors a case of Oromia Credit and Saving Share Company operating in the East Wollega Zone. The survey data was conducted by using the structured questionnaire in order to collect primary data from the purposively selected branches whereas secondary data were collected from published and unpublished documents. Out of 424 total number of groups owned of MSE’s sectors 168 sample size were selected and only 162 of the respondents have filled the questionnaire properly by their respective enterprise’s group leaders. The collected data were analyzed by employing descriptive statistics and ordered logit model by using STATA soft ware version 12. Result of this study shows that out of the predicting variables used in this study, group leaders education level, group leaders experience in similar business, the enterprise’s beginning capital, loan repayment period, loan follow up, Training offered by the loan officers of OCSSCO and access to output market for the enterprises finished products were found to positively influence while the enterprises group size, additional loan they received, problem of information disclosure among members, the problem of financial statement recording experience in the business, loan interest rate, problem of power interruption and shortage of water supply around the enterprise working area have negatively influenced the group loan repayment performance of MSE‘s sectors in the study area. Based on this result, the author recommended that OCSSCO has to focus on the smaller the group size through which the problem of information disclosure would be resolved ,they has to give frequent training about the financial statement recording experience, they have to deal with the concerned body to solve the problem of power interruption as well as about the shortage of water supply around the enterprise’s business area and encouraging them to increase their beginning capital at the enterprise start up that used to build confidence in their loan repayment performance in the study area.
Gajo, M. B., & Daba Waktola, M. A. (2019). Determinants of Group Loan Repayment Performance of Micro and Small Scale Enterprises: Case Study Oromia Credit and Saving Share Company (Easternwollega Zone Branch). RA Journal Of Applied Research, 5(09), 2532–2545. Retrieved from http://rajournals.in/index.php/rajar/article/view/541
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2. AbebeBayuCheriye (2013), Microfinance and Loan Repayment Performance, Case Oromia Credit and Savings Share Company (OCSSC), Ethiopian, Zenith International Journal of Multi Disciplinary Research, Vol.3, January, 2013.
3. Abraham, G. (2002). Loan repayment and its determinants in small scale enterprises financing in Ethiopia: A case of private borrowers around Zeway Area (Master Thesis). Addis Ababa University.
4. Acquah, H. D., Addo, J. (2011) Determinants of Loan Repayment Performance of
5. Fishermen: Empirical Evidence from Ghana. Moldova, 2011, Vol. XLIV, No. 4 (148).
6. Agresti, A. (2007). An Introduction to Categorical Data Analysis. John Wiley and Sons, Inc, New York.
7. Bassem, S. (2008). Determinants of successful group loan repayment: An application to Tunisia. Journal of Sustainable Development in Africa, 10 (2), 776-792.
8. Canadian International Development Agency (CIDA, 2007) Supporting the Development of Inclusive Financial Systems: Micro Finance Guidelines.
9. Chattereje, S., Hadi, A., & Price, B. (2000).Regression analysis by example (3rd ed.). New York: John Wiley and Sons.
10. Cheng T. C. E. and. Choy Petrus W.C (2007), Measuring Success Factors of Quality Management in the Shipping Industry.
11. ChristenR. P, Lyman T.R. and Rosenberg R. (2003) Guiding Principles on Regulation Supervision of Microfinance: Published In The United States of America, Washington, D.C.
12. East Wollega Zone Oromia Credit and Saving Share Company.(2016).Annual financial statement report. East Wollega Zone Finance and Economic Development Office, 2017.
13. Eze C.C. and Ibekwe U.C. (2007) “Determinants of loan repayment under the indigenous financial systems in Southeast” Nigeria’ Journal of social science 2(2) 116 – 120.
14. Fikirte K. R (2011) “Determinants of loan repayment performance: A case study in the Addis Credit and Saving Institution.” Addis Ababa, Ethiopia. Wegeningen University, Netherlands.
15. Francis. O & Abel. K, (2009). Determinants of loan repayment performance in Microcredit institutions: Evidence from Tanzania (Master Thesis). University of Dar Es Salaam, Tanzania.
16. Gujarati, D. (2004). Basic Econometrics (4th Ed.). New York, NY: McGraw-Hill companies.
17. Hosmer, D., &Lemeshow, S. (1980). A goodness of fit test for the multiple logistic regression model. Communications in Statistics Journal, 10 (1), 1043-1069.
18. JemalAbafita (2003), “Microfinance and Loan Repayment Performance: A Case Study of the Oromia Credit and savings Share Company in Kuyu,” Msc. Thesis, AAU.
19. Joanna Ledger wood (2013) A Financial Market System Perspective: The New Microfinance Handbook, Washington, DC: World Bank.
20. Mcfadden, D. (1973) the measurement of urban travel demand, Journal of public economics.
21. MeleseKebede, Tesfahun Tegegn, and TadeseTafese (2014). Factors Affecting Loan Repayment Performance of Small Scale Enterprises Financed by MicroFinance Institutions: Study on Private Borrowers around Wolaita and Dawuro Zone.Global Journals Inc. (USA), Volume 1 6 Issue 7 Version 1.0 Year 2014.
22. Meshesha, T. (2014). Microfinance Credit Rationing and Loan Repayment Performance. MSc. Thesis Addis AbebaUniversity.
23. Munene, H and Guyo, S. (2013). Factors Influencing Loan Repayment Default in Micro-Finance Institutions.Thesis atMeru University of Science and Technology Kenya.
24. Michael S. Barr (2004) Microfinance and Financial Development Michigan Journal of International Law, Vol.26 No. No. 1, Pp. 271-96.
25. Micro Finance Development Review (2000), Vol. 1, No.1, Addis Ababa MFDR Vol.2, No. 1, Addis Ababa. Ethiopia.
26. Mohamed Jamal, (2013) Annual conference on the Ethiopian economic development association.
27. Mohana R.K. andLoddego T.F (2013). Credit provision and savingmobilization of micro finance institutions in Ethiopia. International Journal of accounting and financial management research vol.3.
28. Million Sileshi, Rose Nyikal and Sabina Wangia (2012), Factors Affecting Loan Repayment performance of Smallholder Farmers in East Hararghe, Ethiopia, Developing Country Studies, Vol.2, No.11, 2012.
29. Nawai, N. and Shariff, M. N. M. (2013) “Loan Repayment Problems in Microfinance Programs that uses Individual Lending Approach: A Qualitative Analysis.” Journal of Transformative Entrepreneurship Vol. 1, Issue 2, pp.93-99.
30. Ngai, E.W.T., Cheng, T.C.E. and Ho, S.S.M. (2004). Critical success factors of web based Supply-chain management systems: an exploratory study. Production Planning Control, 15(6), 622-630.
31. NorhaziahNawai and Mohd Noor MohdShariff. (2010) Determinate of Repayment Performance in Micro Credit Programs: International Journal of Business and Social Science Vol.1 No.2, November, 2010.
32. Okibo W .B.andAseyo L. (2013). Causes of loan default within micro financing Institutions in Kenya. Interdisciplinary journal of contemporary research in business vol.4.
33. Peterson, B. & Harrell, F. E. (1990).Proportional odds assumption of models for ordinal response variables. Applied Statistics, 39(3), 205–217.
34. Pindyck R.S. and Rubinfeld D.L. (1998) ‘Econometric models and Economic forecasts’, fourth edition, the McGraw-Hill companies, United Stated of America.
35. Ralph, H. (2011). Background information on group lending. Nairobi, Kenya
36. Robinson,M. (2003). The microfinance revolution: Sustainable finance for the Poor.Washington, D.C: World Bank.
37. Rose A.B. Wakuloba(2007). Ministry of State for Youth Affairs, Kenya.
38. ShaikA. and Tolosa N. (2014).Performance of Loan Repayment Determinants in Ethiopian Micro Finance Analysis.Eurasian Journal of Business and Economics 2014,29-49.
39. ShaikAbdulahi (2014)Microfinance credit and Loan Repayment Performance: A Case of Sidama Micro Finance Institution.
40. Sileshi M., Nyikal R. and Wangia S. (2012) “Factors Affecting Loan Repayment Performance of smallholder Farmers in East Hararghe, Ethiopia.” Developing Country Studies, Vol 2, No.11.
41. Signoriello, V. J. (1991). Commercial Loan Practices and Operations, Bankers Publishing.
42. Stock, J., & Watson, M. (2007).Introduction to econometrics.(2nd ed.). Botson: Pearson Addison Wesley.
43. SolomonAlemu andAddisuBajira (2013), Determinants of Rural Households Loan Repayment Performance, In Oromia National Regional State:
44. The Case of DodotaWoreda: InternationalJournal of Research In Computer Application & Management, Vol.3, No.11, November, 2013.
45. Dr. TesfatsionSahlu, GedifewAgalu and Welderufael Leake. (2015). Factors Influencing MFIs Group Loan Repayment Performance of MSEs. Research Journal of Finance and Accounting.
46. TesfayeGinbare, TesfatsionHailu and KirosHabtu. (2014). Determinants of group loan repayment performance of MSEs. Research Journal of Finance and Accounting, 11.
47. Train, K. E. (2009). Discrete Choice Methods with Simulation (Second edition). Cambridge and New York,Cambridge University Press. TriodosFacet (2013),Policy Review and Private Sectors Development: Country Report of Ethiopia, January 2013, Netherlands.
48. Una Murray and RuxandraBoros (2002) A Guide to Gender Sensitive Microfinance, Socio-Economicand Gender Analysis Programme (Seaga), Fao
49. Verbeek, M. 2008. A guide to modern econometrics, Wiley Vijverberg, W. 2011.Testing for IIA with the Hausman-McFadden test.
50. Watson, Jeff (2001). How to determine a sample size: tip sheet #60, University Park, PA:
51. Penn State Cooperative Extension. Windmeijera F.A.G. (1995) ‘Goodness-of-fit measures in binary choice models’, Econometric Reviews, 14(1), 101- 116, Department of Statistics Faculty of Economics and Commerce, The Australian National University, Canberra, ACT, Australia.
52. Wolday A.and GebreHiwot A. (2002).Micro and Small Enterprise Finance in Ethiopia. Eastern Africa Social Science Research Review. Vol.22.No.1.
53. WoldayAmha (2008), Review of Microfinance Industry in Ethiopia: Regulatory Framework And Performance, Occasional Paper No. 2
54. Wongnaa C. A. and Awunyo-Vitor D. (2013) “Factors affecting loan repayment Performance among Yam farmers in the Sene district, Ghana.”Agris on-line Papers in Economics and Informatics Vol. No. 2.
55. Zeller, M. (1998). Determinants of loan repayment performance in credit groups: the role of program design, intra group risk pooling, and social cohesion. Journal ofEconomic Development and Cultural Change, 46(3), 599-620.
56. Zerai B. and Rani L. (2012). Technical efficiency and its determinants of micro finance institutions in Ethiopia. stochastic frontier approach, African journal of Accounting.
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