Evaluating Amhara Credit and Saving Institution and Determinants of Profitability in Rural People: In the Case of Gozamin Woreda; East Gojjam Zone, Ethiopia

Abstract

Financial services like microfinance for the poor, can be a powerful tool to fight poverty. Microfinance is considered to be as one of the most efficient instruments to support economic development and to struggle against poverty in poorer countries. Many studies have been done to assess the outreach and effectiveness of microfinance in different parts of the region. But to the best of researchers' knowledge there is no published study in the research area whether borrowers are profitable or not and determinant factors. The main objective this study was to identify factors that contribute to Amhara credit and saving institution to make borrowers profitable. Cross sectional study design was used to collect primary data. The study population were rural borrowers from Gozamin Woreda, East Gojjam Zone. Partial proportional odds model was used as method of data analysis. From the total of 431respondents, 18.33% were loser, 29.47% neither profited nor lost and 52.20% were profitable. Borrowers who spent their money for other purposes( OR=0.188) were unlikely to be profitable as compared to those who spent to buy animals. Those who lost property in loan period( OR=0.306) were less likely to be profitable compared to those did not lost. Being medium in economy were important to be profitable. When borrowers take money for one additional year, their profitability increased by 1.15 times. ACSI was established for the poor to come out of property. But almost half of borrowers did not get extra property/ income. Buying animals with borrowed money was good opportunity to be profitable and single borrowers should not be encouraged. Special follow up should be made on poor and female headed borrowers not to spend the money on consumable items and home construction.

Keywords: ACSI, Profitability, Partial proportional odds model, Gozamin Woreda