Factors Affecting Loan Repayment Performance of Borrowers from Cooperative Bank of Oromia

The case of Hawassa District, Ethiopia

Abstract

This investigation explores the elements impacting loan repayment success at the Cooperative Bank of Oromia. The research utilised both primary and secondary data. To obtain information, the study chose 219 borrowers using a systematic random sampling method. Both qualitative and quantitative research methods were applied. Questionnaire data was analysed using Stata software version 15. Descriptive statistics, such as frequency and percentages, were employed. Inferential statistics, including Chi-square and binary logistic regression, were also used to determine which factors most significantly impact loan repayment. Interview data was analysed using narrative analysis to support and confirm the findings. The findings reveal that 45% of borrowers in the study region did not repay their loans as agreed. The key factors shaping repayment were the borrower's gender, educational background, family size, experience with borrowing, loan duration, repayment schedule, and the frequency of advisory visits. The study recommends that the Cooperative Bank of Oromia should initiate training programs for illiterate borrowers, both in the short and long term, and motivate educated individuals, as they are more likely to profit from such training.