Factors Influencing Repayment Performance of Agricultural Loan: Evidence from Boloso Bombe Woreda, Wolaita Zone, Ethiopia

Abstract

The major concern of this study was to identify factors affecting credit repayment performance by small farmers in the Boloso Bombe Woreda. For the purpose of this study primary data were collected from purposively selected 5 Kebeles in the Woreda in the year 2016/2017. A total of 90 households comprising 47 defaulters and 43 non-defaulters were included in the final analysis. In addition, secondary data were collected from relevant organizations and pertinent documents. Descriptive statistics were used for analyzing the data. Moreover, t-test and 2 -test were employed to compare defaulter and non-defaulter with respect to related variables. Abinary logit / regression model was employed to examine factors influencing agricultural credit repayment performance and. A total of 16 explanatory variables were included in the empirical model out of this 4 variables were significantly affect agricultural credit repayment performance. age.sex, number of oxen, and supervision of MFIs were highly important in influencing repayment performance of agricultural credit. Other variables like marital states, climate effect family size, and total farm land, credit experience distance from MFIs, social ceremony and education are less important variables in influencing repayment performance of agricultural credit in the study area. Finally, the study concludes with some policy recommendations that aim to enhance repayment rate.

1.2. KEY WORDS: Logistic regression, Repayment rate, Strata, Defaulter, Non-Defaulter, VIF