College of Business and Economics

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    DETERMINANTS OF LOAN REPAYMENT PREFORMANCE OF RURAL SAVING AND CREDIT COOPERATIVE MEMBER BORROWERS IN CASE OF TSAEDA EMBA WOREDA, TIGRAY, ETHIOPIA
    (Mekelle University, 2024-01-25) GEBREHAWERIA ALEMU ARAIA
    Rural Savings and Credit Co-operatives (RuSACCOs) are cooperatives of financial institution that are owned and controlled by members for the purpose of encouraging members for saving and using the pooled fund to give loan to its members for their short and immediate financial need and as startup capital for small business. There are many demographic, socio-economic and institutional factors influencing loan repayment in the RuSACCOs, and other community based financial institutions. The study was aimed to identify the determinant factors for loan repayment performance of Rural Savings and Credit Co-operatives (RuSACCOs). This study was conducted with the objective of analyzing and identifying the determinant factors for loan repayment performance of rural savings and credit co-operatives (RuSACCOs). To achieve this objective, primarily data were collected from 424 randomly selected member borrowers (334 defaulters and 90 non-defaulters) by using semi-structured interview. For the data analysis, descriptive statistics including frequency, percentages and graph were used to describe the socio-economic characteristics of the member borrowers, institutional factors. Moreover, multicollinearity, correlation and chi-square analyses were employed to fulfil the assumption of binary logistic regression and compare the defaulters and non-defaulters’ group. Binary logistic regression was also, used to identify the determinant factors of loan repayment performance. The analysis found that six explanatory variables; marital status, family size, education, provision of training, follow up/supervision and model of lending become significant variables at 5% significance level. One of the assumptions of binary logistic regression was run to identify which of the independent variables significantly determine loan repayment performance. The omnibus Tests of model coefficients gives an overall indication of how well the model performs; the result obtained when none of the predictors are entered into the model. This is referred to as a „goodness of fit‟ test and indicated a highly significant value.