Factors Affecting Group Loan Repayment Performance: A Case of Dedebit Credit and Saving Institution (DECSI), Mekelle, Ethiopia

Abstract

This study was an attempt to analyze the factors influencing the loan repayment performance of group borrowers.  Primary data was collected from sample respondents (selected by using simple random sampling technique) through questionnaire. From the total 87 questionnaires distributed, 83 that are 95% (response rate) were collected. The study has applied explanatory type of research. Chi-square test statistics was employed to test the association of each explanatory variable with group loan repayment performance (dependent variable). 15 explanatory variables were considered in the Chi-square test. Out of which seven variables (loan purpose, group members know the monthly sales of the group members, group members’ regularly visits other group members, group members’ help, group members knew the other group members before the group was formed, group members put pressure on other members to repay, and penalty) were found to have statistically significant association with loan repayment performance.  Thus, to improve the group loan repayment performance, DECSI should consider those statistically significant explanatory variables and take corrective actions accordingly.

Keywords: Chi-square, DECSI, Ethiopia, Factors, Group Loan, Mekelle, MFIs, MSEs.